History of the supermarket industry in America

Built on the Upper West Side in New York City by Vincent Astor, son of American businessman John Jacob Astor IV, the Astor Market was the first attempt to use economies of scale to lower the cost of groceries during a time of increased prices brought on by World War I. The market sold everything from meat to produce to flowers—much of what can be seen in supermarkets today. However, the market was a bit ahead of its time—customers still preferred small, local shops, to large, all-in-one marketplaces and it closed its doors in 1917.

Clarence Saunders opened the first Piggly Wiggly in the fall of 1916 in Memphis, Tennessee, and developed the first-ever self-service grocery store. Previously, grocery shoppers handed over a list of goods they wanted to purchase to the store clerk, and the clerk fetched the products for them. At Piggly Wiggly, customers were free to roam among the goods and pick out goods they needed or that happened to catch their eye. Saunders was meticulous about arranging items in an appealing fashion and also began the practice of marking all items with a price to help customers shop smarter.

The 1920s brought a wave of small chain grocery stores including Kroger, Loblaws, and A&P. These stores were counter-service stores that were manned by a few clerks who would fetch items for customers. The items they sold were limited to mostly dry goods, as they didn’t sell meat or produce. These small chains developed uniform branding and customer loyalty across different regions.

With growing numbers of households that owned cars, C.L. Peckham came up with an idea to profit off of the increasing number of daily commuters. In 1924, Peckham opened Ye Market Place in Glendale, California, on the side of Los Feliz Road, a commuter highway away from any other businesses. Ye Market Place had 23 separate stores built in a U-shape, with a parking lot in the center. Customers could shop at each store and store their items in their cars as needed. While these stores were not under one roof, it was the beginning of customers embracing department-oriented shopping.

The Great Depression left the country in a bleak state, leaving families desperate to find a way to make an income. Some enterprising amateur grocers began to sell groceries to their neighbors in their homes or abandoned storefronts. They would bulk buy nonperishable goods and consume whatever they weren't able to sell. Several became family businesses now worth billions.

By 1930 King Kullen was founded in Jamaica, Queens, in New York City. Unlike the other markets of its time, King Kullen sold thousands of different products in one store with various departments for produce, meats, dairy, baked goods, and other dry goods. This multidepartment large grocery store earned the title of the first supermarket, according to the Smithsonian Institute. Due to the inventions of cars and refrigerators in the 1920s, the supermarket concept proved to be successful with customers.

The ever-inventive Piggly Wiggly founder Clarence Saunders felt he could take his efficient, self-serve supermarket to the next level by introducing self-checkout. He hoped to fully automate his grocery chain with his self-checkout invention named the Keedoozle. Sadly, the Keedoozle was a complete flop, because the technology kept failing. It seems that Saunders’ idea was a little ahead of its time.

Prior to 1937, grocery stores provided customers with a small wire or wooden basket to carry their items while they were shopping. Grocery chain owner Sylvan Goldman noticed that at his Humpty Dumpty supermarkets, customers would start to head for the registers once these hand-held baskets got too heavy. In order to create a solution that would encourage customers to keep shopping, he teamed up with a local mechanic to create a prototype of what would become the shopping cart.

After World War II, there was renewed interest in international foods born from servicemen who had served abroad. However, the definition of international food during that time was limited to canned LaChoy chow mein and spaghetti and pasta sauce. While international offerings have since expanded in mainstream supermarkets, this was the beginning of including a more diverse set of products in grocery aisles.

Joseph Woodland was working at Drexel Institute of Technology when he set out to create a way for grocery store checkout queues to move more quickly as well as hasten the process for taking stock of goods. He came up with the concept of a bar code (later named Uniform Product Code or UPC) while sitting on a beach in Miami and drawing his fingers through the sand. However, even though he successfully invented the bar code, he was unsuccessful in creating the technology to scan it.

As customer loyalty programs, supermarkets began giving trading stamps to customers when they spent a certain sum of money. The stamps could be saved up and used promotionally toward a future purchase. While the stamps were popular with customers, they faced resistance from government regulators, who imposed special taxes on them, which lead to higher grocery prices.

After running a small Los Angeles-based chain of convenience stores called Pronto Markets for a decade, Joe Coulombe decided to create a store centered on value and unique products. Coulombe opened the first (and still-operating) Trader Joe’s in 1967 in Pasadena, California, which quickly became known for its low prices and its ever-changing roster of private-label goods. Since its founding, Trader Joe’s has become a large chain of grocery stores, with over 500 locations across the United States.

Before the 1970s, shoppers would be lucky if their grocery store stayed open earlier than sunrise and later than sunset. By 1972, 4% of supermarkets that earned $500,000 or more a year had introduced 24-hour service to their customers. Though this was a costly practice, it earned customer loyalty via convenience.

During the summer of 1974, the first Spectra-Physics model A price scanner was installed in a Marsh supermarket in Troy, Ohio. The scanners increased check-out speed by reading the new product-identifying Uniform Product Code (UPC). The first scanned item was a package of Wrigley’s Juicy Fruit chewing gum. UPCs and price scanners are still used in supermarkets today.

What we know now as Costco Wholesale began in 1976 as Price Club in San Diego, California, started by entrepreneur Sol Price. The store was housed in a converted airplane hangar and focused on bulk products at wholesale pricing for small businesses. After finding that the company could increase its revenue by allowing select members to shop in their stores, the paid membership model emerged. Sam's Club followed with a similar membership model shortly after, opening its doors in 1983.

