Blog

Wolves at the Door

November 26, 2013
barbara-petrocelli's picture
By Barbara Petrocelli
Marketing Director

You wouldn’t think that competition in grocery could get any worse, given it’s already slim margins and cutthroat jockeying for new shoppers and market share gains.  But it is.

Enemies on all sides.

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Walmart for example, opened their 4,000 US store last year and added $10 billion in combined sales from 132 new stores– a figure higher than total annual sales for 80% of US grocers. 

Meanwhile specialty grocers like Whole Foods continue to grow revenue at a rate far above industry norms, and apparently just about every retailer has discovered they like selling grocery and fresh food, from convenience and dollar stores to drug outlets.

Traditional grocers are feeling the burn.

The Food Marketing Institute for example in their recent "U.S. Grocery Shopper Trends 2012” study found that primary food stores accounted for only 69% of weekly shopping trips in 2012, down from 77% in 2011. In dollar terms, the average weekly spend in primary stores fell to $72.86 in 2012 from $74.70 the year before.

And then there’s Amazon.

As if that weren't enough, grocers are have to keep an eye on Amazon which threatens to do to grocery what it has already done to books, music, and electronics through their AmazonFresh grocery delivery business. Seattle and Los Angeles are first, then San Francisco. How long till they reach your town?

Bigger can be better, but smaller has its advantages too.

Of course, if you're a mega-supermarket operator, like Safeway or AHOLD, you can leverage your size as well as the best technology and marketing expertise money can buy to weather the storm. But what about regional and mid-market grocers, to say nothing of small independents?

Modest-size operators have always enjoyed a special relationship with their best customers, offering personalized service based on a deep understanding of their wants and needs. But to survive in today’s competitive market they need to take their game up a level, specifically by becoming experts at analyzing their business to ferret out and exploit every possible new efficiency gains, customer insight, sales opportunity or cost savings.

But aren’t analytic technologies that drive this sort of super charged intelligence outside the budget of most mid sized grocers? In the past, yes, but today cloud-based software-as-service offerings are quite affordable.

Even The Playing Field in the Cloud

Grocery merchants can get started using cloud-based analytics in a matter of weeks and at a fraction of the cost of traditional enterprise data warehousing projects.   Built on a grocers own data and updated daily, cloud based grocer analytics let category managers see exactly what’s happening in the business in real time across stores, warehouses and the supply chain and make smarter price, promotion, assortment, and space decisions to avoid problems and maximize sales.

Yes, surviving in the grocery business is tougher than ever, especially for mid-level and small operators, but the ability to fight back by leveraging the right technology, is more promising than ever.

Category:  Category Management