An Identity Crisis for Supermarkets – New York Times

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by: David Polinchock

This is the front page article in the NY Times business section today and it speaks volumes to our experience conversation.

Georgiana Gardiner has no use for conventional supermarkets. When Ms. Gardiner, who lives in a Denver suburb, wants fresh fish, meats, produce, and other perishables, she drives 25 minutes to the nearest Whole Foods Market. When she needs products like canned beans, pasta and paper towels, she stops at a Wal-Mart Supercenter, which has a full grocery store.

It has been at least a year, she said, since she entered a Safeway or Kroger, the two national supermarket chains that operate in the Denver area.

"Once you go to start eating organic foods, you can't go back," said Ms. Gardiner, 61. Whole Foods may be "more expensive, but it's worth it," she added. "Anyway, I make up some of the difference at Wal-Mart."

Ms. Gardiner and a growing number of shoppers like her are the supermarket industry's worst nightmare. Faced with a seemingly endless array of food shopping choices, consumers are increasingly shunning the neighborhood supermarket and going to Wal-Mart, Costco or other discounters for rock-bottom prices or to places like Whole Foods and Wild Oats for specialized quality and service.

Traditional supermarkets, caught in the middle, are struggling to survive. And the pressures on them may only intensify: Wal-Mart and Whole Foods have ambitious expansion plans, and Target says it wants to become a big player, too. 

And look at what Robin Jognson from Food Lion has to say about the grocery industry as a whole. Yes, it is amazing that it has taken so long for grocery stores to understand this change. We're wondering how long it will take for the other retail categories to start to realize this?

"Food Lion, a 1,220-store chain owned by the Delhaize Group of Brussels, is making changes. Robin Johnson, director for marketing and brand development at Food Lion, said that when her team started working on a new store concept called Bloom three years ago, they took a red pen to every aspect of supermarket design.

"For the past several decades, stores have been run in a way that benefits the store and the company's bottom line," Ms. Johnson said.

By contrast, she said, the new store concept "was born from what the customer wants: to take the hassle out of grocery shopping.

"Bloom stores – there are now five, all in North Carolina – feature a quick-stop area in front for shoppers who just want eggs and milk or something for dinner. Traditionally, supermarkets have placed such high-volume items at the back of the store in hopes that the journey may inspire other purchases.

"Why have we played these games with customers?" Ms. Johnson asked. 

 The new stores also have wider aisles, lower shelves and no candy at the checkout aisles, to cut down on temptations for children. Ice cream is at the front so it is less likely to melt before reaching home. 

Ms. Johnson and her team have also banned promotional displays from the aisles, saying that they generate nice fees from vendors, but clog cart traffic. "Taking them out is a scary thing for a retailer to do," she said, "because it's revenue and they're designed to drive impulse sales."

Christina Minardi, head of the New York-New Jersey-Connecticut region for Whole Foods, said she doubted large chains would be able to replicate the appeal of her company's stores. "It's a lot more than paint and new lighting," she said. "We have developed a whole culture here."

Indeed, despite their efforts, many analysts expect supermarkets to continue to lose out to their competitors. Darrell Rigby, who leads the retail consulting team at Bain & Company, said some chains, probably smaller ones, will either go out of business or be acquired.

Nick McCoy, a senior consultant at Retail Forward, said, "Supermarkets have got to offer a compelling reason for people to go there." 

For us, it's not just supermarkets that need a compelling experience. Everyone should be looking at compelling reasons for people to go to their retail location. And don't think about it from your POV. You need to be creating experiences that fulfill the consumers needs, not yours. And you need to decide what your story is all about — rock-bottom prices or specialized quality and service. This is the time to take stock and take a stand. Even if it's scary and means that you need to change the way you've been doing things in the past.

Link: An Identity Crisis for Supermarkets – New York Times.

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