Local grocers have to balance a three-fold commitment:
The first to employees: local grocers have an obligation to provide fair compensation and benefits as well as advancement opportunities to our employees.
The second is to grocery customers: to operate successfully, we need to provide a complete and diverse range of products across multiple categories, including fresh produce, meats, dairy, bakery items, canned goods, frozen foods and non-food items. This diversity of product brands and categories is something that cannot be found within big box retailers. Lastly, we need to be highly competitive with our pricing, helping customers stretch their dollars further.
The third is to our local communities: local grocers are part of the fabric of our local communities and provide a hub of connection for everything from youth groups to community food shelves.
Local grocers need to balance these commitments within a profit margin that, according to the Food Marketing Institute, averages 1.6%. That means for every dollar of goods sold, a grocer, on average, generates 1.6 cents of profit. Portions of that profit are used to reinvest in businesses, to recruit and retain talent as well as invest in new technology applications to enhance workforce, e-commerce, analytics, customer experiences, assortment and other aspects of their businesses.
Here are some of the latest data points on our industry:
The Minneapolis-Saint Paul Grocery Market is very segmented. Estimated market share:1
| 25% Walmart and Sam’s together | 3% Hy-Vee |
| 17% Target | 2% Kowalski’s |
| 17% Cub | 2% Trader Joe’s |
| 12% Costco | 1% Jerry’s |
| 7% Lund & Byerlys | 1% Knowlan’s |
| 3% Aldi | 1% Coborn’s |
| 3% Whole Foods | 1% Fresh Thyme |
In the past 20 years, New MSP market entrants include Aldi, Hy-Vee, Trader Joe’s, Fresh Thyme, and the dollar stores Dollar Tree and Dollar General, which now compete for grocery sales. Whole Foods tripled in scale locally, Coborn’s doubled, Costco quadrupled. Walmart went from one to 27 stores, Target from seven to 55 (counting only stores with fresh grocery), and Kowalski’s and Lunds & Byerlys grew as well.2
31,704 – Average number of products sold in U.S. grocery stores.3 In 2023, profit margins in the grocery industry hit 1.6% — the lowest level since it was 1% in 2019 — as total expenses increased.4 Grocers have some of the lowest net margins in the U.S. economy. Lower than restaurants, banks and most other retailers.5 In 2023, food retailers devoted an average of about one percent (0.9%) of their total sales — more than $10 billion — to their technology budgets.5
1 Inside the Grocery Store Boom
3 Grocery industry profit margins fall to pre-pandemic levels: FMI