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Supermarket Slide: Down 15 Points in 11 Years

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The Wall Street Journal reported on July 12 that “supermarkets’ share of U.S. grocery sales fell to 51% in 2011, down from 66% in 2000, according to UBS.”

The story — entitled “What’s Wrong with America’s Supermarkets?” — suggests that one reason is that major discounters Wal-Mart Stores and Target Corp. are using food to lure shoppers into their stores to buy other goods while they are there, or that shoppers are searching out cheaper food prices in other channels.

Both are true, but until supermarket retailers wake up to realize that shoppers are looking for something more, the slide of share will continue.

There are supermarket retailers like Kroger Co., Publix Super Markets, Whole Foods Market, Trader Joe’s and Wegmans Food Markets (to name just a few) that continue to grow in sales and customer count. And it is simply because they choose to understand their shoppers better than the competition, and evolve with that knowledge.

Running a supermarket chain is difficult business. For many operators, what’s wrong with America’s supermarkets is the quarterly pressure from Wall Street that is unrelenting as are the constant pressures from unions, rising food prices, government regulation and environmental challenges. The desire to put the customer first may exist, but the daily demands of the food retailing business may interfere.

This 15-point share slide should be a wake-up call to every employee at every supermarket. Shoppers want a great food experience. Yes, prices are important; however, in looking at the retailers who are growing they have one important commonality — people enjoy shopping at their stores and they keep coming back.

We must have a balance between a quality shopping experience, building a relationship with shoppers, quality foods and offering value (not necessarily the cheapest prices).

Layoffs are not the answer; better customer-service training and knowing how to listen to shoppers keeps us on the path to success.

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Discuss this Blog Entry 5

Oscar L. Nunez, M.A.S. Grocery Busi (not verified)
on Aug 1, 2012

What's wrong with America's Supermarkets?
Your article is sooo good Mr. Lempert.
May I, Sir, offer a few other suggestions that may help:
1. Notice that Trader Joe's Stores are small in comparison. Our industry went big, 55,000 to 100,000 sq. ft., at a time when our society doesn't have the time to shop 100,000 sq. ft. So, our customers are using us as 7 Elevens.
2. We need to go back to 18,000 to 26,000 sq. ft.
3. Then, there is the "freshness" question. How can I trust that your 50 + salads are "fresh", and, your 50 + breads, & your 50 + cakes, & your 50 + cheeses, & your wine bottles ( how long have they sat ).
Even if your operations manual says they will be fresh, everyday, & even if they are, the customer may not believe that it is fresh. After all, it's the customer that makes up his mind on whether or not he's or she's going to trust "your" freshness.
To our consumers' brain it's more reasonable to trust Trader Joe's freshness because we feel that they could probably put out daily fresh stuff, easier, with the volume they offer.

Others:
Training & better matching of talent.
You can't train a soloist to be a team player.
Anymore than you can train a team player to be a soloist.
Proper training gives confidence & reduces attitude.
Box Boys & Box Girls were always our entry level positions.
That really worked. I remember that at Ralphs, now Kroger, our 3rd man in command, in charge of scheduling & personnel, got to know & match talent with position. It worked to perfection. It seemed that we hired college material, even if in high school, to provide us with the best personnel & the automatic turnover that we need in our Industry.

This positive atmosphere is the only cure I know for "bad attitudes", unhappy mismatched workers, etc.

Lastly, if we know that freshness in perishables is the key to our business, then, give it to them.
Give me a 30,000 sq. ft. Store.
Give me a Farmers' Market, complete with Hay, Barrels, Corral type fencing, wood shavings on the floor, special lighting, a saddle here a wagon there & give me the freshest quality produce money can buy, & I'll show you results.
Then, give me a meat department with a full time butcher, at all times - 2 shifts, working on cutting up an "organic" animal & you will deliver results.

In the bakery department - bake me at lot less variety & make the best of whatever you choose. The best sourdough, etc.
Cakes - the same - give me the best 2 or 3 cakes in town.

Cooking - fresh cooking. Fry carnitas & chicharrones, constantly, for that delicious fresh smell that sells "freshness" & allows the customers to trust the freshness of everything you are selling throughout your store.
I don't care if you fry 3 lbs. at a time. I don't care if they don't sell from batch to batch.
This fresh bread & carnitas "smell" should be part of your advertising budget & not to be stopped by any meat department person.
This needs to be an embraced "Company Policy".
We are going to sell "freshness", & this is how we are going to do it.

Freshness is key to "Customer Loyalty" & there are no shortcuts to it.

Oscar Nunez, C.P.A. 626-213-9068. olnoln1@sbcglobal.net
Management Advisory Services to Our Grocery Industry.
Served Northgate Gonzalez Markets 21 years, 3/86 to 6/2007.
Resident of Hialeah, Florida ( Greater Miami, Florida ) after 48 years in the L.A. Area.

Oscar L. Nunez, M.A.S. Grocery Busi (not verified)
on Aug 1, 2012

Thank you, Mr. Lempert for your Articles.
You stir us all to do more. To contribute just as much as we can.

Thank you for printing my comments, Sir. I try very hard to help anyone that will listen.

Oscar Nunez, C.P.A.
626-213-9068. olnoln1@sbcglobal.net

Oscar L. Nunez, M.A.S. Grocery Busi (not verified)
on Aug 10, 2012

What is wrong?

We simply got away from "the people business". Those that are successful have not gotten away from it.

