WHERE DO WE GO FROM HERE? It is a question every- one should ask himself or herself at least once a week, if not once a day.
For the supermarket industry, its leaders
should be thinking about coming up with
legitimate answers to that query all the
time, for preparing for
the future may be just
as important as working on the present.
Yes, Amazon is a force
to be reckoned with
as the mighty digital
player makes further
forays into the world
of supermarket retailing. Its decision to open
physical stores—well at
least a couple of them
for now—shows just
how difficult it has been for Amazon to
capture the consumer’s attention when it
comes to fruits, vegetables and meats.
Expect that to continue. Amazon sees
a good thing in the supermarket industry
and it will do all it can to gain more share
in the category. Most vulnerable will be the
bulky items like dog food, paper products
and even bottled water, where consum-
ers are eager to have someone deliver the
items to the front door instead of drag-
ging them through a parking lot to the
car. Amazon will make a play for other seg-
ments as well, and traditional retailers need
to respond with a marketing program that
explains and demonstrates to consumers
that they are a legitimate alternative.
Amazon is not the only threat to retail.
Everyone and his brother, from Walmart
and Target to CVS and convenience
stores, are selling groceries. Consumers
are quickly walking away from processed
products, thankfully in favor of fresh items.
Profits are dragging and demand, well
demand is fluctuating—there are headaches everywhere.
But perhaps the largest threat looms
from within, from the private equity com-
panies that have gobbled up so many of
the chains across the country. Let’s get it
right on the table—these financial compa-
nies are only interested in one thing and
that is making money.
At no time are they looking to develop
brands and services that will endear the
operation to the consumers they so badly
need and the suppliers who they have
longed partnered with. No, instead they
are looking for the short-term fix, one that
will simply guarantee a higher price for the
operation when they flip it in a year or two
to another private equity company.
The winner is Wall Street. The losers are
the consumers who do not have the same
services and the company employees
who lose their careers because some guy
behind a desk in some faraway city is playing banker in an industry he knows virtually nothing about.
The supermarket category has reached
a critical stage in its history. But, unlike
other retail segments, the paying public
still believes in this category and are eager
to make their weekly—or more often—
treks to the food store.
The job is getting harder, but there is no
reason why grocery stores cannot thrive, as
long as their owners understand the situation and are willing to invest in it.
FROM THE PUBLISHER
THE NEXT CHAPTER
Figuring out the future of the supermarket industry is much harder than simply looking into a crystal ball.
By Seth Mendelson
Seth Mendelson is publisher
and editorial director of Grocery
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