By Keith Daniels
October 1, 2019
To say Wal-Mart is winning at grocery is an understatement. While this was once a minor part of the goliath business, it now accounts for half of Wal-Mart’s sales. It’s so prominent, in fact, that it graced the Today’s Grocer cover just two issues ago.
As though that competition wasn’t enough, European players Aldi and Lindl have swooped in to gain share with private label offerings. Sprinkle in the encroachment of online retailers like PeaPod, and it’s no mystery why some think regional grocers could become obsolete.
A regional player will have difficulty winning on price — but that doesn’t mean you can’t compete. Without the ability to be the low price leader, regional grocers must look to win on other fronts. The most successful tactic we’ve seen has been around selection. Rather than stock the same products as the big competitors, go after a separate, customized product offering. Bucking the one-size-fit-all method of the Big Box, we’ve seen niche players not only survive, but thrive.
This comes down to changing demographics. The US currently has over 40 million immigrants (those born in another country). While the pace of new entrants has slowed, the fact is that our nationwide population is increasingly diverse – much more than a single global aisle reflects. Regional grocers with a firm grasp of their local population can cater their food and selection based on the “taste of home” for that market.
This goes deeper than offering jasmine rice and Latin salsa. Grocers who are winning are offering spices popular in specific countries or even regions within a country.
From there, the expansion possibilities are wide. For instance, Vallarta markets in California hosts free hatch chile roasting events and have an in-store Taquerias that further cater to their target market.
Niche isn’t limited to ethnic foods. We’ve seen stores like Di Bruno capture a busy, young customer segment with a wide selection of ready-made meals at a higher price point.
This isn’t to say other fundamentals like inventory and liquidity don’t matter. Dean & Deluca was an early adopter of the niche strategy but was crushed by overspending on marketing and rolling out a few too many product flops.
However, for regional grocers who have their finances in order, niche product selection is a way regionals can– at least for now – compete with Big Box players.