Independent grocers face an onslaught of outside pressures and deep discount pricing in 2009
Independent retailers, represented by the National Grocers Association, Arlington, Va., are proving they can grow their businesses while facing price competition made more fierce by the recession. But to win the carrot, or in this case the sale, it will take a delicate balance between managing rising operational costs, adjusting quickly to a fast-changing economic environment and implementing the right strategies that defy big-box operators. This will be a theme during NGA's annual convention in Las Vegas, Feb. 3-6, as members seek a blueprint for success.
Three independents — City Market, K.V. Mart Co. and Howard's Management Group — featured in this report are growing by adding a store here and there when the opportunity arises, and opportunities will surface under the new economic realties. Smaller grocers are being aided in their growth by their wholesalers, who have a vested interest in their welfare and success.
“At the core is to grow our retailers' same-store sales,” said Jay Campbell, president and chief executive officer of Associated Grocers, Baton Rouge, La. “Many of our retailers are seeing above-inflationary growth in their operation. While that is very positive, it also tells you we have an economy that is very fragile, where people aren't eating out or away from home as much. Instead, they are transferring those food dollars back into supermarkets.”
Whether those dollars go back to the big-box operators or to the local community grocer will depend on who can best attract and keep the consumer. “Our independents have been good at being special and unique and differentiated from the competition. Now with the tight economy they also have to be extraordinarily competitive … by being aggressive promoters of key commodities and product lines that are sensitive to the needs of the consumer,” said Campbell.
The retailers profiled here demonstrate that you don't have to be big to succeed in food retailing. You just have to get it right with shoppers and maintain a good balance between costs and profits.