Long-term strategies have their place. However, in this volatile food retail market, it's just as important to react quickly to events. The year isn't even two months old, but already there are signs that retailers and associations are actively reacting to food trends, market shifts, and a changing regulatory environment.
Here are some very recent examples:
Betting a Dollar on Food: Associated Wholesale Grocers of Kansas City, Kan., just launched a program to respond to the continued strong growth potential of the dollar merchandising trend. It is adding a 326-item dollar grocery line to its two-year-old nonfoods dollar program. (See story on Page 1.) The wholesaler, which serves independents in 18 states, recently discovered that the addition of dollar food items can double or even triple sales of dollar nonfood products. Clearly, AWG doesn't want to be caught a day late and a dollar short.
Playing the Carb Card: No one planned the low-carb phenomenon, but everyone is reacting to it. In one of the latest moves, Grocery Manufacturers of America sees an opportunity to react that may bring order to the trend and help sustain it. Carb-related marketing accelerated so quickly that ground rules were never established, such as deciding what low-carb is anyway. That's a big enough problem to lead GMA to recently propose standards to the Food and Drug Administration for carbohydrate nutrient-content claims. "It's not often at GMA that we'd like additional regs, but here we want standards to communicate with consumers," said Stephanie Childs, GMA manager of public policy communications.
Filling a Pharmacy Void: CVS, Woonsocket, R.I., didn't need an invitation to realize there was an opportunity to grab supermarket business. Detroit-based Farmer Jack, a unit of A&P, said recently it will close some stores and convert others to the low-price format called Food Basics. The result is that some of Farmer Jack's in-store pharmacies will disappear. CVS reacted swiftly to the void with advertising directed to Farmer Jack's pharmacy customers that included $25 gift cards for transfers of prescriptions to CVS. The episode represented a rare opportunity for a drug store to capture business from a supermarket without a prolonged battle.
New Stores on Old Sites: Last year's troubles at Fleming and some other companies put a lot of sites and business up for grabs. In 2004, companies are continuing to target those opportunities. Price Chopper, Schenectady, N.Y., continues to open stores on sites previously occupied by discounters that had fallen onto hard times, such as Kmart and Ames. Giant Eagle just reflagged and reopened eight stores it acquired last year from Penn Traffic Co., which entered Chapter 11 bankruptcy protection last May. Meanwhile, Save Mart, Modesto, Calif., is scouring for more opportunities after acquiring 25 Food for Less Stores from Fleming last year and converting them to its Food Maxx banner. All of this is proof that breathing new life into old sites is a more compelling strategy than adding additional square footage to the overcrowded marketplace.