Sunday, September 6, 2009

Grocery price wars, simply a failed tactic!

In a whirlwind of excitement old media has been pumping story after story of Southern California grocery stores in a fierce battle for the consumer and as a last resort CUTTING PRICES up to 30%! No one that is serious about the food industry thinks this price war is about the consumer. The price war is simply a smoke screen tactic to hide the fact that the grocery sector has not kept pace with the consumer. The consumer has demanded ready-to-eat and ready-to-heat prepared food that is portable. The customer has simply moved on, just look at the empty isle in the center store. Where are they getting food? Simple, restaurants, convenience stores and in many cases in the limited prepared food sections of their own stores, there are over 400,000 more restaurants than grocery stores.
On a recent visit to a traditional grocery store I asked two 35 years olds to walk along side the 60ft cold meat case with me. I asked them to point out the cuts of meat that they like and have cooked. OK, here is the answer 3 for one 5 for the other but that included hot dogs and polish sausage?
Senior managers in some retail food sectors have failed to focus on how consumer eat or how they prepare meals today. The consumer is dynamic not static! It looks as if “good old boys” are running good old stores into the ground. The economy is saving them in the short turn. Strategy not tactics will save them in the long term. Rapid growth in the Grocerant niche is going to force major adjustments in how many of the middle of the road grocery stores do business. One only needs to look at Arizona where youthful focused new small footprint operators are attracting new customers from those who use legacy metric’s like basket size as measure of success. Consumers are setting the standards we are simply reading the clues.

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