In this article, we will be talking about 15 most affordable grocery stores in the US. If you do not want to learn about the market dynamics in the global grocery industry, head straight to the 5 Most Affordable Grocery Stores In the US.
Emerging Trends and Market Dynamics in the Global Grocery Industry
The global grocery market was valued at $11,947.2 million in 2022 and is expected to reach $18,335.27 million by 2030, growing at a CAGR of 5.50% between 2023-2030. The grocery market can be divided into product types and distribution channels. Packaged food dominates the product type segment of the grocery market, which accounts for the largest market share because of the convenience and wide variety of products that are easily available. The packaged or canned foods market was valued at $147.5 billion in 2021 and is expected to grow to $201.9 billion by 2028, growing at a CAGR of 4.2% whereas the frozen foods market is expected to grow to $363.7 billion by 2028, growing at a CAGR of 5.1%.
Talking about consumer preference, traditional in-person grocery shopping wins but the trend of the online grocery market is also growing which can be seen by the fact that this market was valued at $50.28 billion in 2022 and is now expected to grow to $$57.81 billion by 2030, growing at a CAGR of 26.8%. According to a report, around 69% of US consumers visit grocery stores at least once a week while 16% of consumers prefer their groceries delivered to their doorstep. Reports also suggest that the average American household visits the grocery store 1.6 times per week, spending an average of $155.62 per trip.
Shifts in Consumer Behavior and Growth Trends in U.S. Grocery Industry
Covid 19 has played an important role in people’s decision to shift to online grocery shopping. Shoppers started trying to limit their exposure by visiting stores earlier in the day, with 40% of the people shopping in the morning compared to only 17% shopping in the evening. Consumers also started buying more in bulk so that they stock up on essentials, with 46% of shoppers reporting they are purchasing items in larger quantities. Brand loyalty has also taken a backseat, with 76% of shoppers saying they do not go out of their way to find their favorite brands during the pandemic, to stay protected.
44% of consumers said that they started using more restaurants, meal kits, or grocery delivery services during the covid 19 pandemic. Amazon Fresh, Walmart Delivery, and Instacart became the most popular delivery apps. Sole proprietorship grocery stores have seen steady growth over the past five years in the US, with an average annual revenue of $289,628. The major and most opted grocery stores in the US are HEB, Walmart Inc. (NYSE:WMT), and Costco Wholesale Corporation (NASDAQ:COST). Talking about Walmart Inc. (NYSE:WMT), it has capitalized on the shift towards online grocery shopping, with its eCommerce sales growing 79% in 2021 and grocery sales accounting for over 56% of Walmart’s net sales globally. Walmart Inc. (NYSE:WMT) is the largest grocery store in the US with over 25% of the market share as of 2022. The Executive Vice President of Walmart said the following in Q1, 2024 financial results.
“Average spend per member increased mid-single digits. Now on margins. Consolidated gross margins decreased 18 basis points with ongoing pressure from category sales mix globally. This headwind was partially offset by a reduction in supply chain and freight costs relative to last year’s heightened levels.
Category mix was a notable headwind across geographies and formats. Walmart U.S. general merchandise sales declined mid-single digits, while food and consumable sales increased low double digits. Headline inflation in food and consumables came down over 400 basis points from the start of Q1 to the end of the quarter, but prices remain high and customers are being cautious with their spend in discretionary categories.
And while we make attractive margins in food and consumables, they have a lower margin than general merchandise. We expect category mix to remain a gross margin headwind for the balance of FY ’24. The higher margin initiatives that are connected to our core omni-retail business, including marketplace, advertising, and membership, continue to meaningfully outgrow the base.”
On the other hand, H-E-B reported total revenue of $43.6 billion in 2023. Their some of the notable planned projects include a new 118,763 sq ft store in Frisco, a 42,603 sq ft expansion in Burnet, and a 128,650 sq ft store in Fort Worth.
A B2B food distributor making sure grocery shelves are fully stocked with food.
Our Methodology
For our methodology, we have ranked the most affordable grocery stores in the US based on the percentage of respondants in a survey from MarketForce’s 2023 US Benchmark Grocery Study that consider the respective grocery stores value for money.
Here is our list of the 15 most affordable grocery stores in the US.
