5 Shocking Facts About Buying Groceries in the U.S.

Is there anywhere that you can't buy milk, toilet paper and Twizzlers these days? From convenience stores to warehouse clubs, dollar stores to gas stations -- and even via -- it seems that everyone's trying to get a slice of consumers' food dollars. 

There's been a sea change in the supermarket business over the past decade -- for instance, did you know that the world's largest grocer is not a grocer at all? -- and certainly more changes to come.

Read on for some surprising facts about the buying -- and selling -- food.

1. Groceries in the U.S. are cheaper than anywhere else on the planet.
Food has never been cheaper for us. In fact, the cost of food (as a share of income) is at a historical low. Plus, it's cheaper in the U.S. than in any other country.

We spend 5.5% of our disposable income on food at home. Compare that to the 11.4%, 13.6% and 14.4% spent by the Germans, French, and Italians, respectively. If you were to move to Mexico, Turkey, or Kenya, putting food on the table would cost you 24.1%, 24.5% and 45.9% of your disposable income. 

2. Wal-Mart is the nation's largest grocer.
Wal-Mart Stores
(NYSE: WMT  ) , world's largest retailer, added "the nation's largest  grocer" to its list of titles in 2000. Its first supercenter went up in 1988, and in its rise to become the go-to grocer it has reportedly put 25-plus supermarket chains out of business. 

Source:Wal-Mart 2013 Annual Report

Credit Wal-Mart's "everyday low pricing" -- a cornerstone of the company's strategy  -- with its rapid rise to the top. The company claims the average family can save $700 annually on groceries shopping at Wal-Mart. That would work out to be a 27% savings on groceries for the average American.

Even if you don't shop at Wal-Mart, you're still benefiting from the behemoth no matter where you buy groceries. A Global Insight survey in 2008 found that shoppers save $2,500 a year at other grocers because Wal-Mart's competitive pricing forces them to lower their prices.

No. 3: Brand-name foods are commanding less shelf space in our pantries.
Private label products -- items manufactured by big national food companies and major brands like Conagra and then sold under a retailer's or a generic label --comprise 17.4% of food sales for U.S. retailers, accounting for a whopping $90 billion in business in 2012, according to Nielsen Company. Nielsen reports that sales of private label products have grown 19% over the last year. .

Offering less-expensive private label brands is one way that supermarket chains are trying to compete with the low prices offered by competitors. Recently Safeway (UNKNOWN: SWY.DL  ) has been pushing private label brands in its stores. CEO Robert Edwards told analysts in July  that private label dollar sales were up 37 basis points and private label volume was up 53 basis points. He added the company is rapidly growing private health and wellness private label brands, in particular, with 2,000 stock keeping units (SKUs).

No. 4. The nation's second largest seller of natural food is...
Guess who's giving Whole Foods Market the most competition as a purveyor of natural food? Kroger (NYSE: KR  ) . Kroger CEO Rodney McMullen told analysts just weeks ago that comparing on sales numbers alone Kroger would be the nation's second largest natural retailer "by a pretty wide margin." He added:

If you look at the market share opportunities for us, we can easily see how that business could double from where we are today. But we don't see it as something that's a dream to double our business. We actually have a pretty good plan in place that will get us significantly along the way on getting there in a reasonable period of time.

McMullen also said natural and organic is their fastest-growing section by percentage and plans to offer even more store brands in that category.

No. 5: There's a science to making you stray from your shopping list.
There's a reason why when you walk into nearly any grocery store you'll find flowers and produce are prominently located at the entrance. That's done to signal freshness.Then you're hit by the aromas from the bakery, in-store deli, and coffeeshop. Feeling hungrier? Of course you are. That's the plan to make you buy more. Even bare-bones warehouse stores like Costco offer in-store sampling and hot dog stands to get you to linger and buy more, more, more.

Then there's the calculated layout of a supermarket. Much-needed items like bread and milk are at the back to lead people to wander through the store and pick up a few extra goodies. Shelf display is equally designed for optimal profit with higher-margin and best-selling items at eye level. Lower-priced goods are displayed at knee level or lower. In candy and snack aisles higher-margin treats lure the unwary at a kid's eye level.

Finally, impulse items are always placed by the cash register. According to Paco Underhill, author of Why We Buy:The Science of Shopping, this is the highest profit shopping area of a store.

Check out anyone?
Yes, modern grocers are masters of myriad marketing tools. But be cheered, the average market basket as a per cent of income is much lower than in decades past. Knowing these facts will help you cut that percentage down further. Those investing in these merchant mavens should be heartened that they're doing their darnedest for every last thin dime of margin.

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Read/Post Comments (20) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 22, 2013, at 12:42 AM, jon1964 wrote:

    Groceries in the U.S. are cheaper than anywhere else on the planet. WHO TOLD YOU THAT LIE?

