Art Patch: Food Retailers, Tighten Your Belts—The Fun Has Just Begun

Art Patch

Art Patch

by Art Patch/a retired retail executive & regular columnist for The Shelby Report

Just begun, indeed. The brick-and-mortar segment is working hard to keep its customer base as the e-commerce and hard-discount operators are working hard and spending millions to grow their customer base.

Leading the everyday discount pricing battle are Aldi and Lidl (the latter new to the U.S. market) and Walmart. Walmart has gone back to its roots by making competitive pricing a priority. Aldi and Lidl are both using private label to drive their pricing strategy. They have been given credit for an uptick in private label sales nationally.

Traditional brick-and-mortar retailers are experimenting with store size. Target, for instance, has opened a 21,400-s.f. store—one-sixth the size of its prototype. At the other end of the spectrum, Kroger has opened stores as large as 150,000 s.f. Both are attempting to find customers’ store size of choice.

Kroger also is using technology to drive its new “Restock Kroger” plan, a data-driven program that will streamline pricing and selection. Data exposed the fact that Kroger’s private label outsold the national brand in some categories but was given the secondary location on the shelf.

The acquisition of Whole Foods by Amazon has created a lot of speculation about what looks like a blend of brick-and-mortar and e-commerce. Amazon Go, a store without checkstands, and Amazon Fresh, the delivery of fresh products, are in conservative test mode.

Another category that has drawn a lot of attention is meal kits, which feature assembled ingredients that customers cook at home. They’ve traditionally been delivered to customers’ homes, but retailers have begun to get in on the act. Albertsons purchased Plated, a New York-based company online meal kit service, and is projecting that Plated will, over time, deliver meal kits nationally both in-store and online. Ultimately, Plated will have access to Albertsons’ 35 million weekly customer base.

Other meal kit services include Ralphs’ Prep+Pared (in Southern California); e-meals also are in development at both Kroger and Walmart.

The meal kit concept took a hit recently when the concept leader, Blue Apron, had to reduce its employee base of 5,400 by 6 percent, indicating that sales projections are not being met. Blue Apron stock is down 50 percent from IPO levels. A German company, Hello Fresh, also entered the market. Obviously, there is a lot of activity and interest surrounding the meal kit concept.

With all the activity surrounding the food business, answers to the following questions will have an impact on future success.

  •  Is the meal kit concept here to stay?
  •  What does Amazon learn from Whole Foods?
  •  Does Aldi, Lidl or Walmart win the price war?
  •  Is “Restock Kroger” the answer for that chain?
  •  Why has Amazon reduced expansion of Amazon G and Amazon Fresh?

Chase those sales; they won’t chase you!

After a 40-year career that included executive-level positions with Safeway, Lucky Stores, Appletree Markets and Save Mart/Food Maxx, Art Patch retired from the retail grocery business in 2007. He is a graduate of San Jose State College and the Cornell Food Executive Program. Patch is on the ExecuForce Team of Encore Associates and is a ­counselor for SCORE, helping new and emerging ­businesses develop business and ­marketing plans. He ­welcomes your feedback. Email him at ALPangle@aol.com.


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About The Author

A word nerd, grocery geek and three-year member of The Shelby Report. She is a proud new homeowner and a great lover of avocado toast.