Tag Archives: Supermarket competition

Customers King at Kroeger?

A recent SupermarketNews article reported that Kroger has launched a new improvement initiative to accelerate changes in assortments and better customer service.

While Kroeger has been in the news lately for considering the sale of its convenience stores, the new  “Restock Kroger” improvement initiative seems to be the bigger story. It will involve “an accelerated and more data-driven effort around pricing, personalized communications with customers, and a revamp of product assortments,” the article said.

“We will change the way people eat in the U.S.,” said Rodney McMullen, chairman and CEO. “If you are eating, we want to serve you. Unless you are eating in a white tablecloth restaurant, we want to be able to provide that meal for you.”

Read the full article… 

A New Era in Food Retail?

While possibly making less of a splash than the Amazon-Whole Foods deal,  Lindl US opened a new store in Virginia Beach, VA, signifying the beginning of what many have termed a new era in food retail.

According to a SupermarketNews article, hundreds of shoppers were waiting in a line that circled the parking lot early Thursday morning waiting for Lidl US to open the doors.

The big splash and anticipated disruption to the industry may be based on a number of factors, two of which truly stand out:

  1. Lindl US is committed to offering the lowest prices. “We will beat the best prices in the market,” Brendan Proctor, CEO says.
  2. Lindl US is basing decisions on the voice-of-the-customer. “It’s not about whether our model works in a market,” Proctor said during an interview. “It’s about what we have to do to adapt to the market.”

As they say, time will tell…

Supermarkets Enhance the Shopping Experience via Partnering

SupermarketNews recently reported that Publix Super Markets will be testing Starbucks cafes in select stores in an effort to enhance its shopping experience.

According to the article, the Lakeland, Fla.-based retailer said that stores in Tampa and Winter Park, Fla., and in Winston-Salem, N.C., will be adding Starbucks cafes shortly.

Of course co-located branded coffee stations have been common in supermarkets for more than a decade. Other “strategic partnerships” or co-location partnerships geared toward providing shoppers with added convenience include Citizens in-store branch banks at many of our local Hannaford Supermarkets, numerous Dunkin’ Donuts stores within convenience stores, and in-store Rite-Aid pharmacies at many Shaw’s Supermarkets.

All of which represent the continuing trend on the part of supermarket chains to put additional focus on customer service and the shopping experience as they strive to maintain competitive positions.

Possibly you might like to share additional examples?

Different Supermarkets Differentiate in “Different” Ways!

In a retail SuperMarketNews article, author Bill Bishop shared his take-away from a super-session at Expo East, a natural product convention that took place in Baltimore, where he heard several natural food market operators describe how they were winning by the way they set their stores apart from the competition.

“Differentiation was what made them successful,” Bishop said. But it was more the unique way in which they stood apart from competitors that resulted in greater success.

Among the top methods of differentiation implemented by these retailers:

  • They set themselves apart from the competition with their passion for serving their community: They believe in a set of values that resonates with their shoppers. They also worked hard to be sure that their prices are competitive on key items, but beyond that, pricing was secondary.
  • They differentiate on both an “executional” and cultural level:
    • Executionally, these retailers differentiated on the basis of product selection. The assortment projected and supported their values (i.e., clean eating through non-GMO, organic, etc.). 
    • Culturally, the differentiation came alive in how they and their associates lived out the store’s values — “we’re in business to serve” was the clear message.

Standing out by “serving customers” in a unique way sounds like a “sound” plan to me… what do you think?

Convenience Stores Selling More Food!

A recent article posted on kdmpop.com,  the order in which convenience stores (C-stores) rank in the “food chain” is evolving.

The article points out that most Baby Boomers, and those before them, wouldn’t have dreamed of buying food from a gas station when they were young.

Apparently the younger population doesn’t necessarily have that same, negative impression about gas station food. In fact, C-stores have improved their food service options and are succeeding at stealing share from both quick-serve restaurants (QSRs) and small format grocery stores with offers like ”Meal Deals”, “Grab n Go” and “Made to Order” options.

An article in USA Today emphasized that Gen Y consumers are big fans of C-store food not only because of the convenience factor but also because of its affordability and improved quality.

The rise has been steady… convenience stores accounted for 11% of Millennial food and beverage visits in 2014, compared to 7.7% in 2006.

The question is, what can supermarkets do to promote more customer loyalty and to recapture this business?

Read the full article…

 

Convenience and External Factors Create Added Competition for Supermarkets

As many retailers will attest, external factors often create new forms of competition, which might well be the case for supermarkets in 2015.

According to a recent CSP Net article, more than 80% of convenience store retailers said they were optimistic about business prospects for first-quarter 2015, and 58% see a chance to expand foodservice sales in 2015.

The top reason? The decline in gasoline prices during the second half of 2014, falling to more than $1.00 per gallon below year-ago prices.

According to 62% of convenience store retailers, consumers were spending their savings from lower gas prices in the store. And 73% said they enjoyed higher merchandise sales in 2014 compared to the year prior, and 88% of retailers said that prepared foods would be an important offer for 2015.

“Foodservice fits the immediate consumption and time-starved needs of our consumers,” said Sonja Hubbard, CEO of E-Z Mart, Texarkana, Texas. “It is an obvious fit, as long as it is a quality offer.”

