Independent Grocers Solidify Differentiation Strategies

For years independent retailers were urged to differentiate and develop niches.

Some did, others didn't.

But the wisdom of those warnings is now clearer if you scan this year's installment of SN's ranking of the Top 50 Small Chains and Independents.

This second annual industry scorecard, based on sales, is proof that independents are being led by a diverse group of operators that have embraced differentiation strategies.

SN's ranking is being unveiled as the independent community converges on Las Vegas for this week's National Grocers Association Annual Convention & Supermarket Synergy Showcase.

One important point about this year's ranking is that growth often equates to adding retail units, which helped a number of operators rise higher on the list.

Which segments of the business are driving growth for independents? Some retailers are being powered by discount strategies, but others are finding differentiation through various forms of product merchandising. Here are three key ways independents are growing:

Fresh Foods: It's no fluke that The Fresh Market, Greensboro, N.C., a perishables-oriented operator, has jumped from No. 14 to No. 4 on the list. That company, and many other independents, have scored big with fresh foods. For many independents that includes success with prepared foods.

One operator, Kowalski's, has managed to raise prepared food sales double digits from last year with a diverse program that includes rotating menu items, holding theme dinner nights, preparing food in front of customers, and staying on top of food trends.

Ethnic: A number of Hispanic retailers figure prominently in this year's SN ranking, including Bodega Latina, Commerce, Calif., Vallarta Supermarkets, Sylmar, Calif., and Mi Pueblo Food Centers, San Jose, Calif. The Hispanic segment offers an incredibly diverse range of opportunities, and new stores are launching every week.

Among the latest are Fine Fare/Dolcy Foods, a Perth Amboy, N.J., retailer that serves Hispanics and some other ethnic groups, and is part of the Fine Fare chain. Customers encounter everything from a walk-in meat cooler to a wide assortment of produce.

Natural/Organic: Smaller retailers focused on natural/organic are now ramping up expansion, as noted in a recent blog post by SN Whole Health.

Earth Fare, based in North Carolina, is entering the Ohio market. Sprouts Farmers Market, based in Phoenix, may be headed for expansion in Northern California. And Sunflower Farmers Market, Boulder, Colo., which appears in this year's SN ranking, is about to open its first California unit.

So what's the takeaway from all of this? Independents should carefully review the wide range of retailers on this year's list, and then ask themselves the question, “Where do I fit in?”