Sate of the Industry and Competition Analysis

Sate of the industry and competition analysis

The US retail grocery industry includes 65,000 supermarkets and other grocery stores with annual revenue reaching 500 billion dollars. The 50 largest companies generate about 70% of the total revenue. Wegmans generates about 40% of the total grocery revenues in Western New York.

Wegmans depends on high volume sales to make a profit because most items they sell are low margin. Because of Wegmans high volume they are able to take advantages in purchasing discounts, distribution, marketing and even finance.

Wegmans sales consist of 60 percent in perishable, 20 percent in nonperishable and the final 20 percent on non food items. Perishable sales offer the highest return and Wegmans sells 10 percent more than the industry average.

An average Wegmans store carries about 50,000 items; this total is about 5,000 items more than the industry average. Most grocery stores offer the basics and then carry a selection of products based on the area the store is located. Wegmans spends millions of dollars each year to make sure they have the right selection of products in their stores. If Wegmans does not carry a product you want but they do business with a vendor that carries it then they can most likely get that item for you.

Wegmans store floor plan is designed to allow the customer to get the basics fast but also makes sure the shopper has to walk by the aisles so they can pick up whatever else they may need. Most Wegmans offer a variety of prepared meals and restaurants to take advantage of the lunch and dinner hour crowds. The prepared foods and restaurants also fall in to the perishable category so the profit margins are high while offering a convenience to the customer.

Because Wegmans sells in such high volume they are able to buy merchandise at a much lower cost directly from the manufacture. Wegmans also offers their own brand name of products at a discounted rate which is as good as the name brands or better. Another benefit of Wegmans high volume is that they get to charge manufactures slotting fees to stock their product.

Wegmans also has their own distribution center and fleet of trucks which helps keep their cost of doing business down. The distribution center allows them to purchase large quantities of an item that a manufacturer may be offering at a discounted rate. The trucks keep transportation costs down because they don't have to lease.

Another area that Wegmans separates itself from the competition is that Wegmans promotes its products to everyone. A female head of house hold is the typical customer to a grocery store but Wegmans designs its stores and selection so no matter who walks through the door they will be able to find what they need.

Wegmans was also one of the first to offer a discount card that not only offers discounts but also rewards and gifts