A decade ago, Walmart (WMT) became the nation's largest grocer. Along the way, 25 of the 29 supermarket chains that existed during that time went bankrupt. Then, the company set its sights on food's "big three" -- Kroger (KR), Supervalu (SVU), and Safeway (SWY). It undercut these competitors with lower prices in a way that couldn't be matched.
Now, to prevent a Walmart monopoly, the grocery store industry is shrewdly transforming itself into a three-tiered hierarchy. It's not a surefire strategy -- but it may be its best chance for survival.
Of course, it also means the way you're used to shopping for food could look drastically different in just a few years.
Organizing Along Class Lines
In the new order of food-buying, the wealthy, the middle class, and the poor will all have their respective shopping destination. These locations will be divided based on quality, value, and convenience -- and it's organized sort of like a pyramid.
Higher-end shopping: At the top of this food-buying pyramid are stores like Whole Foods Market (WFM), which focus on premium, high-margin, natural and organic products.
The nutritional quality of the food is high, and this is reflected in the higher price points. Their stores are also concentrated in urban settings, making it available (and affordable) to the highest of earners in these locales. In fact, the average domestic Whole Foods store is in a zip code with a median household income of $76,903 -- nearly 50 percent higher than the national median household income.
Middle-of-the-road shopping: At the large middle of this food-buying pyramid are rapidly growing chains like Trader Joe's and Aldi's. (An interesting aside: These two chains were founded by brothers who ultimately went their separate ways over the decision of whether or not to sell cigarettes.)
At these stores there are deals on fresh produce (usually pre-bagged, %VIRTUAL-article-sponsoredlinks%to increase checkout speed and reduce waste). But most of the deals are in the centers of the stores, with processed foods.
These stores also employ savvy operational tactics to keep costs lower than your traditional grocery store. Trader Joe's primarily relies on private-label food to keep costs low. Aldi's, on the other hand, sells a small selection of products (97 percent less than the typical grocery store) that have high turnover (meaning they're not sitting on the shelf for months, left to expire). Aldi's also staffs a small number of employees at a time (three to four per shift, according to one source), also to keep operational costs to a bare minimum. Both of these strategies enable Trader Joe's and Aldi's to pass along the savings to their customers.
Lower-end shopping: Lastly, at the bottom of the food-buying pyramid is the growing trend of convenience-store food-buying.
The goal of companies in this realm is to take advantage of last-minute meal shopping when the wallet is already out. Food companies like Tyson Foods (TSN) and Hormel Foods (HRL) are trying to get customers popping into a store like 7-Eleven on their way home from work (to fill up on gas -- or to buy a few liters of soda) to add their dinner to that swift purchase.
Convenience stores are already experimenting with these ready-to-eat or microwavable dishes. The food choices aren't necessarily what you'd think -- it's more appetizing than a hot dog that's been spinning all day. We're talking about food an exhausted working mother would be happy to bring home to her children. As described by a recent Bloomberg Businessweek article, "think chicken nuggets or ... flatbread ham sandwich."
These moves are all to catch the tailwinds of the growth in convenience-store spending: From 2008 through 2013, convenience-store sales grew 5.2 percent per year, according to IBISWorld. Grocery stores, meanwhile, saw sales drop 0.4 percent annually.
What It Means for Shoppers
Of course, these changes aren't going to happen overnight. They might not even happen at all (after all, the nutritional quality of food gets worse as you move down the food-buying pyramid -- something politicians will eventually take notice of).
But unless you're buying your food directly from a farmer, you will see big changes in the way you buy food. And, if the changes currently taking shape (as a way to combat Walmart's encroaching into the grocery industry) come to pass, it will ultimately mean much lower prices.
Motley Fool contributor Adam Wiederman has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Whole Foods Market. John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.
10 Foods You'll Have to Give Up to Avoid Eating GMOs
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Pre-made soups can contain a large number of ingredients containing GMOs. For instance, Campbell's (CPB) popular condensed Tomato Soup lists high fructose corn syrup as its second biggest ingredient. According to the Non-GMO Project, nearly 88 percent of all corn planted in the United States is GMO.
