Grocery Options Galore

Aug 17, 2004
George Anderson

By George Anderson

A funny thing happened on the way to the grocery store. Consumers discovered they could find the very same items they planned to buy at the supermarket for sale at the local drugstore, convenience store, dollar store and discount store, saving themselves time and sometimes money.

Mark Hugh Sam, an analyst with Morningstar said, “There are so many options now for consumers to buy food that their loyalty to their local supermarket chain has steadily eroded.”

Numbers from the Food Marketing Institute support Mr. Sam. Since 2002, the number of consumers who said the supermarket was their primary outlet for buying groceries fell from 81 percent to 72 percent. At the same time, the number of consumers who shop primarily in supercenters increased from 15 percent to 21 percent.

Saving money is the primary motivator for consumers who shop in supercenters. Shoppers at Wal-Mart can expect to save 20 percent, 30 percent or even more compared to what they would pay for the same items in a supermarket.

Supermarkets have responded to the Wal-Mart threat by expanding product selection and seeking to expand consumer services.

Moderator’s Comment: Has the way grocery stores buy
products from manufacturers, including the collection of various up front fees
for shelf space, promotional support, etc., become a competitive disadvantage
for the channel? If it has, how can supermarkets change the way they do business?

Retailers truly interested in becoming price competitive
have little choice but to shift the dollars being made on the buy to lowering
the cost of the goods themselves.

George Anderson – Moderator

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