Monday, March 7, 2011

CNBC highlights the supermarket business in 60-minute TV special

In late January CNBC aired "Supermarkets Inc.," a stat-filled, behind-the-scenes, 60-minute special on the $550 billion industry that is the American supermarket. (I watched it last night, thanks to TIVO!)

The show spent a considerable amount of time at a Giant Eagle Market District store outside of Pittsburgh, which, at 150,000 square feet and with 650 employees, looks very much like a Wegmans. Giant Eagle's distribution and warehousing process was very impressive; I wish CNBC spent more time on it. The show also featured a Chicago Whole Foods Market and an independent grocery store in Santa Fe, Mexico.

I was particularly entertained by the marketing expert from Denmark, who labeled most American supermarket operators as "stupid." His remark came after he explained that a recent experiment showed that consumers will buy 40% more groceries if the shopping cart is twice the normal size, but most operators haven't increase the cart size.

The show correctly stated that Whole Foods (which, by the way, has doubled their cart size) had $9 billion in revenue last year from their 300 stores. It also reported that their customers spend $33 per visit, which is $4 more than the supermarket average, and their profit margins are at 3%, which is at least 1% higher than the typical supermarket margin of 1.5% - 2%. Equally impressive was Whole Foods' ability to get high quality seafood from the boat in Alaska to a store display in Chicago in less than 48 hours.

In another entertaining segment, the host of the show called supermarket shoppers "the largest and longest-running psychological experiment in history." He and various industry guests pointed out that we are constantly being "watched, trailed and analyzed" via heat maps, video monitors and other high-tech gadgets.

It certainly didn't seem that way at Kaune's in Santa Fe. Like many small independent stores, the only reason for a Kaune's employee to follow you would be to make sure you found what you were looking for. According to CNBC, independents make up 20% of America's supermarkets, which is much higher than the 5% figure quoted by industry experts (see Independent grocery stores may soon be a thing of the past).

The average supermarket, according to the show, is 46,000 square feet, carries 48,000 products and brings in $485,000 per week. There are 35,000 supermarkets across the nation, with Walmart accounting for 25% of all grocery sales in the United States.

Here's one more stat to share on useless trivia night: The top selling supermarket item? Bananas!

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