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Are grocery stores doomed?
That’s what a recent Forbes headline asked, heralding an article on a new study by King Retail Solutions and the University of Arizona’s Terry J. Lundgren Center for Retailing that says 96 percent of shoppers will be buying their groceries from places other than grocery stores this year.
The survey of more than 1,200 shoppers found that more than three-quarters of respondents — including Millennials, Gen Xers and Baby Boomers — bought groceries from a nontraditional grocer (like Target, Walmart, or drug, dollar or c-stores) in 2013. Additionally, the study indicated that the wealthier the shopper, the more likely he or she is to buy food from a nontraditional grocer.
Why? Price and convenience, the study found, noting that respondents ranked quality third. Additionally — and this came as a huge shock to me — respondents ranked Walmart and Target ahead of grocery chains as their favored stores to buy prepared restaurant-quality meals.
While the channel leakage comes as no surprise, I can’t imagine Walmart outdoing Wegmans, or Whole Foods or Hy-Vee or Mariano’s, when it comes to prepared foods.
Be that as it may, the study confirms something that should be no secret to any progressive grocer: The competition for the consumer’s grocery dollar isn’t going to ease up anytime soon. In fact, it’s going to get more intense, especially with e-tailing in the mix. So grocers can’t afford to let their guards down in the race for relevance in today’s grocery market.
In light of Forbes’ doom and gloom, it’s a wonder that grocers have such a rosy outlook for the state of the industry – but there’s little reason that they shouldn’t, given the improvements and innovations that such competition has compelled the supermarket channel to make to preserve its share of the nation’s food dollar.
As we demonstrate in our 81th Annual Report of the Grocery Industry, starting on page 21, grocery retailers are more optimistic about 2014 than they’ve been about the coming year for the past decade, despite an economic recovery that continues to prove sluggish.
Overall, retailers’ optimism is up more than four ticks on our 100-point scale, to nearly 72, a long way from the 50s recorded not so long ago, in the depths of the recession. Big chains and Southern retailers expressed somewhat above-average optimism.
Independent operators, meanwhile, are somewhat less optimistic. Such trepidation is justified, with large chains getting larger — like Albertsons’ acquisition of Safeway, announced since our last issue, and Kroger closing its deal to buy Harris Teeter earlier this year — and maximizing their efficiencies to deliver on price as shoppers continue to stretch their budgets. That leaves indies further leveraging core competencies like customer service, specialty departments and local products to build repeat sales.
“We’re generally optimistic,” Seth Stutzman, SVP of operations for Baton Rouge, La.-based Associated Grocers, tells PG in our annual report. “The independents out there are embracing the change, and they’re keeping their focus on moving forward. It’s exciting to be part of that. We continue to look for new ways to serve them, and that feeds our enthusiasm. We want fun things for the customer and [work on] interesting ways to interact with them.”
The full King Retail Solutions study is available at www.kingrs.com/news/filter/white-paper/study-traditional-retail-categories-are-blurring.
RIP: Carol Christison
The PG team sends its deepest condolences to the family, friends and industry colleagues of Carol Christison, longtime executive director of the International Dairy-Deli-Bakery Association, who passed away March 4. Last year, Christison celebrated 30 years at the helm of Madison, Wis.-based IDDBA, and her keynote speeches at the annual Dairy-Deli-Bake were always chock full of learned insights and good humor.
Her loss will certainly be felt when retailers convene for this year’s expo in Denver. We’ll focus more on Carol’s life and work as part of our
IDDBA show preview in next month’s issue.