It doesn't stop at HFCS, though. Take the company's Cream of Mushroom soup, which lists vegetable oil as its third ingredient. It specifically says the oil does come not only from corn, but from cottonseed, canola, and/or soybeans. However, in America, says the Non-GMO Project, 90 percent of cottonseed, 90 percent of rapeseed (the source of canola), and 94 percent of soybeans are GMOs.
Frozen foods are often sweetened with HFCS, according to IRT. And even if HFCS isn't on the ingredient list, the presence of non-cane sugar likely means GMOs are included. Sugar beets provide half of all consumable sugar in America, and 95 percent of those sugar beets are grown using GM seeds, according to the Non-GMO Project.
Many parents might be surprised to find out they've been feeding their infants GMOs. Both milk and soy products regularly show up the ingredient list for baby foods. In America, according to the Non-GMO Project, 94 percent of all soy is GM. Meanwhile, 88 percent of the corn fed to cows contains GMOs, meaning that such organisms are part of the food chain that ends with milk being produced and fed to infants.
If you didn't expect juice to make this list, that probably means you know a little something about GMOs: The Hawaiian papaya is the only genetically modified fruit readily available to average American consumers. The vast majority of fruits are don't have GMO variants in the marketplace. But in order to entice kids to drink more juice, many companies add HFCS or non-cane sugar. For instance, Minute Maid -- owned by Coca-Cola (KO) -- offers a 20-ounce bottle of fruit punch that has HFCS as the second largest ingredient and contains 71 grams of sugar.
The chances are fairly slim that you'd encounter GMOs when dealing strictly with grains (other than corn) in their natural grainy state. But when you're eating cereals, especially those made for children, there's much more than just grains in your bowl. General Mills' (GIS) Honey Nut Cheerios -- America's top-selling brand -- has sugar and corn starch listed as two of the top three ingredients -- both likely to contain GMOs.
Vegetable oil can be made from several different plants. Some of the most popular are corn, soy, and cottonseed. All three of these crops -- when sourced from the United States -- have a greater than 88 percent chance of being GMOs, according to the Non-GMO Project. Canola oil's parent plant -- the unfortunately named rapeseed -- is also highly likely to be a GMO, as 90 percent of all rapeseed plants from the United States come from GM seeds.
It's a favorite of vegetarians, vegans and other healthy-eating enthusiasts for its high protein content, but the main ingredient in tofu is soy milk, and the vast majority of soybeans from America -- 94 percent -- are GMOs.
We aren't at the point yet where scientists have begun to genetically modify livestock the same way that they have with plants. (Though there was a now-defunct GMO experiment involving pigs dubbed the Enviropig.) But as the saying goes, "You are what you eat." If we take that to heart, then we might view most livestock as simply large GMO consolidators. The main ingredient in the diet of many forms of livestock is corn feed, which usually contains GMO varieties.
Until agribusinesses start genetically modifying the cows, it might feel like a stretch to think of their milk as a GMO product. But since GMO corn feed is the main source of nutrition for dairy cows, consumers should know that GMOs are dominant in the food chain that eventually ends with the milk in your refrigerator, the IRT says.
No type of food is more likely to introduce GMOs into your system than soda. Though our soda consumption has declined, it's still the fourth most popular type of food/drink in the United States. These drinks are pumped full of sugar or -- far more often -- HFCS. And as you know by now, that means they're virtually guaranteed to contain GMO ingredients.
Of course, if any one of these products are marked "USDA Organic" or "Non-GMO," then you know for sure that GMOs aren't present. However, you usually have to pay a premium for such products. For instance, a gallon of standard whole milk runs around $3.29, but its organic counterpart can cost as much as $6.99.
In the end, it's up to each person to determine how important -- if at all -- avoiding GMOs is, and how much you are willing to spend to avoid them.