Traditional Grocery Stores Buying Growth is Yesterday’s Strategy

Have you noticed that private equity and legacy grocery stores are buying up legacy grocery stores in order to show year over year growth?  You know the one’s I don’t need to point them out.  Industry insiders continue to say that buying growth does not drive customer relevance, drive year over year same store sales, or garner brand excitement particularly when they leave the legacy name on the building.

So why do they do it?  It all goes back to legacy metric’s that were once relevant on Wall Street.  The financial analysts that call the team at Foodservice Solutions® have been looking to the future and shying from the past.  So what are some of the underlying currents driving a new view?

1.       Traditional grocery retailers continue to capitulate market share to non-traditional channels including grocerant niche retailers. Think about this number: Traditional grocery stores commanded 46% of grocery and consumable product sales in 2015, compared to 90% in 1988. That’s very close to 2% a year.  Do you want to keep doing what you are doing?

2.       Mobile ordering, online ordering is the fastest growing retail grocery channel.  The IDDBA projects it will grow 23.1% by 2020.  How many BIG FOOTPRINT stores do you need?

3.       The second fastest growing grocery channel is grocerant niche Fresh currently at 8.6% of the grocery business but that number does not include concepts the ilk of EveryTable

4.       Dollar stores are adding fresh food and fresh prepared food traditional grocery stores have done nothing but turn a blind eye to them and continue too.  I know you have say you have but the growth numbers don’t lie.  Traditional grocery stores you are still growing slower.

5.       There are 25 Restaurants for everyone grocery store in the U.S.  and 70% of consumers say there food preferences are driven primarily by what they encounter in restaurants.  That is Hand Held Food fresh prepared in single sever portions.  They don’t want to cook from scratch no do that want to buy 12 pork chops at a time?  

6.       Small meals are in while some call this snacking consumers call it a mini-meal or small meal restaurants call it small plates. 

7.       Bakery or bust well legacy grocery stores will soon be seeing a 6% drop in sales and Aldi & Lidl continue to offer bread for less.  That’s right consumer are price sensitive and category managers have been wrong for years.         

       Aldi and Lidl smaller selection, larger loaves, lower price equals customer migration.  Consumer want transparency in food and pricing they do not want to be fooled by a category manager. Consumers have Been there Done That! Just go back to number one and see how that has worked for them.

In short buying slowly dying legacy grocery stores to boost lagging sales is a text book case of yesterday’s strategy and works to fool a few analyst on Wall Street but does not food industry insiders or customers. The grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh prepared food continues to drive top line sales and bottom line profits in every sector of retail today.

Foodservice Solutions® team is here to help you drive top line sales and bottom line profits.  Are you Looking A Customer Ahead?  Visit www.FoodserviceSolutions.us   or Contact Steve@FoodserviceSolutions.us for more information.  Remember Success does leave clue and we just may have the right clue for you.