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This research presents a strategic analysis of the grocery store industry. Included in this research also is a brief strategic plan for a major firm competing in this industry.

The strategic analysis of the grocery store industry is presented in this section. Included in this analysis are (1) threats and opportunities, (2) the financial position of the industry, (3) a cost of capital determination, and (4) an industry performance forecast.

The economic recession in the United States that threatened grocery store sales is receding. In its wake, however, the economic recession has left an environment of increased price sensitivity among grocery consumers (Mulqueen, 1993, p. 1495). This increased price sensitivity on the part of consumers poses a significant threat to the grocery store industry. Rising wage costs and occupancy costs will be more difficult to pass along to consumer in such an environment, causing the attainment of a profit, much less a growth in profits, to be much more difficult for grocery store operators (Mulqueen, 1993, p. 1495).

As the threat of the recent economic recession is waning for the grocery store industry, so is the threat to the industry from warehouse stores (Mulqueen, 1993, p. 1495). As the novelty of warehouse shopping dulls for the typical grocery consumer, however, the appeal of the SuperCenter shopping format is gaining strength (Mulqueen, 1993, p. 1495). SuperCenter is the term for such shopping complexes as Wall Mart stores, K mart stores, and Fred Meyer stores. SuperCenter stores create onestop shopping environments that neither supermarkets nor warehouse stores can duplicate (Mulqueen, 1993, p. 1495). The SuperCenter shopping format is a major threat to the grocery store industry at the beginning of the mid1990s.

Both increased grocery consumer price sensitivity and the SuperCenter shopping format, however, create opportunities for some grocery store operators. Superma...