Supermarkets have to get back to the shoppers’ basic needs,
instead of just addressing their own operational goals
and requirements; and just mass selling to the marketplace.
This is especially important in the high margin perimeter
departments.

Engagement with consumers, grouping shoppers, and local neighborhood area requests and needs will start the frequent shopping
trips, and spill over to the total store’s departments.

In today’s world, there will always be some dual food outlet
shopping! The question is “can the supermarket serve the
meals, fresh meats, deli, beverage, bakery, etc. better than
the non grocery, retail meat, produce, and / or bakery shops in
the consumers’ neighborhoods?”

As one looks at the facts that…

1) More and more retail outlets of all sorts are carrying food
products, some a great deal of skus and some just certain
items or categories;
2) Growth of players like Wal-Mart, Aldi and Save-A-Lot
continues at a very fast pace; and
3) The rationalization of national chains continues to take place, reducing the number of supermarkets in certain parts of the country;

…it is no surprise that trips to conventional supermarkets are dropping.

While I am not sure the topline erosion in number of annual trips to the supermarket will level off soon, it does seem likely that, in some regions, progressive and innovative independents can, and will, take over some of these locations and focus on niche retailing. Other locations will simply go away leaving other existing players more healthy.

I wish I could be as optimistic as Al, but I think that the decline will continue for quite some time. There are very few supermarket operators that seem to understand what their problem is or how to solve it. The supermarkets close to us are pleasant places to shop and are convenient, but from there the list of attributes goes downhill quickly. It’s hard enough to be willing to pay the surcharge in price compared to Costco or Sam’s, but when the varieties are also lacking in some categories… My wife went to purchase an over-the counter name brand cold and sinus medication at our nearby Jewel and they don’t carry it. So, she had to go to Walgreens and Jewel lost a sale and customer for the day. Another day she went to buy her favorite olive oil and, guess what? Jewel doesn’t carry it. So she went to Whole Foods and Jewel lost another sale and customer for a day. (She bought meat and produce while she was there because it was… Read more »

Supermarkets still have the highest household penetration. What they’re losing, primarily, is number of shopper visits. So people are still going to supers, they’re just doing more ancillary shopping elsewhere. As long as consumers are in their stores, the opportunity exists to recapture them.

The outlets that are eating their lunch are those offering the best price/value option. Meat, for example, is not cheap at Costco, it’s just a little cheaper and, generally, higher quality. Trader Joe’s is making a fortune selling high-end items: cashews, olive oil, rice vinegar, prepared foods. So it’s not just that people are watching their dollars, they’re also looking for indulgence foods and the highest quality at the best price.

If and when supers stop focusing on simply offering the lowest price and concentrate on the price/value relationship, and learn to promote it effectively in-store, they’ll begin to win their customers back.

What you are looking at is a demographic shift. Our population is getting older and “at home” food preparation is declining as people age and households become smaller. The two person household, in many cases, is better off eating out or ordering out than buying ingredients at the grocery store and preparing a meal. If my wife and I can order out and eat a first class steak dinner with two sides and bread for under $15.00 or Chinese for under $10 or Mexican for under $9.00 – well you get the picture! The grocers should do a better job of offering meal replacement but my experience has been that, while some are very good, they are often MORE expensive that the restaurant’s take out and the grocers sides are usually lousy. The grocery buck isn’t being absorbed by other “retail locations.” It is being “out valued” by the traditional restaurant’s NEW “take out” service.

Well, if we’re talking about the future of conventional full-line supermarkets, I would agree that average frequency of customer visits will continue to decline in the sector. I disagree, however, that a desire for one-stop shopping is a primary reason. On the contrary, I hypothesize that shoppers are dividing their purchase behavior a little differently, according to the “Trading Up; Trading Down” scenario of the recent book from Accenture. I think many families are buying heavily consumed commodity and packaged items at best unit cost during visits to EDLP outlets like Wal-Mart, Costco and Aldi. This saves them money, but also limits brand choice and other variety. To compensate, they spend some of the saved dollars at specialty food retailers, like Trader Joe’s, Whole Foods, Sunflower Markets, etc. The conventional supermarket becomes relegated to a fill-in role, where produce and meats may be purchased in smaller quantities, and milk is available in quantities smaller than 55-gallon drums. Importantly, supermarkets also offer lots of prepared food options, which can solve the what’s for dinner problem a… Read more »

