Monday, May 21, 2012

Safeway, Kroger, Publix, and Marsh still stuck in the middle with an aging biz model

While customization and personalization are driving success with in retail foodservice today many legacy grocery retailers are avoiding business model updates in order to maintain strong relationships with Wall Street. Yet the dollar store sector continues rapid growth cherry picking item after item and eroding the core of legacy grocery store operator business models. Wawa is opening 100 new units in Florida over the next 3 years.  Each store will offer select CPG’s products combined with consumer interactive participatory fresh prepared food. 7 Eleven leads the C-store sector growth with 100% of the new units having fresh prepared food and 50% with no gas offered. Walgreens success with ready-2-eat and heat-N-eat fresh food provides another peek of the evolving retail food sector grocerant niche success too come.  

While many legacy grocery retailers continue to be stuck in the middle of the market; trapped in a quagmire of outdated category management techniques and sector evolution denial, can their future be bright? Most have been positing anemic sales at best. In 2010, for the first time, SNAP benefits appeared to have surpassed 10% of all grocery spending.  If you look at USDA’s two data series on aggregate food spending, SNAP now represents 10% to 17% of the food retail economy.  Unemployment is in decline, a year after a decline SNAP program falls as well.  What is going to happen to these industry legacy titans if they do not evolve with the consumer?  Clearly the dollar store sector with continue to rise, C-stores sector (currently the fastest growing US food sector) will continue its push into fresh prepared food and continue to garner consumer.  Many consumers will return to restaurants and that sector void 99.5% of SNAP billions a month in SNAP funding will rebound very well.  Where is the void going to show the most?  Clearly legacy grocery retailers.

Differentiation individualization customization via bundled meal components are driving the ongoing success in retail food sales today.  Trader Joe’s, Whole Foods, Walgreens, and Wawa all have incorporated interactive participatory fresh prepared food options. Foodservice Solutions® 5 P’s of food marketing: Product, Packaging, Placement, Portability and Price; continue playing a key role on how food is being sold, packaged and delivered.  When ready-2-eat and heat-N-eat fresh and prepared food is thrown into the mix, consumer frequency and customer loyalty both increase.  New retail food industry leaders are emerging are you one of them?

Since 1991 retail food consultancy Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche for more on Steven A. Johnson and Foodservice Solutions® Bing or Google Grocerants or visit, or Facebook/Steven Johnson

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