Food Stores
Overview of Demand and Supply Conditions
The retail category of food stores includes grocery stores; meat and fish (or seafood) markets; fruit and vegetable markets; candy, nut, and confectionery stores; dairy product stores; retail bakeries; and miscellaneous food stores (including coffee stores, health food stores, vitamin food stores). Grocery stores account for about 95 percent of total food store sales and nearly 90 percent of all employment. Large chain-store companies operating supermarkets (full-line food stores with over $2 million in sales) dominate the grocery store category.
Expenditures on foods purchased for off-premises consumption—principal determinant of retail food stores’ core sales grew by just 2.5 percent in 1998. Growth in this category of personal consumption expenditures continues to trail gains in consumer incomes. Income growth has been strong in recent years; in 1998 real disposable income increased by 4.1 percent. Spending on food items for at-home consumption is forecast to grow only modestly by only three percent over the next five years as other categories of spending crowd out food purchases. For a twelve year period (1986-1998), retail sales at food stores increased an average of 0.5 percent in constant dollar terms.
Changes in consumer tastes and lifestyles continue to erode sales of many traditional grocery items. Shoppers increasingly stop at food markets searching for hot meals for take-out, freshly baked breads and pastries, and nonfood items such as health and beauty care products. Consumer desires for "one-stop" shopping and convenience are driving growth in value-added product categories.
In response, new store formats (including increasing store size) continue to be constructed to target convenience-minded customers. Large supermarkets now have in-store service counters (delis, snack shops, bakeries, flower shops, etc.) with separate check-out areas to speed up purchases of prepared take-out foods and other high value-added products and services. Also, many grocery stores are offering home meal replacement programs to cater to customers who shop for convenience. Stores with such programs offer gourmet and prepared foods, salad bars, and ready-to-heat meals with side dishes. Stores are also focusing on programs to increase customer loyalty and restructuring their operations to reduce costs. One way supermarkets are generating customer loyalty is by offering private label brands. These brands are generating good business for grocery stores, because the price is usually lower but the margin is typically two-three times as high as it is on national brands. If customers enjoy a private label brand, it is likely that they will continue shopping at that same store due to convenience.
Supermarkets also compete by investing in new cost-saving technologies. Technology initiatives include inventory management and new merchandising techniques to reduce costs and raise productivity. For many store operators, better management of the supply-chain and cost-cutting systems to improve accounting and better coordinated supplier deliveries are a clear focus.
Food retailing has traditionally been considered a consumer staple industry, in that many of the items purchased are deemed necessities. The industry is characterized by high fixed costs; profit margins are notoriously thin requiring continued sales gains to keep profits up. Weak sales growth for much of the 1990s have battered the financial statements of many retailers. Chain grocery stores dominate the food store sector. Food retailing is highly competitive and large chains continue to wrestle market share from each other as well as from smaller independent grocery operators and other food stores (e.g., fruit and vegetable markets, meat and seafood markets). Warehouse clubs (e.g., Costco) and "supercenters"—those that sell general merchandise and food—have been problematic for chain grocery stores.
Annual Retail Sales of Food Stores, 1986-1998 (Billions of 1998
dollars)
Source: U.S. Bureau of Census
For more detail of above graphic
Current Conditions in Washington
Of the eight retail trade major categories (SIC 2-digit), food stores employed the approximately 15 percent of the 1998 total of 460,670 retail trade workers in Washington State. In 1998, 3,611 food store establishments employed 68,890 workers statewide. From the latest economic census (1997), food stores account for about 18 percent of total Washington State retail sales.
The largest sub-category is grocery stores, representing over 70 percent of all establishments and over 88 percent of all employment. In general, the number of establishments in food stores has been stable for the last decade.
Composition of Retail Sales in Washington State, 1997
Source: U.S. Bureau of Census, 1997 Economic Census, Retail Trade, Washington State
For more detail of above graphic
Notes: Based on the new North American Industry Classification System (NAICS); among the changes, eating and drinking places were re-classified to the accommodation & foodservices sector.
Total 1997 retail sales in Washington was $52.473 billion.
Number of Establishments in Washington Food Stores, 1981-1998
Source: Washington Employment Security Department
For more detail of above graphic
Employment in food stores has steadily grown in recent years. Over the 1981-1998 period, food store employment increased by 58 percent. Seventeen of every twenty net new workers in food stores were found in grocery stores. Dairy products stores and meat and fish markets lost employment during the 1981-1998 period, while other specialty food store categories saw gains in employment.
Washington Food Store Workers, 1981-1998
Source: Employment Security Department
For more detail of above graphic
Food stores—particularly grocery stores—in Washington are largely composed of large nationwide companies that retail various food goods. Nearly 70 percent of all food store workers are found in establishments with 100 or more employees, compared with 51 percent of all retail trade workers and 60 percent of all state nonfarm workers.
