WHERE DO WE GO FROM HERE?

For over 35 years I have been doing site analysis for supermarkets.  Several hundred locations I have evaluated have become supermarkets.  But the market is changing. A question I would like to ask each of my clients is do you ever expect to open another supermarket again?  My typical client is the independent operator with one to twenty stores or a regional wholesaler of independent conventional supermarkets.  Perhaps the answers to my questions are in the cemetery.

My great-grandfather Laymon was a successful buggy salesman for the Anchor Buggy Company until the early 1900s.   You can probably figure out how that turned out.

Then his son, my grandfather Laymon was sales manager for Laymon’s World Products.  In the depression years, he began buying aspirin tablets in bulk, putting them in coin envelopes which he stapled onto cardboard sheets to be set on counters in stores, service stations, restaurants. Thus began what later became the biggest distributor of what was known as “counter carded merchandise” in the world.  In the 1930s and 1940s Grampa did quite well.  By 1940 they had over 300 items to include aspirin, chocolate laxatives, cold tablets, razor blades, and many articles on card displays.   Spencer, Indiana has a population of about 3,000 yet has a post office the size of one you might see in a city of 40,000 due to all the mail order business from Grampa’s company.  They had 4,000 distributors all over the world. By 1960 it was all over and the company was sold.  Retailing was changing, bigger boxes opening, and it wasn’t economical to buy small qualities of carded merchandize.

I wonder how great-grandfather felt after a successful career selling buggies only to see the automobile dominate by the end of his life. Maybe  I will have similar feelings at some point.  Two years after my grandfather retired was the birth of Meijer, Target, Woolco, Walmart, and Kmart.  A long successful career selling everything from combs to condoms was now dominated by mass merchandisers.

So what will I have to show for all my work?  Today many of those stores I did market studies for are open and successful.  However as time passes they are disappearing.  In recent times it’s happening at a faster clip.  Over the next ten years I think we will be amazed at how fast the supermarket industry will change.  In one recent study I did, only 9 of the 23 major competitors were conventional supermarkets.  That number will continue to fall.

The business model of my clients and my own business model must change in order to stay relevant.  In the 1980s and 1990s we had to start adding Aldi and Walmart Supercenter to our gravity models.  Then Whole Foods, Trader Joe’s, and all the rest of the natural/organic stores came along.  Target is now a grocery store.  Costco used to be just leakage but they do such a high volume they can’t be ignored.  Drug stores, dollar stores, upscale convenience stores have a larger supermarket market share  further deteriorating the conventional supermarket.  Is it a coincidence that when the government expanded free lunch programs at schools, inner city supermarkets began closing by the bushel?  The real question is how will we evaluate those supermarkets in the “cloud”?  Spending on food away from home has surpassed food at home.  Negative same store sales trends will probably be the industry norm, further fueling store closings and consolidations.  I drove my a major regional mall anchored by Sears, JC Penny, and Macy.  I realized I had not purchased one item at those stores in several years,   When people drive by a supermarket in 10 to 15 years will they say the same thing?