By 1988, the largest chain supermarket had amassed enough real estate to build out even bigger “supercenters.” These supercenters offered a wide array of services, including banking, photo development, pharmacy needs, and floral arrangement. This model is still in place today in stores like Walmart and Costco Wholesale.

The first online grocery delivery service, Peapod, was founded in 1989 by brothers Andrew and Thomas Parkinson. The company required customers to install software from CD-ROMs onto their computers to place orders. The service would then shop for the groceries at Jewel and deliver them to customers’ doors. Though it took years to become a well-known name in the supermarket industry, Peapod created much of the online grocery innovations used today and is still in business.

As supermarkets became more popular, smaller regional supermarket chains decreased while larger, national chains acquired small chains and specialty markets. According to Food & Water Watch, between 1996 and 1999, 385 grocery store mergers took place, equaling almost 100 mergers per year during that period. By 2009, the top four supermarket chains—Walmart, Kroger, Costco, and SuperValu—were responsible for over half of all grocery sales.

While Green Shield stamps acted as a successful beginning for supermarket loyalty programs, they faded by the 1990s and were replaced with modern-day loyalty cards. The loyalty cards utilized the new UPC bar code technology and were less cumbersome to deal with during checkout. Though some loyalty cards have been replaced by apps, they are still largely used today.

Though organic farming has been around since the 1970s, the foggy definition of the parameters of "organic" made organic food a hard sell in the mainstream market. However, once the classification of "organic" became federally regulated in 2002, stores adopted organic foods quickly and to great success. Organic products earned $8.6 billion that year and sales climbed to more than $49 billion in 2017.

In 2007, Amazon expanded its Prime membership service offerings by adding an online grocery delivery service in select cities, under the name Amazon Fresh. While other online delivery services existed during this time, the tech giant offered convenience as well as value—one area where most similar services were lacking. The online store could also draw from its thousands of products outside of just grocery products, including household goods, to offer to customers. Amazon Fresh currently delivers to 19 metropolitan cities in the United States as well as four cities in Germany.

With the effects of the Great Recession in full swing, grocery stores had to change their business models to appeal to a post-recession world. There was a singular focus across all supermarket chains: value. While supermarkets were arguably one of the least affected of all retailers, there was still a heavy emphasis on deep discounts and savings for customers. While some value-centered stores like Walmart and Kroger were more successful at selling this message, other premium retailers like Whole Foods were not able to compete on the same level.

With the awareness of the environmental toll of trucking mass amounts of produce across the country, consumers have gained a growing interest in goods sourced from their community. The demand for local food has grown so much that customers are willing to pay a premium for it. The local food market rose from $5 billion in 2004 to $12 billion in 2014 and has only grown since.

Private store brands were perceived as lower-quality value alternatives in the 1970s and 1980s, but younger generations do not prescribe to that stigma. Due to their decreased brand loyalty compared to their baby boomer predecessors, they are happy to purchase private store brands in lieu of more costly name brands. Because of this, some supermarkets have thrived off of their private label goods, including Aldi and Trader Joe’s.

In the summer of 2017, Amazon announced that it would buy the upscale grocery store chain Whole Foods for $13.4 billion. While Amazon had been selling groceries online, it had a difficult time selling mainstays like produce and meat online, as customers preferred to buy those products in person. With this acquisition, Amazon had successfully infiltrated the mainstream supermarket market and implemented its online ordering and delivery service across all Whole Foods stores.

Consumers began trying to find healthier and more economical ways to eat preprepared food. Compared to the previous year, 2017 saw a jump in sales in the prepared foods category of 139.5% over the previous year. Because of this, supermarkets begin to expand their prepared foods offerings in new ways, including opening small restaurants or food halls inside their stores.

With unemployment officially below 4%, it became tough for supermarkets to attract workers, expand their workforce, and stand out from their competition. Because of this, supermarkets began to offer higher hourly wages and a variety of employee benefits, including less-restrictive dress codes, tuition assistance, and more robust family leave policies.

As trends in retail move toward automating companies’ interactions with customers, the online retail giant Amazon took on the task of implementing an automated customer experience in brick-and-mortar storefronts. Customers scan into the store with their smartphones, and the store records customers' selections and charges them via the Amazon app. The first Amazon Go store opened in Seattle in 2018 on a smaller bodega-like scale. Amazon launched its first full-sized, cashier-less grocery store in Seattle in February 2020.

Pacific Foods founder Chuck Eggert felt that an innovative way to earn customer loyalty is to teach customers ways to prepare the food that they bought in the market. So when he opened his Portland, Oregon, outpost in 2018, he integrated a classroom space that took up about a third of the store. Centered around healthy living, the courses teach healthy recipes and bundle products together for customers to bring home.

The concept of short-term retail pop-ups was applied to grocery shopping in 2019 by Emily Schildt, founder of Pop Up Grocer. Schildt sought to change the grocery shopping experience by creating a design-centered, millennial shopping experience featuring trend-oriented products ranging from foods to beverages and body care. Pop Up Grocer opened its first location in the SoHo neighborhood of Manhattan for 10 days. It has since traveled across the country popping up in cities for months at a time.