Supermarket Industry Facts
- A supermarket typically makes 1.0-1.5% bottom line profit. For every dollar in retail sales, a supermarket makes just 1 penny to 1.5 cents.
- Sales volume and expense control are the prime drivers of supermarket profitability.
- Sales volume is determined by its share of disposable everyday consumable dollars in a store’s geographic trading area. Volume is affected not only by supermarket competition but by competition from mass merchants, club stores, drug stores, convenience stores, gas stations, dollar stores, etc. – all of whom sell everyday consumables. Volume is dependent on population, household disposable income, etc. Connecticut’s lack of population growth, lack of job creation, increases in property taxes, increases in income tax, increases in gas prices and utility costs, and high unemployment rate have reduced disposable income and put pressure on a supermarket’s ability to grow top-line sales.
- Food purchases are one of the few controllable expenses in a consumer’s budget.
- On the expense side, stores have met with increased unemployment taxes, higher insurance premiums, higher Works Comp rates, higher tax rates, higher electricity and gas prices and expenses to comply with federal and state regulations. Only supermarkets are required to comply with country of origin labeling (COOL) regulations. Convenience stores, gas stations, and dollar stores with less than 50 employees are not covered by mandated paid sick leave.
- Supermarkets generate revenue for many community based small businesses including electricians, plumbers, repair and maintenance companies, recyclers and carting companies, and banks. They create opportunities for small regional producers of specialty food products.
- Many supermarkets operate pharmacy departments in their stores. The recent decision to convert the state employee’s drug plan to CVS mail order only has a major negative effect on a supermarket’s profitability and will reduce staffing of pharmacies.
Industry Partners
Consumer Brands Association
Representing the Makers of the World’s Favorite Food, Beverage, and Consumer Products
Food Industry Association Executives
National Association, representing State Food Association Representatives