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Stuck in the Middle with You

An end-of-supply chain perspective
Retail Reflections_2017

At the same time, German retailer Lidl decides to make its debut in the United States, and this adds to the deep discount space Aldi has carved out for itself. Both of these companies continue to expand and open new stores, dominating in price (operational excellence).

So where does all this leave Kroger, Safeway, Albertsons, etc.? The saving grace of these retailers are their store locations, and all are still viable enterprises. But what about the future? Much has been written about the margin pressures of trying to remain competitive on price. Many of their markets are already contending with Whole Foods on the top end, with Lidl and Aldi eroding price position on the bottom end. Does this sound like being “stuck in the middle” to you?

Again, there are other factors influencing the performance of traditional food retailers. But all we need to do is to look at Sears to know how a company can become marginalized by being in the middle. General merchandise retailers have found this out the hard way. How will food retailers avoid the same fate?

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Bruce Peterson is the founder and president of Peterson Insights, Inc., a consulting company specializing in the complex challenges of the fresh food industry. Peterson began his career bagging groceries and went on to work for several supermarket chains, including 17 years at Walmart Stores, Inc. He has owned and operated a wholesale produce company, and served as chief executive officer of both Naturipe Foods LLC and Bland Farms.