Supply chain disruptions and food-price inflation have put economic pressure on grocery stores already operating at thin 1% to 3% profit margins. US grocery stores and supermarkets, which are largely local and regional, have less purchasing power than the national chains in the UK and continental Europe. Stateside supermarkets also offer bagging and other services not standard in Europe, an additional cost.
Food retailers employ more than 8.5 million people in the US and European Union, but employee turnover is high amid competition from other service industries, increasing hiring costs. Supply chain disruptions still common in the industry have forced grocers to shift from acquiring goods just in time to keeping more inventory on hand, which increases inventory costs. The UK's shortage of fresh fruit and vegetables is one ramification of rising energy prices affecting growers’ greenhouses.
Different income classes have different spending priorities. For example, 52% of low-income consumers in Europe said they’re looking for ways to save money on grocery shopping, according to a 2022 McKinsey report. On the other hand, 34% of high-income consumers surveyed said they’re focusing on healthy eating and nutrition, a choice that isn’t always synonymous with the lowest prices.