The news for most traditional retailers has not been too good over the last few years. That is not the case for the supermarket industry.
It is hard to miss. Read through a business section of any newspaper or website and there is a pretty good chance that you will come across an article about another retailer closing stores and laying off employees by the boatload. In just the last several months many high-profile chains have announced store closing programs.
Most blame a combination of a lagging economy and intense competition from the Internet for the cause of most of their troubles. Few blame their own missteps, like Radio Shack officials failing to upgrade their stores and their merchandise to satisfy the need of today’s more savvy tech shoppers or Barnes & Noble execs not getting that the introduction of the Nook was just a short-term fix.
Some of those other chains were just guilty of opening up too many stores in the heady days to satisfy Wall Street demands and failing to figure out what happens when the good times end.
Interestingly, though, not one supermarket has made this list in recent years. Sure some chains have made some changes and Safeway announced that it was leaving the Chicago market and selling off as many Dominicks locations as possible last year. However, very few stores were actually shuttered. Instead, other chains picked up most of the locations and opened their own stores, most probably much better suited to the increasingly-distinct personality of shoppers in the Windy City’s metropolitan area.
To the contrary, a number of grocery chains keep opening up stores throughout the country. For example, Aldi, the German import that seems to be almost everywhere these days, plans to open as many as 650 stores over the next five years. Wegmans keeps adding stores in the crowded Northeast. H-E-B is adding stores in Texas; Kroger is opening stores throughout its banners; and Walmart never does seem to stop opening new stores.
Why is the grocery industry virtually immune to this trend? The answer is quite simple: A growing population (granted not as fast as in years past) and the failure of Internet companies to make much of a dent in the supermarkets’ business model has enabled food stores to keep their momentum going.
In good times, consumers, flush with extra cash, rush to the grocery store to spend their discretionary income on those little extras that make a difference in their lives. In bad times, many of those same customers, now trying to stretch their incomes, rush to the grocery store to most efficiently feed their families. It is a win-win for everyone involved.
That is as long as grocery store executives do not forget who brought them to the dance—the consumer—and what is needed to keep this good thing going over the long haul. That would be competitive price points, quality merchandise, a great selection and clean stores.
In the end, many big chains will continue to close stores and try to re-establish a business model on 21st century retailing. Supermarkets only have to keep doing what they have been doing for the last 100 years to stay ahead of the trend. That is a pretty nice place to be.