Why Wal Mart Is Important to Food Companies

If you are in the food business and you do not have distribution with Wal Mart you are missing almost 40% of the consumer grocery traffic in the south. Wal Mart’s average market share in ten southern states is 38.3% and growing. Wal Mart has taken business from every retailer in the south except Publix. The only state Wal Mart is not ranked number one is Florida (Wal Mart now ranked a weak #2). Wal Mart’s highest market share is in states with the lowest average income and poorest level of competition. In the past fourteen months Wal Mart has grown to the number one market share position in North Carolina and Virginia which were dominated by Food Lion. Current grocery market share information is listed below. Wal Mart will control 50% of grocery sales in the next few years if the current trend continues.

Wal Mart’s management has taken a “less vendor – product assortment” direction in dry grocery categories which has hurt small companies. It is impossible to get shelf space in dry grocery categories unless you are a category leader nationwide. Wal Mart’s direction is now focused on private label and market leaders only. This move so far has resulted in increased sales with less item selection. I predict this marketing plan to spread to meat, deli, and dairy soon.

Shopping at Wal Mart you will notice that all private label packaging has changed to a standard white package. This makes private label products very visible on the shelf. Wal Mart’s newest supercenters are also merchandised without the “action alley” pallet displays. Action alley was the floor space between grocery and general merchandise and an equal area on the other end of the store thru general merchandise. Both action alleys are now gone in new supercenters. End cap displays have been re-designed to give Wal Mart equal display space lost to action alley. The result is a real improvement in store appearance.

Grocery Share Of Total Business

State Wal Mart

Mississippi 56.36
Louisiana 50.09
Alabama 48.18
Kentucky 40.00
Tennessee 40.27
S. Carolina 36.25
Georgia 32.82
N. Carolina 32.19
Florida 24.80
Virginia 22.00