“Consumers are looking for quick, fresh and easy snacks or meals that can be consumed on the run,” said Julie Jackson, general manager and senior vice president at G&M Oil, Huntington Beach, Calif. And Tim Switzer, COO and executive vice president at Radiant Food Stores, Tampa, Fla, described prepared food as “our industry’s future.”

Produce also has a lot of interest from convenience store retailers, who acknowledge its appeal and challenge; 61% of retailers cited produce as an important offer for 2015. “The trend is for fresh and better-for-you products,” said Giselle Eastlack, general manager of Diaz Market, Metairie, La.

So as the battle for food shoppers rages on, supermarkets are impacted by a variety of shifts in shopping trends. All the more reason, I’d say, to delight customers and promote loyalty through exceptional customer service and engagement.

Supermarkets Engaging Their Communities…

Recent research indicates that in addition to engaging employees and customers, many successful organizations have taken the concept a step further as they attempt to engage their communities.

Two supermarket chains that are doing exactly that are Delhaize America and Hannaford.

Delhaize America has committed to donating — and in some cases packaging and distributing — 500,000 meals to area food banks by the close of 2020 under its Food Lion Feeds program.  The program is geared to help families or individuals in the community who either struggle with hunger or may become food insecure, which has been defined as “they might have food for the first part of the week but as they enter the second part they may struggle with putting food on the table…”

Food Lion has also partnered with Electrolux and Crisis Ministries in the Charlotte, NC area to help give needy families the perfect holiday fest: a $50 Food Lion gift card, a new oven range and a slow cooker.

In a similar effort toward engaging their community in Albany, NY, Hannaford has opened a community wellness center that offers group exercise, weight management programs and personal training. The 5,277-square-foot “Healthy Living Center,” located inside a Hannaford supermarket, is the result of a partnership between the Hannaford, the Capital District YMCA and health insurer CDPHP.

Along with fitness, the center offers programs that address specific health needs, such as Pedaling for Parkinson’s and diabetes prevention.

These represent two excellent examples of community engagement, which seems even more relevant during this time of year.

Possibly one of your local supermarkets has become involved in a similar community engagement effort?

Why Move Into the Grocery Business?

A recent article in The Guardian asks the question, “Why would Amazon want to move into the grocery business”?

People who watch the Amazon model at work know that to Amazon, volume is king. And with a $1 Trillion food market in the USA, how could Amazon not play? But with the infrastructure that needs to be built, the high level of customer expectations, the inherent problems with perishable items, can Amazon work their magic? Or, as the story suggests, is Amazon using its learning for a bigger purpose — one that is in keeping with the rest of their business?

“Skepticism about AmazonFresh’s viability has fuelled speculation that its real purpose is not, in fact, to turn the company into a mega-grocer but to cement customer loyalty and to test-run speedier delivery, honing Amazon’s edge in other areas.”

We know that Amazon tested the AmazonFresh concept for almost 5 years in Seattle before rolling it out to Los Angeles, San Francisco and, most recently to San Diego. Whether or not they succeed in these (and more) markets, AmazonFresh will disrupt all of the markets they play in. We will need to wait to see how that plays out….

Comment…

HEB Announces On-line Shopping Plans

A recent article in the San Antonio Business Journal announced that HEB, the $18 Billion supermarket chain headquartered in San Antonio, expects to announce an online sales operation later this year.

No other details were announced but Bob McCullough, Senior VP of Manufacturing, did offer this, “It will be a world-class offering you’ll be very excited about.” 

More and more chains are exploring online sales.  A decade or more years ago, many supermarkets tried to develop online ordering, shopping, and delivery, but most were either not commercially viable or could not offer reliable service.

But the world has changed — systems are better and more innovative, costs are better controlled, and customers are interested in saving time and are more willing to pay for the service.  But, the competition is stiff in selected markets — Amazon Fresh has entered several markets on the west coast and Chicago and Google Express in San Francisco, West LA and Manhattan. 

If HEB does in online sales what it has done successfully in so many other parts of their business, Amazon Fresh and Google Express will probably not enter the Texas market any time soon!

Food Shopping Decisions: Price v. Convenience

In an earlier post we noted that San Francisco based Instacart had begun providing grocery delivery to customers in the Chicago area.  With Instacart, customers can place orders from a “catalog” of thousands of items and from a variety of stores including traditional supermarkets, Trader Joe’s, and Costco and receive same day delivery.

In fact, for an increased fee, Instacart offers 1 or 2 hour service.
In the Los Angeles and San Francisco markets, Instacart competes directly with AmazonFresh, Amazon’s home delivery service for grocery and other like items.  Amazon tested its model for almost five years in Seattle before bringing it to California.

Everyone who knows Amazon knows that they have historically competed on price.  But a recent article in Supermarket News found that in the Los Angeles market, AmazonFresh is not the low cost provider, as WalMart to Go and Instacart are both less expensive than Amazon!

Combine that with the annual $299 fee for AmazonFresh (an Amazon Prime membership is included) and it’s unclear to most Amazon watchers what Amazon will do next to compete.  For now, they say they are competing on convenience and time saving.

Is that a workable model? It certainly sounds as though Instacart with lower prices (and no annual fee), is pretty convenient too!