# grocery store market share

Thanks to all for your positive feedback about my post about breakfast cereals.  My mom said that she was flattered, especially after a community of OR geeks admitted that she was onto something good with her breakfast cereal rule.

A recent article in the local paper generated a lot of discussion between my husband and I.  The article reported the market share of different grocers in the area.  We immediately thought of the big three in our area (Ukrops, Food Lion, and Kroger).  We suspected that they shared the vast majority of the market share (like 80%).

We were wrong! A portion of the market share is as follows (I am going off of memory for the ones not in boldface):

• Food Lion 19.34
• Ukrop’s 17.58
• Wal-Mart 12.14
• Kroger 11.38
• CVS 6%
• 711 3%
• Walgreens 3%

First of all, the top grocery store has less than a 20% market share.  We observed that Ukrops dominated the market (it is *the* grocery store in Richmond), but even when they led the market, they had less than 20% of the market share.  (Incidentally, the fictional Kay Scarpetta shops at Ukrops).  We are loyal Kroger shoppers (they have a healthy OR department, and more importantly, great deals on day old bread) and assumed they were second or third, but they are actually fourth on the list.  The top three combine for only about half of the market share.

We were amazed by the diversity of places where people buy their groceries.  Convenience stores and drug stores account for something like 20% of the market share.  We could not imagine buying 20% of our groceries at drugstores (even though Walgreens has wicked good deals on nuts and dried fruit).  But if you don’t have a car, the drugstore may be the only convenient place to shop.

I did an exercise in one of my classes when students assign probabilities to things that occur “frequently” and “rarely” to get an idea of how we quantify normal and rare events.   The estimates were all over the map.  It depends on your background–people who study rare events may consider an event with a probability of 1% to be “frequent.”  But even within an area, I bet the guesses are all over the place.  In time, I would like to assemble a collection of surprising data sets to use in my classes, and I will get there eventually.

The article was a pleasant reminder that real data is often more diverse and messier than we believe.  People are not good at estimating probabilities or proportions (I’ll stop there, since I am not an expert at eliciting expert judgment, and some of you are familiar with how to mitigate some of these problems).

Have you been surprised by looking at real numbers?

#### One response to “grocery store market share”

• Larry (IEOR Tools)

Grocery stores are not the only market segment that has surprisingly low market share. Think about all of the Mom&Pop operations out there. In a recent job I worked in the restaurant business for one of the larger companies and we only saw 16-19% market share. When you combined all of the Mom&Pop operations they accounted for 60% market share. Don’t discount small business as a factor. They account for the majority of jobs and commerce in America and the world.