Size of Establishments of Washington Food Store Workers, 1998
Source: Washington Employment Security Department
For more detail of above graphic
In 1998, average covered wages for food store workers was $20,024, compared with $17,908 for all retail trade workers and $33,922 for all nonfarm workers in Washington. Food store workers rank fifth in wages and salaries among all retail trade workers (behind auto dealers and gasoline service stations; building materials and supply stores; home furniture and furnishings, and general merchandise). Unlike most statewide nonfarm workers, food store workers lost ground in real wage growth (i.e., without inflation) over the 1981-1998 period. Real wages in food stores declined by more than 7 percent during the time period.
Table 1
Real Average Wages for Washington Covered Food Store Workers,
1981-1998 (1998 dollars)
Sources: Washington Employment Security Department,
U.S. Bureau of Economic Analysis
| Sector | 1981 |
1983 |
1985 |
1987 |
1989 |
1991 |
1993 |
1995 |
1997 |
1998 |
| Grocery stores | ||||||||||
$22,691 |
$22,334 |
$20,420 |
$18,459 |
$17,405 |
$17,929 |
$18,461 |
$18,919 |
$20,055 |
$21,043 |
|
| Grocery stores | ||||||||||
$19,507 |
$17,908 |
$15,365 |
$16,828 |
$19,648 |
$20,448 |
$14,726 |
$16,159 |
$16,742 |
$18,213 |
|
| Fruit & vegetable markets | ||||||||||
$12,540 |
$12,630 |
$10,448 |
$11,026 |
$12,438 |
$12,421 |
$13,096 |
$13,070 |
$12,515 |
$12,173 |
|
| Candy, nut & confectionery stores | ||||||||||
$8,576 |
$9,580 |
$8,373 |
$9,143 |
$8,449 |
$9,525 |
$10,723 |
$11,631 |
$11,504 |
$11,156 |
|
| Dairy products stores | ||||||||||
$10,506 |
$10,455 |
$10,188 |
$8,957 |
$10,857 |
$10,084 |
$15,398 |
$11,156 |
$5,429 |
$5,982 |
|
| Retail bakeries | ||||||||||
$11,854 |
$11,362 |
$10,313 |
$9,782 |
$10,640 |
$11,363 |
$12,609 |
$12,072 |
$12,066 |
$12,700 |
|
| Miscellaneous food stores* | ||||||||||
$11,754 |
$11,460 |
$9,580 |
$9,036 |
$10,003 |
$12,943 |
$16,250 |
$18,401 |
$23,281 |
$11,604 |
|
| Total, Food Stores | ||||||||||
$21,674 |
$21,227 |
$19,315 |
$17,521 |
$16,710 |
$17,337 |
$17,905 |
$18,337 |
$19,638 |
$20,024 |
|
| Total retail trade | ||||||||||
$16,764 |
$16,274 |
$15,600 |
$15,233 |
$15,264 |
$15,672 |
$15,886 |
$16,163 |
$16,915 |
$17,908 |
|
| Total nonfarm state | ||||||||||
$28,783 |
$27,789 |
$27,313 |
$27,304 |
$27,167 |
$27,928 |
$28,575 |
$29,046 |
$31,504 |
$33,922 |
|
The distribution of hourly wages for food store workers is dissimilar to the state, with a pronounced disposition toward lower hourly wages. Sixty percent of all workers in food stores earn $12 or less per hour, compared with 41 percent of all nonfarm workers in the state.
Hourly Wages for Washington Food Store Workers, 1997
Source: Washington Employment Security Department
For more detail of above graphic
The labor force in food stores is dominated by sales workers, service workers, and laborers. Cashiers, stockers, and food service workers (e.g., deli counter help) are the most common occupations within food stores.
Table 2
Occupational Profile of Food Store Workers in Washington, 1998
and 2008
Source: Washington Employment Security Department
Estimated 1998 |
Projected 2008 |
|||
| Food stores, SIC 54 |
Estimated Employment |
Percent of Total Employment |
Projected Employment |
Percent of Total Employment |
| Managerial & Administrative | 2,507 |
3.4% |
2,742 |
3.3% |
| Professional, Paraprofessional & Technical | 1,413 |
1.9% |
1,789 |
2.1% |
| Sales & Related Occupations | 38,789 |
52.4% |
43,877 |
52.3% |
| Clerical & Administrative Support | 4,640 |
6.3% |
4,347 |
5.2% |
| Service Occupations | 13,905 |
18.8% |
16,310 |
19.5% |
| Production, Operating & Maintenance | 256 |
0.4% |
277 |
0.3% |
| Operators, Helpers & Laborers | 8,481 |
11.5% |
10,104 |
12.1% |
| Undefined Occupations | 4,035 |
5.5% |
4,422 |
5.3% |
| TOTAL | 74,026 |
100.0% |
83,868 |
100.0% |
Outlook
In general, the outlook for food retailers, particularly grocery chains, appears bright. New merchandising strategies and successful efforts to reduce costs should help push up profits and offset the effects of only modest increases in core food purchases in the years ahead.
In Washington, forecasters expect continued health within food stores as measured by employment. Grocery stores will continue to dominate the employment picture. Food stores are expected to experience only modest growth of 0.8 percent per year during the 2000-2020 forecast period.
Washington Food Store Wage & Salary Employment Forecast,
2000-2020
Sources: Washington Office of Financial Management,
Washington Employment Security
Department
