Skip to main content

4 Signs That Spell Doom For Traditional American Grocery Chains


Image result for Demise of the traditional supermarket














by Tyler Durden


May 4, 2017 9:15 PM





The grocery business in the U.S. is, and always has been, a fairly miserable one. In fact, from A&P to Grand Union, Dahl's, etc., bankruptcy courts have been littered with the industry's failures for decades.


Of course the reasoning is fairly simple...razor-thin operating margins that hover around 1-3% leave the entire industry completely incapable of absorbing even the slightest financial shock from things like increasing competition or food deflation.

Image result for Demise of the traditional supermarket





Unfortunately, the industry is about to undergo a series of changes that will likely lay waste to the traditional grocery store model. 


Here are a couple of the changes already in motion:

1. Increasing Competition From Large-Format Discount Retailers


While you would think that an oversupplied market with abysmal operating margins would be immune from massive new capacity additions, you'd be wrong. States all across the country added millions of square feet of grocery capacity in 2016.









Moreover, as Bloomberg points out today, large European discount grocery retailers, like Lidl and Aldi, are also looking to build a large presence in the U.S. market over the coming years.




An invasion is getting under way. Lidl, a German retailer known for low prices and efficient operations, is expected to start an aggressive U.S. expansion in the coming weeks that could open as many as 100 new stores across the East Coast by the summer of 2018. The company, which runs about 10,000 stores in Europe, has also set its sights on Texas, one of the most competitive grocery markets in the U.S. Analysts expect Lidl to expand to nearly $9 billion in sales by 2023.






Lidl is slated to open 20 locations in Virginia, North Carolina, and South Carolina this summer and could reach 630 locations over the next six years, according to Kantar Retail. The company had sales of roughly $69 billion last year. Expect Lidl's entrance into the U.S. to ramp up the price war and possibly force smaller, regional companies to close or consolidate. "It's definitely making the regional players nervous," said Bartashus. "It's like a stack of dominoes; it takes one thing to tip it, and they all start moving in one direction."









2. Competition Continues To Grow From Every Other Retail Format From Dollar Stores To Pharmacies


Dollar stores have been stealing share from traditional grocers for years and the pressure does not seem likely to abate anytime in the near future.




More food is sold in more places these days, with pharmacies and dollar stores looking to groceries to lure customers. Dollar General alone added more than 900 stores last year, ending 2016 with more than 13,000 locations. The chain, which generates roughly 75 percent of revenue from consumable items such as food, soap, and paper towels, is planning to open another 1,000 stores this year. CVS, which operates nearly 8,000 standalone locations, is betting on food to boost store traffic. Like other pharmacies, where shoppers would traditionally visit to pick up deodorant along with a prescription, the chain has boosted its food offerings to add more healthy snacks and grab-and-go options.









Because of their smaller footprints and labor costs per square foot that are a fraction of a traditional grocer's, dollar stores can offer consumers lower prices and still earn 3x higher margins than a regular grocery chain....all of which makes it likely that they'll continue to steal share.









3. Food Price Deflation



Meanwhile, food price deflation continues to wreak havoc on already razor-thin margins.









4. 'Smart Stores' Will Ultimately Revolutionize The Traditional Retail Grocery Market


Finally, while Amazon, and others, have yet to make meaningful progress penetrating the traditional grocery market, their success is a matter of when, not if. 


Concept stores, like Amazon Go, already exist that virtually eliminate the need for dozens of in-store employees which will allow them to generate higher returns at lower price points than traditional grocers. Meanwhile, other grocery concepts, like drive through pick up, are certain to take some share over the coming years as well.









And while the demise of the traditional grocery store will undoubtedly take time (recall that people were calling for the demise of Blockbuster for nearly a decade before it finally happened), make no mistake that the retail grocery market 10-15 years from now will not include many of the well-recognized companies that consumers visit weekly as of today.





Popular posts from this blog

THE MOST SOUGHT AFTER MANGOES IN THE WORLD ....

While "Flavor" is very subjective, and each country that grows mangoes is very nationalistic, these are the mango varieties that are the most sought after around the world because of sweetnesss (Brix) and demand.

The Chaunsa has a Brix rating in the 22 degree level which is unheard of!
Carabao claims to be the sweetest mango in the world and was able to register this in the Guiness book of world records.
Perhaps it is time for a GLOBAL taste test ???





In alphabetical order by Country....










India




Alphonso





Alphonso (mango)
From Wikipedia, the free encyclopedia








Alphonso (हापुस Haapoos in Marathi, હાફુસ in Gujarati, ಆಪೂಸ್ Aapoos in Kannada) is a mango cultivar that is considered by many[who?] to be one of the best in terms of sweetness, richness and flavor. 


It has considerable shelf life of a week after it is ripe making it exportable. 

It is also one of the most expensive kinds of mango and is grown mainly in Kokan region of western India.

 It is in season April through May and the fruit wei…

MEET MELANIA TRUMP: The 5'11" supermodel married to Donald Trump

Aly Weisman, INSIDER

Sep. 2, 2015, 3:28 PM 











Chip Somodevilla/Getty Images







While Donald Trump loves to be the center of media attention, his third and current wife, Melania Trump, is a bit more camera shy.










The Slovenian-born model keeps a lower profile than her husband, doing philanthropy work, raising their son, working on a jewelry collection with QVC, and creating a $150-an-ounce caviar moisturizer.




With Trump on the campaign trail, Melania has stoically stood by his side.




But who exactly is Melania and where did she come from? Learn about Trump's other half here ...





Melania Knauss was born April 26, 1970, in Slovenia.




Wikimedia/Getty







The 5'11" brunette began her modeling career at 16, and signed with a modeling agency in Milan at 18.



Chris Hondros/Newsmakers via Getty









She took a break from modeling to get her degree in design and architecture at the University of Ljubljana in Slovenia.








Wikimedia/Getty

Source: MelaniaTrump.com









But after graduating, her modeling career took off and Me…

INDIA 2016 : Mango production in state likely to take a hit this year

TNN | May 22, 2016, 12.32 PM IST






Mangaluru: Vagaries of nature is expected to take a toll on the production of King of Fruits - Mango - in Karnataka this year. A combination of failure of pre-monsoon showers at the flowering and growth stage and spike in temperature in mango growing belt of the state is expected to limit the total production of mango to an estimated 12 lakh tonnes in the current season as against 14 lakh tonnes in the last calendar year.



However, the good news for fruit lovers is that this could see price of mangoes across varieties decrease marginally by 2-3%. This is mainly on account of 'import' of the fruit from other mango-growing states in India, said M Kamalakshi Rajanna, chairperson, Karnataka State Mango Development and Marketing Corporation Ltd.




Karnataka is the third largest mango-growing state in India after Uttar Pradesh and Maharashtra.



Inaugurating a two-day Vasanthotsava organized by Shivarama Karantha Pilikula Nisargadhama and the Corporation at P…