Having just returned from the National Grocer’s annual convention, which had the greatest number of attendees in its history, there is a lot of energy building around some regional and community-based operators. With older consumers’ preference for smaller stores, the new importance that CPG companies are placing on retailers other than the top 5 or 10, and a better attitude among supermarket operators, I look for the decline in trips to level off at some point in the next few years. If supermarketers focus on being competitively priced on the top 500 SKU’s, providing superior customer service, and offering tasty, convenient, easy-to-prepare meals, they should do fine.

A lot depends on how you define a supermarket. I think, as the numbers of conventional supermarkets decline, so will their market share. Winn-Dixie will most likely not be around much longer. Albertsons and Safeway will need to make some hard decisions soon on leaving areas where they have lost all chance of recovery. The number of chain store closings in the next couple of years could be well into the thousands. Perhaps half of them can be acquired and continue to be operated as supermarkets. Wal-Mart isn’t slowing down. Neither is Aldi or Save-A-Lot. Marcs in Ohio keeps growing – is it a drugstore or a supermarket? Natural and organic food stores are in a huge expansion process all over the country. Costco and Sam’s Club keeps expanding. What should the conventional supermarkets do? Evolve and change with the consumers’ needs…just as Publix, HEB, and Wegmans have done. Otherwise you will have to go into the real estate business like Kmart.

Todd’s research is first-rate, and it behooves everybody to become familiar with it. The biggest drain on supers has been supercenters, which are continuing to roll out. The supercenters are well-run, low-price and huge. Not for everybody, but key to a very large non-upscale (remember them?) segment. I don’t see supers, as we generally know them, regaining share in this decade. Niche independents, if well-run, can obviously survive. But with the significant expansion from Wal-Mart, Costco and Whole Foods, to name just three, supers won’t be able to hang onto the share or shopping trips that they have now, let alone retrench.

Yes, supermarkets’ share of shopping visits will continue to decline. That is, of course, if we continue to define supermarkets in the same old way (in agreement with David Livingston).

7-Eleven was born as an ice house, selling blocks of ice that were delivered to homes to chill their iceboxes. Times changed. Ice houses no longer exist, but 7-Eleven does.

“Purveyors of food” take many forms. Supermarkets have the locations, expertise, and investment capital to continue to be successful food purveyors even if they cease to be conventional supermarkets.

What’s critical, however, is the fountain of cash provided by CPG manufacturers to carry and feature their brands. Today’s supermarkets profit mostly by trafficking multitudes of shoppers in front of miles of shelving and billing CPGs for the privilege of being there. If that dynamic ceases to exist as the outlets for CPGs become more diverse and fragmented, food purveyors will eventually have to learn to survive by selling stuff to shoppers.

My prediction is that, nationwide, the major supermarkets will continue to lose share as they continue to lose contact with the customer. Too often they are focused on the competition, not the target of that competition. My wife and I avoid the supermarket, except for those items which we can’t get at the local neighborhood independent or Trader Joe’s. I shop daily for our food. For me, it is a convenience not to think about what we are having for dinner too far in advance. When I go to the neighborhood foodie, I get in and get out quick and I like the idea that they still hire local high school kids to bag groceries. Remember that? At my local Ralphs, several times when I’ve gone there the manager is manning the checkout. This is either because he is short on staff, or because he wants to connect with the customers. Unfortunately, as it has happened, he is either so busy answering phone calls, other clerks questions, or directing the bag stuffers, that he can’t… Read more »

I agree that the trip frequency will level off at some point but how low will it go? Yes, the competition is increasing and retailers have been attempting to create strategies to combat Wal-Mart and warehouse clubs.

But giants such as Safeway, Kroger and Albertsons have yet to notice the damage they are causing on their own. By forcing “store brands” on consumers while eliminating long term popular brands (a similar situation to what Art mentioned), they are forcing consumers to go elsewhere for these products. I don’t know if it’s ego, or a [territorial] contest between them, but they better start considering more what consumers want or that bar will drop really low before it settles.