Authors: Artz, Georgeanne M.; Stone, Kenneth E.
Source: American Journal of Agricultural Economics
The entry of discount mass merchandisers into the grocery business is part of a rapid consolidation occurring in the grocery industry in recent years. Supermarket News estimates that the top five retail grocery chains now account for nearly 40% of U.S. sales. At the top of this list is Wal-Mart. Operating 1,980 Supercenters as of January 31, 2006, Wal-Mart's 2005 share of the nation's retail grocery market was estimated to range from 15% to 20%. Supercenters are Wal-Mart's fastest growing store format. With more than fifty departments including a full-line grocery section and average size of 187,000 square feet, these stores compete with a wide range of existing retailers in the markets they enter. The greatest competitive pressures from the expansion of Supercenters occur to existing grocery stores. Nearly 500 of these stores are located in counties with an urban population of fewer than 20,000 people. These are primarily rural trade centers in which retail trade is akin to a zero-sum game. Unless population or incomes are growing substantially, there is a relatively fixed amount of money to be spent in the retail sector.