1 Business Cost Structure of Grocery Stores & Supermarkets Market
The costs of Grocery Stores & Supermarkets mainly consist of purchasing costs, operating costs and loss costs.
Purchasing costs: The purchasing costs of supermarkets include the cost of purchasing goods, equipment and supplies. These costs will be affected by market price fluctuations, procurement channels, procurement strategies and other factors, and are an important part of supermarket costs.
Operating costs: The operating costs of a supermarket include rent, labor, energy, maintenance, etc. These expenses usually account for a larger portion of supermarket costs and are an important factor affecting supermarket operating efficiency.
Loss cost: During the operation of the supermarket, due to factors such as loss, damage, expiration of goods, etc., there will be a certain degree of loss cost. These costs will not only affect the supermarket’s profitability, but also affect the customer’s shopping experience.
2 Grocery Stores & Supermarkets Market Major Distributors
Grocery Stores & Supermarkets are retailers. This industry sells products directly to consumers through physical stores, offline or online sales channels, so there are no distributors.
3 Grocery Stores & Supermarkets Market Customer Analysis
Downstream of the Grocery Stores & Supermarkets industries are the vast end consumers. With the improvement of residents’ income level, the affordability of residents’ consumption has also been continuously enhanced, which has further promoted the growth of effective demand for chain supermarket industry.
At the same time, residents have increasingly high requirements for commodity quality, shopping environment, convenience, and effectiveness, and further promote the development and change of the supermarket industry in the format, business model, and technical level.
Grocery Stores & Supermarkets increasingly pay attention to enhancing the relationship with consumers, constantly strengthen communication with consumers, improve the shopping environment, enhance consumption experience, increase service types, improve service levels, etc., to cultivate consumer loyalty and cultivate a broader consumer group, and to a certain extent, change the shopping habits of consumers.
4 Grocery Stores & Supermarkets Market Drivers
Table Drivers
Item | Descriptions |
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In the absence of grocery stores and supermarkets, customers had to go to multiple locations to buy vegetables, groceries and other everyday items, and commuting from one location to another (especially on the subway) was time-consuming. In addition, grocery stores and supermarkets provide customers with more choices. Customers can choose the most suitable products according to their convenience, desire and budget. According to a survey conducted by the National Retail Federation in 2021, 35 percent of consumers reported that they used curbside pickup to buy groceries in the past year, up from 13 percent in 2019. In addition, the same survey found that 23% of consumers use home delivery services to buy groceries, up from 16% in 2019. |
Higher disposable income |
Additionally, median household disposable income grew by an average of 0.7% per year between FY20 and FY22, according to estimates from the ONS Household Finance Survey. In the longer term, UK median household disposable income will grow by an average of 1.7% per year in the 10 years to 2022 (FY2013 to FY2022). According to data from the National Bureau of Statistics of China, in 2022, the per capita disposable income of Chinese residents will be 36,883 yuan, a nominal increase of 5.0% over 2021. The improvement of the global economic level and the increase in residents’ income have promoted the upgrading of consumer demand, the upgrading of consumer consumption concepts, and the improvement of consumption levels, which are the intrinsic driving factors for the growth of the grocery store and supermarket market. |
5 Grocery Stores & Supermarkets Market Restraints
‘Purchase and rental costs rise’
Large supermarket chains purchase huge quantities of goods, but their gross profit margins are low and their price room for maneuver is small. In addition, fresh products are easy to lose and difficult to preserve. Therefore, the ability to effectively control procurement costs and reduce the loss rate of goods will directly affect the company’s operating costs, affect the company’s price competitiveness, and thus affect the company’s profitability.
In addition, most supermarket chain stores are operated through leasing properties, and rental costs are one of the important operating costs of supermarket chain companies. In recent years, the rental level of commercial real estate has increased year by year. The expiration of lease terms for groceries and supermarket corporate stores and the increase in rental costs for newly opened stores have become unfavorable factors affecting the profitability of supermarkets.
‘The impact of relevant laws and regulations’
The supermarket industry is affected by various legal factors that affect its operations and profitability. Food safety regulations are a key legal factor affecting the supermarket industry. Supermarkets have a responsibility to ensure their products are safe to eat. They must comply with various food safety regulations, such as the Food Safety Modernization Act, which requires supermarkets to implement preventive controls to minimize the risk of foodborne illness.
In addition, governments around the world have enacted various regulations on the industry with the aim of promoting fair competition, ensuring consumer safety and protecting the environment. For example, in the United States, the Food and Drug Administration (FDA) has implemented regulations requiring supermarkets to disclose nutritional information on food labels.
Additionally, many governments have minimum wage laws in place, which affects supermarket labor costs and therefore pricing and profit margins. The government uses taxes to increase revenue, and the amount and structure of taxes can have a significant impact on supermarkets. For example, a government that imposes high sales taxes may reduce consumer spending, thereby reducing supermarket profits. In addition, tariffs on imported goods may increase the prices of products sold in supermarkets, affecting consumer behavior and causing changes in demand.
6 Grocery Stores & Supermarkets Market Challenges
Table Grocery Stores & Supermarkets Market Challenges
Item | Descriptions |
Fierce competition |
In addition, smaller independent supermarkets may struggle to compete with larger supermarket chains, thereby reducing market share and profitability. In addition, cost and profitability are also important economic factors affecting the supermarket industry. Supermarkets have high fixed and variable costs, including labor, rent, utilities and inventory. The level of these costs can affect pricing strategies and overall profitability. For example, if labor costs increase due to minimum wage laws or other factors, supermarkets may need to adjust their pricing strategies to maintain profitability. Therefore, fierce competition will affect the development of the grocery store and supermarket industry. |
Supply chain challenges |
The surge in retail sales is a positive sign for the economy, indicating that businesses are benefiting from renewed consumer interest and a stabilizing economy. Despite the positive outlook for the retail industry, supply chain challenges are becoming increasingly apparent. These issues include delays in the delivery of essential goods, shortages of critical components and increased logistical complexity. These supply chain bottlenecks are concerning and could hinder the grocery and supermarket industry’s ability to meet growing demand and threaten overall economic stability. |