15. Smith’s
Value for Money: 54% of Respondents
Smith’s Food, a subsidiary of The Kroger Co. (NYSE:KR) is one of the most affordable grocery stores in the US. Their prices are 14% lower than the average grocery store prices in the Puget Sound area which means that a family that spends $250 on groceries per week could save up to $1800 per year by shopping at Smith’s. Smith’s grocery store had a revenue of $4 billion in 2023.
14. ShopRite
Value for Money: 54% of Respondents
Shoprite is one of the highest-quality grocery stores in the US with a revenue of $630 million in 2023. In 2017, ShopRite’s internal food inflation was 5.9% as compared to the official food inflation of 10% which shows the company’s ability to pass on cost savings to its customers. Most importantly, in 2022, ShopRite invested R145 million in community projects in South Africa and collected 43,355 tonnes of cardboard from its stores and distribution centers for recycling.
13. Walmart Inc. (NYSE:WMT)
Value for Money: 58% of Respondents
Walmart, with about 5,342 stores spread across the entire USA had a revenue of $611.3 billion in 2023, with around $605.9 billion coming from net sales which means that Walmart generates over $1.5 billion in daily revenue. The company serves more than 200 million customers every week and reported that it is seeing an increase in the number of households with incomes above $100,000 shopping at its stores which indicates its ability to attract customers across income levels.
12. Schnuck Markets
Value for Money: 58% of Respondents
Schnuck Markets is one of the most affordable grocery stores in the US with a revenue of $3.1 billion in 2023. The company has more than 115 stores which are located mainly in the Midwest region. Schnuck’s most popular grocery items are staples like produce, dairy, and meat, which account for a large portion of the overall sales of the company.
11. Fred Meyer
Value for Money: 61% of Respondents
Fred Meyer is a subsidiary of The Kroger Co. (NYSE:KR) and is one of the cheapest grocery stores in the US. They have over 130 stores spread across the Pacific Northwest and their prices are also 14% lower than the Puget Sound area.
10. Trader Joe’s Market
Value for Money: 63% of Respondents
Trader Joe’s market had a revenue of $13.3 billion in 2023 and operates over 530 stores that are spread across 42 states. Trader Joe’s is highly known for its private-label products, which account for around 80% of its offerings and are usually priced 20-50% lower than national brand equivalents. More than 500 people visit the Trader Joe’s grocery store and spend about $42 per trip.
9. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ)
Value for Money: 67%
BJ’s Wholesale Club Holdings, Inc. (NYSE;BJ) had net sales of $19.6 billion in 2023. BJ’s claims its customers can save 25% or more on a representative basket of manufacturer-branded groceries as compared to traditional supermarkets. BJ’s Wholesale Club Holdings, Inc. (NYSE;BJ) currently operates 244 warehouse clubs across 17 states with an addition of 9 new locations over the past 12 months. The company offers a wide assortment of grocery items, with its own private label brands that account for nearly a quarter of total merchandise sales in 2022.
8. Sam’s Club
Value for Money: 71% of Respondents
Sam’s Club which is a subsidiary of Walmart is one of the high-quality grocery stores in the US. Sam’s Club had net sales of $84.3 billion in 2023. The company operates in 44 states in the U.S. and Puerto Rico. According to a survey, around 23% of people aged 18-29 shopped daily at Sam’s Market as compared to 18% of people aged 50-64. On average, people spend about $30-40 at Sam’s club daily.
7. Costco Wholesale Corporation (NASDAQ:COST)
Value for Money: 75% of Respondents
Costco Wholesale Corporation (NASDAQ:COSST) has about 602 locations in the US with a revenue of $242.29 billion in 2023. A study that was conducted by CNET found out that if a household of over one or two people buys in bulk at Costco, it could save them $1,000 per year as compared to shopping at a conventional grocery store. Another analysis by Squawkfox revealed that shopping at Costco could result in a 21% savings on a nearly $100 food bill.
6. Grocery Outlet Holding Corp. (NASDAQ:GO)
Value for Money: 78% of Respondents
Grocery outlet Holding Corp. (NASDAQ:GO) stands sixth among the most affordable grocery stores in the US with net sales of $3.97 billion in 2023. The company has over 400 stores spread across the US and has plans to keep expanding. A study by Numerator found out that Grocery outlet Holding Corp. (NASDAQ:GO)’s customers visit the store an average of 16 times per year and spend an average of $35 per visit.
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Disclosure. None: The 15 Most Affordable Grocery Stores In the US is originally published on Insider Monkey.