The Next Chapter

Where do we go from here?

It is a question everyone should ask himself or herself at least once a week, if not once a day. For the supermarket industry, its leaders should be thinking about coming up with legitimate answers to that query all the time, for preparing for the future may be just as important as working on the present. 

Yes, Amazon is a force to be reckoned with as the mighty digital player makes further forays into the world of supermarket retailing. Its decision to open physical stores—well at least a couple of them for now—shows just how difficult it has been for Amazon to capture the consumer’s attention when it comes to fruits, vegetables and meats. 

Expect that to continue. Amazon sees a good thing in the supermarket industry and it will do all it can to gain more share in the category. Most vulnerable will be the bulky items like dog food, paper products and even bottled water, where consumers are eager to have someone deliver the items to the front door instead of dragging them through a parking lot to the car. Amazon will make a play for other segments as well, and traditional retailers need to respond with a marketing program that explains and demonstrates to consumers that they are a legitimate alternative. 

Amazon is not the only threat to retail. Everyone and his brother, from Walmart and Target to CVS and convenience stores, are selling groceries. Consumers are quickly walking away from processed products, thankfully in favor of fresh items. Profits are dragging and demand, well demand is fluctuating—there are headaches everywhere.

But perhaps the largest threat looms from within, from the private equity companies that have gobbled up so many of the chains across the country. Let’s get it right on the table—these financial companies are only interested in one thing and that is making money. 

At no time are they looking to develop brands and services that will endear the operation to the consumers they so badly need and the suppliers who they have longed partnered with. No, instead they are looking for the short-term fix, one that will simply guarantee a higher price for the operation when they flip it in a year or two to another private equity company. 

The winner is Wall Street. The losers are the consumers who do not have the same services and the company employees who lose their careers because some guy behind a desk in some faraway city is playing banker in an industry he knows virtually nothing about. 

The supermarket category has reached a critical stage in its history. But, unlike other retail segments, the paying public still believes in this category and are eager to make their weekly—or more often—treks to the food store. 

The job is getting harder, but there is no reason why grocery stores cannot thrive, as long as their owners understand the situation and are willing to invest in it.