Are Grocery Stores Big Money’s Big Mistake

Did big money do what it has always done that is drink out of the cup of compliancy? Today food consumers are eating out at restaurants less they are also cooking from scratch less at home than ever before.  According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® consumers are migrating to Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared meal components at an accelerated rate.

According to commercial real-estate firm CoStar Group “Commercial square footage of retail food space per capita last year set a record, with 4.15 square feet of food retail per person.” That is nearly 30 times the amount of space allocated to groceries at major chains in 1950.

The simple fact is consumers are buying meals and food for takeout today at companies the ilk of IKEA, Eveytable, EatFitGo, Snap Kitchen, Boston Market, Wawa, Sheetz, and Dollar General.  Never before in America has so much retail square footage been devoted to selling food simply put there is just too much.

A massive build-out by retailers has left the country piled up with grocery shelves as consumers are shifting from big weekly shopping trips to more snacking and to-go meals. The mismatch has flattened retail sales and leaves the industry vulnerable to a wave of closures that some executives, bankers and industry experts think is coming soon.

While shopper loyalty to conventional grocery store chains lifted same-store sales for food retailers by at least 3% annually since 2013, that metric was flat in 2016 and is projected to remain static this year as competition grows, according to FactSet. “There’s only so much food we can buy,” said Suzanne Mulvee, director of research for CoStar.

European fresh food grocery retailers Aldi and Lidl are vying for U.S. market share, investing over $4.5 Billion combined in the US market over the next three years according to the team at Foodservice Solutions®. That will increase the retail footprint while elevating competition for share of stomach in all retail channels.

Change is in the air it is reported that Kroger, the nation’s largest traditional supermarket chain by stores and sales, is reducing its new-store openings this year to 55 from 100, a nearly billion-dollar drop in capital expenditures, and its chief financial officer, Michael Schlotman. All the while non-traditional meal and meal component grocerant niche retailers the ilk of Snap Kitchen, EatFitGo, Everytable just keep opening new units and expanding their reach.

Wal-Mart Stores has no other move but reposition to the middle of the grocery price range according to the team at Foodservice Solutions® as it plans additional cuts at will build 55 supercenters and smaller-format stores in its 2018 fiscal year, down from the 132 it opened in the 12-month period ending in January.

With drug stores ability to drive incremental food sales one has to question if the corner grocery store will become a drug store, as today food, beverages and other consumables account for about a third of transactions at drug stores nationwide.

Many legacy chain restaurants will continue to close units as will legacy grocery store chains and according to the team at Foodservice Solutions®.  Consumers will continue to migrate to new non-traditional points of fresh food distribution.  Is your company evolving fast enough?  Are you putting money into food retail that looks more like yesterday than tomorrow?

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how www.FoodserviceSolutions.us can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information.