Here's the Difference Between a Supermarket and a Grocery Store — and What That Means for Your Budget

If you consistently shop for food at one place, you probably don't have to think twice about where to find the goods on your grocery list. Whether it's a neighborhood Walmart or a warehouse chain like Costco, you know the store and its selection well.

But here's a question that may stump you: is it a grocery store or is it a supermarket? The two terms may seem interchangeable, but they actually refer to different kinds of retailers. Here's the distinction and why savvy shoppers should take note.

The First Grocery Stores and Supermarkets

The way people shop for food has changed again and again over the past 100 years. Early grocery stores differed from the butcher shops and bakeries of the time by selling a greater variety of goods. Like butchers and bakers, however, grocers interacted with shoppers from behind a counter. Customers gave grocers their shopping lists, and grocers retrieved the items for them. In 1916, the first self-service grocery store opened (Piggly Wiggly in Memphis, Tenn.) and set the precedent for other markets.

In the 1920s, two grocery chains in southern California opened stores that were about 10 times the size of the average grocery store, introducing the term "super market" to the American vocabulary, says The Oxford Companion to American Food and Drink. Many grocery stores across the United States had, in fact, expanded into chains by then, contributing to a decline in small, independent grocers. And by the mid-1930s, many chains had even shut down their smaller stores to open larger stores — that is, supermarkets.

Grocery Stores vs. Supermarkets Today

Today, grocery stores specialize in food and drinks but sell a small selection of household products, as well. While food and drinks remain central to supermarkets, these stores devote more shelf space to other items than grocery stores. Supermarkets offer more household products, plus personal care products, cookware, and small kitchen appliances.

Other markers of supermarkets include departments for clothing, home decor, gardening supplies, and entertainment. Likewise, you are unlikely to find a pharmacy or a bank inside a grocery store.

Larger inventories require larger spaces, so you could say size still factors into the difference between grocery stores and supermarkets. On the whole, however, it's more about selection.

Which Is Better for Your Budget?

When it comes to budgeting, you want to consider a handful of factors — but whether you opt for a grocery store versus a supermarket isn't one of them. In other words, both kinds of stores vary too much to make generalizations about which type costs more or less.

For example, grocery stores like Aldi and Lidl cost less on average than supermarkets like Walmart and Costco, while other grocery stores, including Trader Joe's, cost more than these popular supermarkets, according to the 2021 grocery edition of the Dunnhumby Retailer Preference Index (RPI).

The bottom line: Don't bank on a better deal from a retailer simply because it's a supermarket or grocery store. Shop at the retailers that best fit your needs, and refer to our other budgeting strategies to save big bucks.