INDUSTRY SNAPSHOT: Grocery Stores
Few industries are as essential to everyday life as grocery stores. Whether it’s a discount superstore or a small boutique grocer, nearly everyone visits a grocery store at least a few times a month. Grocery stores are also large employers, and most of their employees are low-wage workers.
As the following chart shows, grocery stores are big business in NC. Wal-Mart is not only the largest retailer of groceries in NC (even excluding non-grocery sales), it is also the single largest private employer of North Carolinians – more than 1 in 100 workers in the state are Wal-Mart employees. Another four of NC’s top 20 private employers are grocery retailers, and all except Wal-Mart are headquartered within the state.,
Population is a main driver of grocery store industry growth. Between 2000 and 2010, NC was the sixth fastest growing state in country, growing by 18.5%, or about double the pace of the U.S. as a whole . Between 2012 and 2013, 60% of NC counties grew in population, with seven urban counties growing by 3% or greater during that time period . As these populations expand, so does demand for newer, better, closer-to-home grocery stores. Given these figures, it is surprising that the number of grocery stores in NC has been nearly flat for two decades, and grocery store employment in the state has fallen since the 1990s, though it did begin to climb again in 2010.
What’s Driving Low Wages in the Grocery Store Industry?
Despite their large inventories, grocery stores are classified in industry reports as labor-intensive and capital-moderate, meaning that most of the cost of running a grocery store is in the form of wages to employees . Grocery stores have little control over fluctuating food prices, so in order to compete with one another on price, they must cut personnel costs. This may come in the form of lower wages, delayed or denied promotions, cutting hours, and limiting overtime availability.
In the past two decades, grocery stores have tried to cope with changing times and tastes in other ways as well. For instance, starting in the early 1990s, grocery stores began to diversify in order to draw in more cash from customers. They shifted from being explicitly retailers of fresh and packaged food into prepared foods (such as delis, hot food bars, and cafes), in-house medical and vision clinics, banking services, hair salons, video rentals, and more. A Greensboro newspaper reported in 1991 that this trend created new employment opportunities for more specialized labor, such as those with skills as bakers, chefs, or clinic staff . The decrease in employment since the mid-1990s may be reflective of a shift toward more skilled workers (who would be paid more) and fewer lower-skilled workers. This is reflected in the wage trends for the industry: between 1992 and 2003, wages rose, but flattened and then fall during the Recession .
Another trend of note is that grocery stores, particularly Wal-Mart, which previously focused on large-format stores in rural areas and suburbs are now moving into central cities with smaller, leaner stores in an effort to capture more demand .
Policy Trend: Food Security
A major policy focus in the U.S. is ending food insecurity, often characterized as addressing “food deserts,” or places that have limited or no access to grocery retailers. First Lady Michelle Obama, along with the President and Agriculture Secretary Tom Vilsack have “pledged to end U.S. child hunger by 2015 while also tackling obesity .”
United Food and Commercial Workers Western States Council blog calls for attention to the economic security of grocery store workers to be part of this equation as well: “As we think about using tax credits, public investment funds, and other public resources to bring full-service grocery stores to low-income, underserved communities, we need to think creatively about how to hold these businesses accountable for providing good, sustainable jobs." The First Lady’s team is answering these calls by promoting a “Good Food, Good Jobs” initiative that promotes grocery retailers to not only locate in food deserts but also to create living wage jobs that would be available to local people . New York City is conducting a pilot project within this initiative. The “FoodWorks” project aims to create more well paying jobs from the farm to the aisles of grocery stores while addressing the city’s food deserts, obesity, and nutritional needs . Programs such as this, which add an employment opportunity lens to popular social and economic issues, may be an effective way of addressing low-wage conditions in these vital industries.
,  Calculated by authors using data from 1992-2012.