Types of Retailers

 

Nicole Perlroth, “The Consumer’s Temple,” Forbes.com, April 30, 2009.

Prior to the 1930s, Americans shopped for their groceries in a very different manner. Consumers made daily trips to the butcher, baker, produce stand, and dairy. Wagons sold canned goods and prepared foods, but did not have a reliable schedule or consistent assortment.

Americans spent 21 percent of their disposable income on groceries and much more time shopping for food than they do now. The “modern” concept of the supermarket offered better variety, lower prices, and a one-stop shopping experience to shoppers. Supermarkets eliminated the need to make daily trips to the butcher, baker, and so on; instead, shoppers could consolidate all their grocery shopping into a weekly trip. As automobiles and home refrigeration became more common, the idea of stock-up trips also became more appealing.

Self-service supermarkets created so many efficiencies that they could offer much lower prices than their competition. They also offered a consistent and large assortment that was previously unheard of. Manufacturers benefited too because they could negotiate directly with supermarkets to gain shelf space, rather than depending on wholesalers to distribute their products. When one of the first major supermarket chains, Big Bear, began in 1932, it grossed $3.8 million in sales, equivalent to $50 million 2009 dollars. By 1939, there were 5,000 supermarkets in the United States.

Today, consumers spend less than 6 percent of their disposable income on groceries and are accustomed to the grand innovations of mass merchandising, competitive pricing, self-service, and instant gratification.