ECONOMICS REPORT - U.S. Supermarkets Face Growing Competition
By Mario Ritter

Broadcast: Friday, October 21, 2005

I'm Steve Ember with the VOA Special English Economics Report.

Supermarkets are big stores that provide a wide choice of foods and other products. In the United States, traditional supermarkets are facing competition from even bigger stores. They are also facing competition from stores with more choices of fresh, natural foods.

The first supermarkets opened in the nineteen thirties. New technologies for freezing and processing foods helped create goods that could be stored for a long time. Long-distance shipping meant that many different groceries could be kept in one big center.

Many supermarkets are chains, stores owned by one company. Price competition is fierce in the grocery industry. Most Americans still spend the most money at supermarkets. But traditional supermarkets have lost some of their business. Many people are changing where they buy groceries. They are also changing the kinds of groceries they want.

New competitors are winning business because they are even larger than supermarkets. And they have lower prices.

Wal-Mart Supercenters sell groceries as well as clothes, tools, electronic equipment and everything else. Costco membership stores are also known for low prices. Discount stores like Wal-Mart and Costco buy their goods in huge amounts and sell at prices that supermarkets usually cannot equal.

Competition has also come from stores, like Whole Foods Market, that sell natural foods. Prices for these goods are higher. Americans are concerned about prices. But many will pay more for organic foods. Organic producers must show that their products are free of added chemicals or drugs.

The market for organic foods is small but growing quickly. At the same time, traditional supermarkets have slowing growth. Some have had to cut jobs. One large chain in the Southeast, Winn-Dixie, sought protection from its creditors in February.

Yet supermarkets are changing too. Many have cut prices. And many are offering more fine foods and organic products.

Since two thousand, Americans have bought more organic food from supermarkets than from any other kind of store. Also, supermarkets are able to offer greater choices of similar products than might be found at their discount competitors.

This VOA Special English Economics Report was written by Mario Ritter.  I'm Steve Ember.