Photo: Doug Wilson
The humble origins of Wal-Mart are the stuff of legends.But equally amazing is the story of how Wal-Mart took over supermarket sales in the past 24 years, dethroning established companies like Safeway, Kroger and Harris Teeter.
According to a report from JPMorgan, Wal-Mart leads the nation in sales, with greater than 15% share in 75 markets major markets.
It grew from one retail store in Arkansas in 1962, founded by Sam Walton, to the largest food retailer in the U.S. for 2010 with an estimated $188.3 billion in total food/consumable sales.
In 1987 Wal-Mart opened larger Hypermart USA stores which combined a grocery store, a merchandise market and other services such as restaurants and video rental stores.
Sales volume averaged $1 million per week at the Hypermart stores compared with $200,000 for the regular stores.
The store spread across the country like wildfire. But its first full-stocked grocery didn't open until 1988
The first Wal-Mart Supercenters opened in 1988 which combined the discount outlets and grocery stores.
There had been complaints about the Hypermarts not providing a fully-stocked grocery offering. Wal-Mart attacked these issues by opening five supercenters with better-stocked grocery sections. The Hypermart format was eventually phased out when the supercenters took off.
Hundreds of supercenters were opened during the 1990s under the direction of David D. Glass who took over as CEO and president in 1988.
Under his leadership, Wal-Mart entered its most profitable phase.
Glass stepped down in 2000 and was replaced by H. Lee Scott Jr. In 2001 Wal-Mart became the largest food retailer in the U.S .when its grocery sales reached $56 billion.
The Wal-Mart neighbourhood Markets were rolled mainly to compete with traditional grocery stores and convenience stores.
Wal-Mart neighbourhood Markets are smaller than the supercenters but have pharmacies, liquor stores, a deli, a bakery and a photo shop. It also has a drive-through and a 'Grab It and Go' bar.
By 2002 there were 31 Wal-Mart neighbourhood Markets which contributed to grocery revenue.
In 1993 Wal-Mart introduced the Great Value line which is the largest food brand in the U.S. in sales and volume.
The packaged food items brand has over 100 categories and works with dozens of suppliers.
Wal-Mart's grocery category is the largest of the company's six merchandise units. The grocery business includes meat, produce, household chemicals and pet supplies.
Wal-Mart thrived during the latest recession because of its prices for food, pharmacy and household goods and renovation made it more appealing to its core customer base, households with under $70,000.
As part of its renovation it made the store look cleaner by widening aisles, eliminating clutter, improving lighting and lowering shelves.
According to the report in terms of total sales of supermarket items for 2010 stores such as Kroger, Safeway and Cosco are distantly trailing Wal-Mart.
It had $188.3 billion in sales in its 3,599 supermarket stores. Kroger came in second with $76.2 billion followed by Safeway with $41 billion.
Wal-Mart is in the top three spots for 14 markets including Houston, Atlanta, Phoenix, and Miami and has a greater than 15% share in at least 75 markets.
It has opened 94 stores since 2009 while Kroger closed six and Safeway shut down 25.
Wal-Mart's prices have stayed below the competition since January of 2009.
In the same 31-item basket tested by all the stores in the study, Wal-Mart's items priced lower on 68% of the items.
It has an average price of $3.02 and a total basket averaging $93.67 for January 2011, according to JPMorgan's Charles Grom. Whole Foods was the most expensive with an average price of $4.06 and total basket of $125.71 on average in January 2010.
Other stores such as SuperValu have trouble with pricing strategy. It is targeting regular prices that are 10-15% above Wal-Mart.
The retailer has been endorsed by Michelle Obama to work on reformulating its Great Value private label foods line.
It is also pursuing its plan to expand in urban areas despite opposition from labour unions. Wal-Mart does not have a strong presence in major cities on the West Coast and in the Northeast.
It has announced plans to build stores in Washington and New York in the next year.
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