Dollar Stores & Hard Discounters Devastate Legacy Grocer’s Business Model

Grasping for some light at the end of the tunnel due to continued customer migration from the legacy grocery sector to hard discounters, dollar stores, and new non-traditional fresh food retailers the ilk of Ikea and CostCo Wholesale; Tesco may have found a way to survive according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. 

Regular readers of this blog know that the team at Foodservice Solutions® back in 2011 reveled that Millennials could identify only three cuts of meat in a typical legacy grocery store meat display and had cooked only one of them in the past 30 days. We said then and we repeat today the legacy grocery store business model is broken.  This is not just a US problem it global just take a look at this.

Tesco reported recently that they were going to cut 9,000 jobs and close fish, meat and deli counters in 90 stores all the while downgrading many bakeries.  Why?  A Tesco spokesperson stated “customers are using its counters "less frequently".

Counters in 90 out of 790 larger Tesco stores in the UK and Ireland will shut in total and in the remaining 700 stores, some counters will only be open part-time. The supermarket giant said it is also changing how it manages its stock with less work available for backroom staff. It will move towards a "simpler and leaner structure" in head office, Tesco said.

Time starved consumers do not know how too or skill-set to cook a full-flavored meal from scratch and have fewer than 20 items in their ‘pantry’.  Pre-portioned full-flavored Ready-2-Eat and Heat-N-Eat fresh prepared food has replaced the ‘pantry’. 

Hard discounters continue to expand meal options, including full-flavored ‘better-for-you’ meal components, at prices legacy grocery stores simply cannot compete with.  All the while the dollar store sector having won the minds-eye of the consumer is evolving into a ‘fresh food’ retailer with products portioned for one and two people garnering even more consumers interest according to our Grocerant Guru®.

Consumers are dynamic not static.  What is your brand doing to provide increased customer relevance? Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869