Consumers will eat at grocery store-related restaurants if they are good. Kroger already has a number of restaurant formats that are just mediocre. They are no Wegmans or Hy-Vee. So why open a bunch of mediocre restaurant formats? Panic reaction to their stock crash and getting psyched out by Amazon. They should have learned their lesson after buying Mariano's.
I think the stigma of buying anything from Kmart is enough to make it fail. I still have nightmares of kids making fun of me 50 years ago because my mom bought me some clothes from Kmart. Goodwill has a better reputation now for clothes than Kmart.
This reminds me of one of the opening scenes in Saturday Night Fever where John Travolta is delivering paint that a customer ordered. It seems simple yet Target needs to hook up with a small tech company to accomplish the same thing. Does this have to be so complicated? Perhaps hiring two employees and buying a small delivery truck will accomplish the same thing without any algorithms or executives with lots of words in their title.
Aldi is so far in left field anything they do will not affect traditional grocery stores much. I'm wondering if delivery will put them in play to compete with institutional wholesalers. I know at my local Aldi, when avocados go on sale, local restaurants come in and clean them out.
At the end of the day people will demand to make a certain wage and if they aren't getting it, they move on. Most of the above comments seem to be right on target. If a retailer pays a fair wage, there is no need for bonuses. When too much emphasis is put on the bonus, that's when you see all kinds of games being played to skew the results. One time at FW Woolwroth, in order to get our bonus we needed more sales. So the employees made large purchases at our store and returned the items to a nearby sister store. We cheated, got our bonus and the management at the other store didn't. We got away with that once.
Sounds like Tesco's Fresh & Easy 2.0. Totally different than their European model, open lots of untested stores, put the pedal to the metal and hope for the best.I think Lidl will do better than Tesco because they are competing with grocers that are so ineffectual like Food Lion, Ahold and Farm Fresh, to name a few. It will probably just be another Aldi, which is successful but certainly never ranks high with market share leaders. Lidl should have just opened a handful of stores before making such a big commitment. However they were smart enough to have an exit strategy if they don't work.As far as competitive advantages I would say none, other than that the major market share leaders have lost their mojo and can be taken advantage of. Wegmans and Publix will do the same. Lidl and Aldi coexist well in Europe among high-volume market share leaders and will probably do the same in the U.S. Walmart is not getting better which is good for everyone. Although Walmart probably will not give up much percentage-wise, even a point or two is all Lidl needs. Having Publix and Wegmans beat up on the competitors creating massive store closings, Lidl and Aldi can clean up feeding off the scraps.
The market is overstored with hundreds of sterile ineffectual grocery stores. I predict about 500 store closings over the next couple of years, mostly on the eastern seaboard and Florida. I don't think Food Lion, Winn-Dixie, Bi-Lo and a few others are going to make it. Kroger is quietly closing stores in the Midwest. Albertsons will need to shed some low volume units, many of them in Texas. I'm seeing per-bankruptcy strategies based on calls I'm getting from landlords. Such as a chain agreeing to a 10-year lease extension in exchange for a cash payment today. I advised the landlord that the chain will pocket the money and go bankrupt. Wegmans, Lidl and Publix will simply push too many off the edge.We are also going to see a lot of failures in the natural/organic area. Fresh Thyme, Sprouts, Earth Fare and others. Any that are growing too fast using debt will most likely fail. Survivors will be the debt free, rent free chains that grow methodically using their own cash.
With private equity the game plan is usually buy on borrowed money. Borrow more money to pay investors. Sell assets to pay investors. Cut expenses to increase cash flow to pay investors. Then go bankrupt and repeat the process with another company.
I work with retailers on opening small supermarkets on college campuses. We know from our research the probability of success is greater when the percent of the population is skewed higher with females and all that implies. Lesley's comment about grab-and-go is right on. Men might be doing a lot of shopping but basket size is higher with women. A university with 55 percent women gets our attention. If it's 55 percent men we usually pass.
In my opinion most of the innovations and improvements have benefited both genders. All those quoted statistics sound meaningless and empty. An increase in men watching cooking shows? Probably by default because there are more cooking shows. I'm sure the percentage of women watching cooking shows has also increased. Thirty-five percent of men were influenced by something they saw online? Surprised it wasn't 100 percent. Of course the results will show men are doing more grocery shopping. The survey was aimed at men about grocery shopping. A man not interested would not take part in the survey.
All businesses suffer from a learning curve after an acquisition. Even good changes are met with resistance. My advice is if it's not broken then don't fix it. Keep quiet and don't make promises to employees you can't keep.
Consumers are certainly ready in Minneapolis. For years grocers like Cub and Target counted on hometown loyalty to shop their below-par formats. They were and still are asleep at the wheel. C-stores like Holiday and Speedway are still stuck in the 1980s. Hy-Vee is basically copying all the good ideas of other successful c-stores. Kwik Trip has carved out a solid niche too with deeply discounted dairy and produce along with almost daily $1 off gas purchases. Yes, I am one of these jerks that stops in every day for $1 of free gas so I hardly ever have to actually pay for fuel having a hybrid. I found one in Scottsdale a few months ago with an upscale deli, coffee shop, full detail car wash and 100 octane fuel. The modern c-store will need to have something signature to set it apart. Kwik Trip is free gas, 49 cent eggs and 38 cents per-pound bananas, onions and potatoes. Another will have 100 octane gas or E85 fuel. Starbucks-style drinks for a dollar. Still I have yet to see all the signature offerings in one store. Minneapolis is a great place for Hy-Vee to experiment due to the weak competition that does not have the wherewithal to fight back.
If you have a good product you want to sell it where people can see it. Nearly everyone has access to Amazon. However most have forgotten about Sears and have assumed their stores are all closed. The ones still open look like an attic of random products tossed about. Not very inviting. The last place Sears should consider selling products is in their own stores.
Price, quality, service, experience and signature private labels are driving shoppers to smaller stores. Most large supermarkets can't compete in this area. Especially the traditional publicly-held, plain vanilla conventional supermarkets. They have a huge center-store that is boring and unhealthy. There will always be a handful of very well-run large grocers like H-E-B, Publix, Hy-Vee, WinCo, Woodmans and Wegmans. Those kinds of grocers have more flexibility to hire good people and experiment with new trends because they are employee- or privately-owned, have stayed out of debt and have long-term objectives.I think in the next five years we will see huge bankruptcies, stores closings and mergers with some of the largest and most boring supermarket chains. There is not much the plain vanilla retailers can do. Throwing mud at the wall with loyalty cards, gas programs, coupons, mobile apps and copycat online shopping will be futile and they will fall further behind. It's very easy to see who the next A&P dinosaur to go extinct will be.
Saw the same thing happen in Oklahoma City and Atlanta during the Obama years. If there is a crackdown, the undocumented won't drive. Taxis aren't cheap. A quite a few Hispanic stores went dark. Another opportunity for Amazon. Smart Hispanic retailers will make out well with home delivery.