A grocery store or utility store deals with a wide range of products and services comprising fresh, packaged, and unpackaged. In the UK and the US market, grocery stores and supermarkets go by the same name. It is a type of store that sells daily consumer products and groceries.
Grocery shops, corner shops, and convenience stores are some of the names of the grocery store.
The grocery industry has been booming for the past few years. According to an estimate in 2019, an average household in the US spent roundabout 8000 dollars on groceries annually. A vast majority of American consumers buy groceries from the supermarkets and they go shopping once a week.
The annual sale of food and retail services has reached the figure of $6.2 trillion by the end of 2020, and it has been increasing for the past 11 years. The annual sale of grocery stores and supermarkets has reached $742 billion in 2020, and it comprises 86% of the total food and beverage industry in the US. At the beginning of 2021, Walmart had a net sale of $572.8 billion with a network of a total of 4743 stores (US).
As of 2022, the number of Supermarkets and Grocery stores in the U.S is 63,419
Today, we’ll study the swot analysis of grocery stores. It’s going to focus on the internal strengths and weaknesses and external opportunities and threats.
Here’s the swot analysis of grocery stores as follows;
Table of Contents
Strengths of Grocery Store
Marketing & Promotion
Grocery stores deals with routine consumer products and people consume them in their daily life. That’s why they don’t require a lot of effort in marketing and promotion of grocery items. However, if grocery products are readily available, they would buy them for consumption. If a supermarket invests resources in marketing and promotion, it would amplify the growth.
The trend of online shopping and home delivery service has increased significantly ever since the pandemic crisis. If the company works on its delivery services and makes them quick and fast, it would help the store to gain a competitive edge.
The customer market of routine groceries is usually price-conscious, and they notice a little change in price because they’re daily repetitive users. If the business sells products/services at a competitive price range, the customer won’t hesitate to buy them.
Quality customer service makes a difference. If your business offers the service 24/7 all the time and every day, then it would make a huge impact in the industry. The customer market would value and appreciate your effort of keeping the store open all the time, 24 hours a day.
Some retail grocery brands are operating a very large chain network globally. If you associate yourself with the network of any multinational brand and offer the same types of products and quality, it would help you to attract loyal customers to the brand. However, you don’t have to work on establishing your brand.
The distribution channel and supply chain network of the grocery industry is very large and you can find it anywhere across the world. The sale or distribution of grocery supplies won’t be a problem if you’re launching your business.
Successful Business Model
If we study the history of businesses for the past fifty years, the grocery store business model has proven to be successful. You have to make an investment in the purchase of consumer supplies, location, building, and operations, and you can profit from the sale of products.
Innovation & Technology
You won’t be able to find an area that hasn’t made the use of innovative technology in today’s world, and the grocery store business is no exception. In fact, the usage of technology in the stores amplifies the customer experience. The usage of kiosks and robots would help customers to find the product easily, easy checkouts, convenient management, and overall good impact on the atmosphere of the store.
If the retail store company invests capital in the expansion of its product/service portfolio in terms of variety, it would amplify the chances of growth. If the business offers whatever customers are looking for and satisfy their needs and want, they would buy from your store and increase the sale.
Weaknesses of Grocery
In order to achieve a breakeven point and make the business profitable, the retail store business has to sell a lot of small products/services with a very small margin. The reality is that there is a lot of pressure on businesses and companies to make their business grow and increase sales on the weekends, occasional off days, strikes, and holidays.
Retail chain brands have got a very large network of stores across the country along with a strong database of loyal customers. It’s because brands run marketing and promotional campaigns throughout the year. Visit their favorite brand store is the top priority in their mind. However, it’s difficult for an ordinary store to make a name for itself in the competitive environment.
The usage of innovative technology and robots make a great impact on the store and they amplify the customer experience and increase profitability. The investment in technology is very costly and risky at the same time, and the operational and maintenance are also very high. Many small stores can’t afford to invest in technology.
Opportunities for Grocery Store
Eco-friendly policies and environmental trends have made customers cautious about the type of food they eat and buy. They’re trying to avoid industrially processed food. It presents a great opportunity for the retail stores to bring in organic products. However, if they start offering organic products to the customers, it would increase their sales.
The target customer market of retail stores is middle-income families. The growth of the middle class is increasing and more people are moving into this category. In other words, the growth of retail store businesses, and that’s many young entrepreneurs are entering the grocery retail market.
Asian Populated Countries
There is an explosion in population in the Asian and sub-continental countries like India, Pakistan, China, and Bangladesh. More people means more mouths to feed, and ultimately more consumption of groceries. Retail store brands should consider expanding their businesses into these markets.
A healthy diet and food trends have changed the preferences of customers, and they want low salty, low calories and low sugar food. It also presents a great opportunity for the retail stores to introduce organic and low-calorie foods and satisfy the needs of diet-conscious customers.
Retail stores should invest in the research and development of studying consumer market trends. It may seem an ordinary thing, but it would help you to maintain a similar type of inventory before demand arose. You can offer the customers the same type of products that customers are looking for on time.
Threats to Grocery
The competition in the grocery retail store business is very high comprising the world’s leading retail chain brands with a great influence and customer market share. It’s highly difficult for an ordinary retail store to maintain its position and make a profit in its presence. You can’t differentiate your store to a great extent, because the products are almost similar.
The increasing regulations on sanitation, labor, health and safety in the retail industry are increasing the operation cost. When stores follow up to these standards, it becomes very difficult for them to make a profit.
The cost of raw materials is increasing due to various factors like oil price, carriage, inventory, and other costs. The target market of retail stores is high price conscious and they don’t like changes in prices.
Contracts with Suppliers
Finding suppliers aren’t the problem, developing a long-term relationship with them is challenging. When you don’t have a proper supplier, you can’t meet the needs and demands of consumer products.