Conventional supermarkets are increasingly facing competition from alternative sales channels, notably dollar stores and farmers markets.
“The way grocery stores deal with these challenges differs,” says Brian Numainville, principal at Lake Success, NY-based Retail Feedback Group.
“With dollar stores, grocery stores need to focus on freshness and value-adds. On the other hand, competition with farmers’ markets in many cases means grocers join the fray by holding a farmers’ market of their own.”
Numainville points to pop-up stores as an interesting mainstream retail trend that might take on additional steam in 2020. Pop-up stores such as SÜPRMARKT in Los Angeles and mobile stores such as Kroger’s Fresh Picks Mobile Market in Louisville, KY, can bring fresh foods into underserved areas, expanding access and increased fresh food purchasing, he says.
“While this may not be an idea that generates large sales volumes,” Numainville continued, “it has the potential to impact a large number of people with major players like Kroger finding ways to make this model more efficient and impactful.”
As alternate channels grow, conventional supermarkets need to hone their own positioning.
“Retail will have continued pressure, but the better retailers, small and large, will continue to succeed by executing their own focused value proposition versus trying to outdo the disrupters,” says Steve Grinstead, CEO of the FreshEdge companies.
Recent studies show retailers succeeding in bricks-and-mortar have significantly larger fresh food purchases compared to lesser performers, as well as over ecommerce, says Tom Thompson, partner at Golden Sun Marketing in Mound, MN.
“It will be interesting to see how grocers capitalize on this trend by investing further in fresh, in terms of the experience and offerings, as well as differentiation and quality.”
This is a multi-part series adapted from the January 2020 issue of Produce Blueprints, featuring a variety of experts predicting what will be top of mind in 2020.