It takes more than low prices to own a market.
New York City is not a place to admire grocery stores. Astronomical real estate costs mean supermarkets are often found in cramped quarters in inconvenient locations. Even when national chains locate to Manhattan, the stores are smaller and more crowded than their suburban siblings.
So the annual winter visit to Florida always offers a reminder of how business is done in most of the rest of the country. This year’s trip coincided with the new advertising pushes that Target and Walmart are making for their grocery operations. Walmart was emphasizing low prices. Target was running quirky commercials that first appear to be about fashion and end up being about groceries.
On top of that, every chain drug store with an electronic zipper ad in the parking lot seemed to be pushing traditional supermarket products at low prices.
Efforts to grab sales from conventional supermarkets are not new and, as we all know, are not limited to Target, Walmart and chain drug operators. People have huge choices in where to buy groceries, and many outlets are trying to use price as a differentiator.
This has been considered a serious threat to traditional grocers, and a typical response has been to cut prices. But a new report for the Food Marketing Institute by Daymon Worldwide and Hartman Group indicates that times have changed and retailers who focus too much on price may be damaging their own long-term interests. According to Reframing Retail Through the Lens of Changing Food Culture, “While this is an effective way to attract shoppers, it does not secure loyalty. Instead it conditions shoppers to look elsewhere to find a lower price. Another way to offer value and build loyalty is to understand what consumers want that they can’t get elsewhere.”
Shoppers, the report says, expect retailers to act as “curators,” ensuring “the right combination of assortment, quality and experience.”
Which brings us back to Florida, where all the price advertising did not seem to be changing the fact that to many in the Sunshine State “Publix” is synonymous with “supermarket.” Publix long ago mastered what the FMI report recommends. Sometimes you wonder if the retailer is so embedded in the local culture that its name could become a verb as well as a noun. That worked for Google, but “Publixing” groceries just doesn’t trip off the tongue.
Grammatical concerns aside, this is a great illustration of the point made in the FMI report. Publix spends on advertising and pays close attention to its pricing. But over the years it has also invested significantly in stores, inventory, private label and people. Any retailer can put smiling faces on TV to tell you how great its stores are. The more lasting strategy is to back up those claims by creating an environment in which your stores are a positive part of the local conversation and shopping in them seems like a natural part of life.
It is a process, not a project. You cannot set a goal, reach it and move on. You have to maintain it, which is not nearly as fun. We all like meeting challenges and then focusing on new ones. But running a supermarket is not like solving a problem. There is no final answer; you just have to keep working at it every day.