Grocery’s Regional Battle for Baskets
Editor’s Note: In the first of this two-part series, industry analysts offer their thoughts on which retailers are best positioned for success in their respective markets. Part 2 will look at banner loyalty and shopper dwell times.
Market disruptors are giving stalwarts a run for their money, compelling grocery retailers to be constantly innovating and ever vigilant.
But even the disruptors can be disrupted, and ultimately success comes down to how well you know, connect with, engage and serve your market. That means being all in on shopper insights, talent development and diversity; learning from the wins and losses of parallel sectors; and delivering a seamless experience that doesn’t let consumers discover that you don’t have something they need.
To paraphrase the wise sensei Mr. Miyagi in the inspirational 1984 film “The Karate Kid,” either you do retail “yes” or you do retail “no” -- you do retail “guess so,” you get squished, just like grape.
Despite continuing industry consolidation and the presence of several strong national giants, the battles for dominance are playing out regionally. Still, it’s those big players, assembled from formerly independent regional banners, that are leveraging their scale to disrupt or be disrupted.
Bill Bishop, chief architect of Barrington, Ill.-based Brick Meets Click, offers Progressive Grocer his thoughts on the state of competition in key U.S. markets.
The Northeast is competitive, “but there have been no major competitive disruptions, with the exception of Lidl’s entering the New York market, which will increase competition and probably trigger a price war,” Bishop asserts. In the South, “Walmart, Publix, Lidl and now Wegmans are all expanding in ways that are increasing the pace of competition,” he says.
In the Midwest, Aldi and Hy-Vee “are both expanding and increasing competition,” Bishop notes, while in the West, Kroger and Aldi “are disrupting an otherwise generally stable market.”
As competition ramps up, which retailers are in the best position for success? In New England, it’s Ahold Delhaize, Bishop says, “because of their experience competing successfully in Europe, and ShopRite, because of their strong prices and reputation for innovation.” In the South, he sees Walmart continuing to win, “because of their EDLP and online grocery focus, and Publix, because of their stellar customer service.”
In the Midwest, Bishop names these retailers as his top three: “Kroger, with all of their innovation; Hy-Vee, driven by their exceptional culture; and Aldi, with extreme value and small-store convenience.” And in the West, he says, “Kroger, with some historically strong KMAs and all the innovation, is probably best positioned for success, followed closely by Walmart and Aldi.”
Burt Flickinger, longtime industry observer, analyst and managing director of the New York-based Strategic Resource Group, makes this prediction: “The best leaders with the best women, who strategically invest in the business and hire from within, will be the big winners.”