Battle of the Grocery Giants: What’s left for small to mid-sized grocers?

by | Oct 18, 2017

People of a certain age may remember being dragged to the grocery store by their moms, being pushed in the cart up and down the 12 aisles, and the week’s (or month’s) groceries filling the cart.

Later, grocery stores were replaced by supermarket chains, these giant stores filled with groceries, pharmaceuticals, general merchandise and seasonal products. Then big box stores like Walmart and Target got into the grocery game, placing large supermarkets inside their already gigantic stores.

More chains, fewer independents

Today, unless you live in a small town, it’s hard to find an independently owned store or small chain anymore. Grocery store giants like Kroger, CostcoAldi, Lidl and Hy-Vee, as well as Walmart and Target, have changed the landscape as they leverage their buying power to offer bigger inventories and lower prices. And now the latest wrinkle: Amazon purchasing Whole Foods and offering better efficiencies and lower prices from Day One.

Smaller grocery stores, like Chief, IGA, HEB, Roche Bros., and Heinens are fighting to maintain their market share as the playing field has been inundated with giant opponents carrying expanded assortment supported by giant budgets.

At the same time, consumer grocery shopping habits are changing. The trend towards more fresher foods can impact profitability and margins. Fulfilling customer demands for more ways to buy, as well as grocery delivery and pickup options, can quickly get out of hand without the proper technology, planning and execution.

So how will the smaller chains and independent grocers keep up and maintain the level of service and quality their customers are accustomed to? How can grocers continue to grow and expand their offerings, all while taking advantage of new technological advances in the grocery industry?

Changing up the grocery game

Of course, the goal of a grocery store buyer/manager will always be the same: trying to find ways to lower prices and improve operational efficiencies. Trying to keep up with the big grocery chains without resorting to rock bottom prices and hoping the volume makes up for it.

They’re also looking for new ways to differentiate themselves from the larger competitors, and offering things the large chains never will. We’ve seen many local grocers selling apparel and sports merchandise from local high school and college sports teams. Oftentimes, it’s difficult for fans to find the apparel and merchandise, and local grocers are able to fill that gap.

These small chains and independents grocers have also begun selling local foods, such as meats, eggs, and produce. Large stores and chains just don’t have the time and network space to devote to inventory that’s measured in a few thousand dollars or hundreds of units. But the smaller grocers are in a better position to work with local farmers and producers more easily, bringing locally produced foods to their stores and communities.

They also have a better understanding of their shoppers as many times they are in the store interacting with them and hearing firsthand what they are looking for. This allows them to carry the items that their shoppers want; not what someone hundreds of miles away at a Corporate office many think they want. To compete with the large chains, they are also beginning to offer services like BOPUS (buy online, pick up in store), curbside pickup and boxed meal kits. We’re even seeing local stores focusing on providing serving size portions for those shoppers that may live alone or with 1 other family member. Smaller, mid-sized and independent grocers are starting to innovate and find new ways to serve their customers in ways that large supermarkets can’t easily do.

This is where being a part of SPS Commerce’s retail network can help grocery buyers with improved assortment, sourcing new products and discovering new vendors. Grocers who want to find a particular kind of product, or a particular product line can use these tools to zero in on the vendors who can fulfill their needs.

Becoming a part of a trading partner network like ours makes it quicker and easier to get up and running with new grocery products and food distributors, turning initial contacts into profitable relationships in a matter of hours and days rather than weeks and months. For more information, please visit the SPS Commerce website for a free demonstration and to speak to an SPS representative.

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Operating in the grocery and food industry?

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Bekki Windsperger

Senior Customer Strategist at SPS Commerce
Bekki Windsperger is a Consumer Product Goods (CPG) industry expert with more than 30 years of experience in developing and supporting Business to Business (B2B) integration, with a focus on optimizing and automating Supply Chain and Item Management business processes. Before she came to SPS Commerce, she held positions at Supervalu, Pillsbury and Best Buy.In 2017, she was named as a Supply & Demand Chain Executive “Pro to Know.”
Bekki Windsperger

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