Salvage Grocery Stores in the US Industry Market Research Report Now Available from IBISWorld

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The industry’s discounted items gained widespread appeal to low-income and unemployed consumers once the economy turned sour, but amid the recent recovery, competition from other retailers is on the rise. For these reasons, industry research firm IBISWorld has added a report on the Salvage Grocery Stores industry to its growing industry report collection.

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With less disposable income to spend, consumers flocked to salvage stores for groceries

The Salvage Grocery Stores industry has grown quickly over the past five years. During the Great Recession, households began to pinch pennies due to decreases in disposable income and consumer sentiment. Furthermore, according to IBISWorld industry analyst Eben Jose, “the poverty rate increased considerably, forcing more Americans to start shopping at salvage grocery stores.” As a result, IBISWorld expects industry revenue to grow at an annualized rate of 5.1% to $4.4 billion in the five years to 2012. While this rate includes an additional 4.9% in 2012, external competition from supercenters and warehouse clubs has been slowly increasing as the economy improves, threatening this industry's growth.

Rapid growth over the period has encouraged new enterprises into the industry. In the five years to 2012, the number of companies in the Salvage Grocery Stores industry has increased strongly because the industry's low barriers to entry have made it easy for new entrants to open a store and source food products. “The number of industry establishments has increased at an even faster rate due to the success of companies like the Grocery Outlet,” says Jose. While most industry operators are independently owned and operate on a local basis, this particular chain was able to raise its revenue from an estimated $450.0 million in 2007 to $1.1 billion in 2012. Along the way, the company has been able to open numerous salvage grocery stores all across the West region of the United States. Strong demand has also allowed salvage stores to raise their prices over the past five years, causing industry profit margins to rise from an average of 2.0% in 2007 to an estimated 3.1% in 2012.

Meanwhile, the rise of the Salvage Grocery Stores industry has been mirrored by expansion of companies like Walmart and Costco. The size of these companies allows them to purchase large quantities of food products from food wholesalers and processors at very low prices, resulting in substantial discounts for consumers. Salvage grocery stores have been able to fend off these giants, maintaining their competitive prices due to their products' lack of quality. But with the economy improving, consumers will likely turn their attention back to quality products, and supercenters and warehouse clubs will have more success at drawing consumers away from this industry. With that, the industry's customer base is expected to plateau over the next five years, as consumer sentiment bounces back and the poverty rate drops. As a result, IBISWorld forecasts industry revenue will increase at a slower rate over the next five years. For more information, visit IBISWorld’s Salvage Grocery Stores in the US industry report page.

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IBISWorld industry Report Key Topics

Establishments in this industry are primarily engaged in retailing general lines of food products, including meats, poultry and seafood, canned and frozen foods, fruits and vegetables and various dairy products, that are either near or passed their expiration date or damaged in some way. This industry includes salvage, bargain and discount retailers, but excludes cut-rate supermarkets that produce their own lines of food.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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