    I bring home $1,600.00 a month and spend 30 to 50 percent of that on groceries alone with a family of four which is about $600.00 to $800.00. As far as shopping at Wal-Mart, NO WAY, there are other stores cheaper than Wal-Mart to buy groceries from and other merchandise also. If I shopped at Wal-Mart, I would be far more than just broke. Wal-Mart is not what it used to be and I think people are finally starting to wise up to that fact because most of their merchandise is cheap Chinese crap. When things were mostly made in the USA, it used to be quality built, but not any more, you're lucky to find anything made in the USA at all.

  • Report this Comment On December 22, 2013, at 2:35 AM, r1961 wrote:

    Definitely not fact that Walmart and Target have cheaper grocery prices, unless of course you buy mostly processed foods. My local international market has FAR better prices on fresh fruits, vegetables, meat, and fish than WM or Target. Can you buy a three pound bag of onions for 99¢ at WM? Broccoli for 79¢/lb.? New York strip steaks for $3.95/lb.?

  • Report this Comment On December 22, 2013, at 8:03 AM, MizFit wrote:

    Shopping at Target/Walmart will save money is no where near a fact.

    We had a Target open nearby a couple or years ago. One block away from the local big chain store. Target's prices were great for about a year then they slowly started creeping up. Now the chain has the best prices on the regular basis. You may catch things on sale at Target, but it's not at all the best place to shop everyday.

    There's also a Walmart not too far away. I've been in there twice. Its food prices are the worst of the three.

  • Report this Comment On December 22, 2013, at 10:25 AM, schwirmerdad wrote:

    This article is pure fantasy. I spend 1/3 of my income on groceries at home. If groceries were so cheap why are people starving in this country.

  • Report this Comment On December 22, 2013, at 11:11 AM, septer wrote:

    Most of America does not buy fresh food and does most of their shopping in the middle of the store with processed and frozen food so this article is correct. As for Ny steaks at $3.95 a pound you should watch out this meat must be distressed because that price is under wholesale.

  • Report this Comment On December 22, 2013, at 11:49 AM, BeezFolliez wrote:

    Groceries are cheaper than ever before?? Yeah, and so is buying fuel for your car.....What lala land is Kraft living in?

  • Report this Comment On December 22, 2013, at 12:02 PM, woodyy wrote:

    Quit reading after 'food has never been cheaper for us'. After that I knew article had to be BS.

  • Report this Comment On December 22, 2013, at 12:25 PM, lscarp01 wrote:

    You never mention the GMO CROPS WHY ??

  • Report this Comment On December 22, 2013, at 3:53 PM, nowisthetime wrote:

    I have to ask the question. What alternate reality does the writer of this article live in. Just about everything mentioned in this bit of internet gibberish is so far from the truth, that it is hardly worth commenting about. It is about time that our situation here in America be acknowledged for what it is. Terrible inflation, low wages and high prices. Along with the greed which is rampant at all levels of society. But taken to a new level by the various companies and corporations which are driven to take everything they possibly can from Americans without giving anything back!

  • Report this Comment On December 22, 2013, at 4:51 PM, ran36bar wrote:

    who ever wrote this article must be filthy Rich and can't see it from a poor persons point of view!!!!!!!!! It must be nice to eat out all the time?

  • Report this Comment On December 22, 2013, at 6:29 PM, spantini wrote:

    If you're complaining about Walmart and Target's food prices, you don't even want to get near a Publix.

    I can't believe food prices as a percentage of our income is at a historical low. Publix's everyday prices on most items are at least TWICE of their nearest competitor - and people flood their stores!

    In my region, fresh UN-organic produce is as much or more expensive than meat(s). If you're going ORganic on anything.. you'll be dipping into a retirement account to supplement your food expenses. I mean.. $9.99 for an UNorganic seedless watermelon at Publix? When everyone else has them for $3.99 - $4.99?

    And fast food.. the prices there are 10 times what they were 40 years ago.. those (today's prices) are not "historical lows".

    If you're on a heart-healthy diet - forget it! The foods that will kill you are .99-cents and the foods that will make you healthy are 9.99. All the coupons are for foods with high sodium, high saturated fats, hydrogenated oils, high carbohydrates.. massive amounts of sugar.

    Very few or no coupons for fat-free, low-sodium, trans-fat free, low sugar..

  • Report this Comment On December 22, 2013, at 6:50 PM, catfashionslayer wrote:

    NY strip for $3.95 a pound? Ha. Maybe in bulk, frozen, ordered from a wholesaler on the internet. If that person is getting fresh NY strip for 3.95/lb please share this location with the rest of us dummies who pay 8-10 duckets a lb on a good day.

