Where will tomorrow’s growth come from in packaged foods?
Experts abound, and some predict that smaller, more-nimble manufacturers will dominate the marketplace.
This report by the consulting firm Strategy& (formerly Booz Allen) insists that Whole Foods, club stores and dollar stores will take more and more market share away from conventional grocery stores.
Of course, pundits have been predicting the demise of the grocery store for decades, yet that model soldiers on. Grocery stores tend to become complacent because EVERYBODY EATS. During the Great Recession, food retailers were the only ones that made money (though not all conventional grocery stores were profitable, since consumers shifted their shopping patterns to value, discount and other retail options). We recall the huge kick in the *** that Walmart gave conventional grocery stores when it entered the food category years ago.
And quite frankly, many grocery retailers need that kick, as their stores had become dark, dirty and old-fashioned.
Today, the top-performing retailers continue to innovate and thrive, while those who don’t like A&P have shuffled from one crisis to another.
There is no “one size fits all” way for conventional grocery chains to take on the challenges of alternative channels of distribution, online shopping or specialty retailers. For example, Wegman’s and Publix consistently score among the top retailers in the nation based on attractive stores, appealing merchandising and product mixes that delight their customers.
And there’s a real danger in projecting how things are now into the future. Several years ago, it looked as though Walgreen’s and other drug stores would take a big bite out of the food marketplace, but that simply hasn’t happened. Whether that’s because Americans aren’t ready to swap shopping at the grocery store for picking up dinner and a prescription remains to be seen.