In our age of communication we have allowed ourselves the luxury of studying information, a computer screen, temporary price reductions in & out, price integrity, security, fraud detection, etc. At the expense of what?
You guessed it: the customer, the customers' needs, & being in touch with the Community we serve.

This is all in your report Mr. Lempert, it really is. Yet, somehow they are not listening.

Even the big houses that have gone into the business are not delivering the goods; In appearance they are because anytime you start at "zero sales" all the numbers' increases are positive.

Sam Walton was on the floor.
My Store Manager at Ralphs ( Kroger ) in So. Pasadena was on the floor
( 1966 ).
Mr. Alejo of Liborio Markets was on the floor.
The entire family / owners of Northgate Gonzalez Markets were on the floor.
Same for Jesus Cardenas of Cardenas Markets.

So, what makes the next generation, & the next, believe that it can be any different.

Then, there's training & the lack thereof. Last night at 9:30 p.m., I shopped at my Cuban market across the street, here in Hialeah; I asked the front super to keep an eye on 2 guavas & one ready avocado, instead, she followed me to aisle 9, almost to the end of the store, to pick up my Goya popcorn & my cooking wine. Somehow "security" was more important than "customer service", or building "customer loyalty", etc. Unbelievable! Send someone after me & you accomplish both objectives: customer service & security!

At that same store, on one occasion, I noticed the store director / manager & I approached him and asked him if he had a minute & he replied: "hopefully less".

Besides living through an epidemic of lack of manners, & not respecting your elders ( he was at least my age ), etc., there's another phenomenon out there amongst successful businesses: slowly, if we are not careful, we develop an attitude of "take it or leave it". And, that's when healthy competition arrives in town. Watch carefully how "manners" come back.
Competition always serves the community.

I, personally, welcome Walmart Neighborhood Market to my Hialeah, FL

Oscar Nunez
626-213-9068. olnoln1@sbcglobal.net

Oscar L. Nunez, M.A.S. Grocery Busi (not verified)
on Aug 10, 2012

One more, Mr. Lempert, on the subject of What's Wrong with our American Supermarkets?

How about:
* a little innovation
* a little vision
* daring to do things differently after some very good proven progress.

Innovation. Mr. Lempert, how many of us have a department or committee dedicated to it? Should we? Do we have a department or committee that goes around looking for fantastic ideas & practices by others in the business?
* I understand that H.E.B. in San Antonio has a market for everyone:
3 different stores for 3 different income levels. Why not? Toyota has the Corolla, the Camry, the Avalon, & the Lexus.
*. We are surrounded by 7 Elevens, Circle K, Stop & Shop, now, Walmart Express ( 10,000 sq. ft. ), & Walmart Neighborhood Markets ( 31,000 sq. ft. ), Trader Joe's, & Fresh & Easy. Well, what are the rest of us waiting for?
( even SN covered "the Russians are coming" to Miami with stores 4,500 to 7,500 sq. ft. - well, 400 stores' target is a whole bunch of stores & sales dollars - then, SN had an article, recently, that China is coming ).

Visionary. No need to write more, for now.

Going against the grain. Daring to reinvent a wheel not broken.
Our respected Walmart went away from back loaded Dairy.
I envision all my coolers & freezers immediately behind my perishables' departments, all the way from my dock to my cooler to my floor space ( by a side wall to one side & to the rear wall ), yet, we all saw what our Walmart & our Target stores did. I think we would find it very interesting if SN were to do an Article about what went in to this "Logistic" phenomenon, and, how it's worked. I see it as super labor intensified everytime I see a supply cart transverse an entire Walmart just to bring the milk to its place.
Very interesting.

I'm almost fresh out for now, Mr. Lempert.

While at Northgate Gonzalez Markets for 21 years, I saw my share of innovative ideas. The family is great about that.
In Miami "La Carreta Cuban Restaurant" went in at our Airport.
Before I left Northgate, I wanted the family to do the same at LAX.
Plus, I wanted Dodgers' Stadium, the Staples Center, our Convention Center, Grand Central Station, +++++++++

Another wonderful family that could easily do it is the Cardenas Markets Family, particularly, because the Cardenas Family has the "Del Real Foods" kitchen. The exposure should be very good for either family, & our L.A. Community will be well served by folks that have been serving our community for over 30 years. God Bless them!

Oscar Nunez
Growth Advisor to Our Grocery Industry & Others.
A Hialeah, Greater Miami, Florida Resident after 48 years in So. California.
51 years experience in the Greater Miami Area.
626-213-9068. olnoln1@sbcglobal.net

Thank you, Mr. Lempert.

&, then, my non perishables

Oscar L. Nunez, M.A.S. Grocery Busi (not verified)
on Aug 24, 2012

Biggest Challenge for our large supermarket chains:
It's finding out how big chains may go back to the "basics" after being so broken up into "specialists".
Right now, I'm staying across the interstate looking out to a Super Target in Lakeville, MN. Will you believe me, if I were to say that their Super Center lit sign is off when the store is closed. Can you imagine missing all that traffic exposure on Interstate #35 all night. Parking Lot Lights are going off @ 6:10 a.m. when it's still dark. Unbelievable!

Man, can you imagine that gorgeous, humongous lit "Super Target" sign on it's own breaker & lit at all stores, Nationwide" from 1 hour prior to Sunset & staying on until 1 hour past dawn?! Can you imagine spending all those advertising $ Dollars & not lighting your Signs All Night? Unbelievable.

Another trap is another big one:
Once an outfit is successful there is a huge tendency to "stop learning from others". "And, you know what Coach Wooden said about that"!

305-924-6733
Hialeah, Florida
Oscar Nunez

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