  • Report this Comment On December 22, 2013, at 8:19 PM, mw3051 wrote:

    AnnaLisa Kraft you are very wrong.

    the "facts" you write about are not true.

  • Report this Comment On December 22, 2013, at 9:04 PM, LadyMantle wrote:

    Walmart has really made an effort to supply their grocery stores with some pretty high quality produce at a very reasonable price. Jumbo bags of fresh baby spinach for a little over $2/bag got me coming back, also kale and collards. Their fresh fruit is real nice also. Also you can get some pretty nice wines and frozen salmon for very little. It's true grocery stores have a lot to compete with these days. I found some very high quality cheese at the Dollar Tree which is a usual go-to place for me.

  • Report this Comment On December 22, 2013, at 9:55 PM, MStepens01 wrote:

    I have shopped a lot of grocery stores and club stores in my time and I must say Wamart is NOT the cheapest on groceries and the only way you can save by shopping at Wal-Mart is to take other stores sales ads and Wal-Mart will match prices of the other stores. I find Meijers is far cheaper on their fruits and vegetables and Meijers buy local where possible.

  • Report this Comment On December 23, 2013, at 1:02 AM, ellen76 wrote:

    If, indeed, European consumers spend a greater portion of their income on food, there is good reason for that. Speaking as someone who once lived in France, the food available at markets there is so much better than what we have here that there is little comparison.

    Plus, they can afford it, as they are not wasting their money on the health insurance bureaucracy that eats up 40 percent of our ever-growing medical bills here in the USA.

  • Report this Comment On December 23, 2013, at 8:11 AM, timstroud wrote:

    This is obviously the writers opinion based data for it is so far off base it is pathetic. Food prices have risen nearly 50% in the last decade alone while wages have remained stagnate. Here are some local stats for my area I found at my local library while researching this very subject for my economics paper last year.


    Average wage $6 hr

    Gal gasoline $0.89

    Gal milk $1.29

    Loaf of bread $0.79

    Chicken per lb $0.39

    Ground beef lb $0.99


    Average wage $12 hr

    Gal gasoline $3.83

    Gal milk $3.79

    Loaf of bread $1.59

    Chicken per lb $1.59

    Ground beef lb $2.99

    What I found was that while wages have doubled, food prices have tripled. Combine these factors with the increased cost of utilities, increased and added taxes, over inflated property values based upon promises made by the local and state governments that 100,000 new jobs would be brought into the area by the year 2000 (the number was actually 480) and you can see why eastern N.C. has gone from what was once a booming and prosperous area to a haven for the poor and those looking to live off of government handouts. Public/section 8 housing in my town has swelled from 400 units in 1980 to over 2200 units today. Unemployment is still at 9.2%, and the percentage of income going to sustenance continues to rise.

  • Report this Comment On December 23, 2013, at 9:30 AM, TYPEONEGATIVE wrote:

    "Food has never been cheaper for us. In fact, the cost of food (as a share of income) is at a historical low. Plus, it's cheaper in the U.S. than in any other country. "

    WHAT? Food prices have been going crazy in the last 10 years. Meanwhile income has been shrinking/stagnant.

    There is no way in hell that this is true.

  • Report this Comment On December 23, 2013, at 11:09 AM, r1961 wrote:

    "NY strip for $3.95 a pound? Ha. Maybe in bulk, frozen, ordered from a wholesaler on the internet. If that person is getting fresh NY strip for 3.95/lb please share this location with the rest of us dummies who pay 8-10 duckets a lb on a good day."

    I live in northern Virginia. There are plenty of Asian supermarket chains in the area: L.A. Mart, H Mart, Fresh World. They all have consistently better prices on fresh food than WM, Target, Safeway, etc. I'm looking at a Fresh World online ad right now: rib eye steak is $3.89/lb. Thousands shop at these stores; they are no less safe than the "white" stores.

  • Report this Comment On December 23, 2013, at 6:30 PM, leglamp wrote:

    Dear readers,

    Thank you for your comments. here is a link to a USDA chart on groceries as a percentage of income.

    As individuals, you may spend more than the average 6% as a percentage of income, especially if you are in a lower income bracket and have to shop stores which prey on the poor by jacking up prices.

    As for me being rich and not buying my own groceries, ho-ho-ho I wish.

    Personally, I also do a large part of my shopping at smaller supermarket chains, produce at Asian groceries once a week (much cheaper), and certain staples at dollar stores.

    For the holiday feast for eight I managed to bring it in under budget at $40.00 by shopping at Safeway, Dollar Tree, Aldi, and Big Lots.

    This includes cheese and crackers, crudites with dip, turkey and all the fixings, five sides, plum pudding (homemade), pumpkin pie and beverages. Whole Foods Market charges over $200 for a smaller feast.

    I wish all my readers happy holidays. I appreciate your feedback and think it may be time for another piece on how to really save money.

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