Generally speaking, grocers aren’t gamblers: Traditionally, they’ve tended to hew to fairly traditional approaches to marketing and selling food. At least they did until a few years ago.
Then, faced with new competitor types – such as hard discounters such as Aldi and Sav-A-Lot (and now, Lidl) – and an increasing emphasis on store periphery departments, retailers started stepping up their game, expanding their offerings and, most recently, paring prices to the bone.
A growing number, including New York State-based Wegman’s, and Connecticut-based Stew Leonard’s, added an entertainment factor by bringing ‘backroom’ business to the store floor: Putting in-store baking operations front-and-center; providing a window into juice- and milk-bottling operations (Stew Leonard was a pioneer in this); taking sampling to a new level with educated offerings of featured wines … the list goes on.
But following at least two other Illinois grocers in truly breaking new ground recently was a Piggly Wiggly store in Antioch, where several video gambling machines were introduced. Store owner David Karczewski told the local Daily Herald newspaper that while the machines hadn’t been part of his original plan when he applied for a license to sell alcohol within his store, he quickly realized that the liquor permit, which also allowed him to introduce video gambling into his grocery store, sounded like a good idea.
He’s subsequently said he’s been proved right: He told the Daily Herald that they’ve earned him a number of new customers.
Hardly surprisingly, some community members have objected to the presence of gambling machines in a family-focused establishment, while town board members say allowing gambling wasn’t their intention in approving the store’s liquor license. Store owner Karczewski, meanwhile, said he installed the machines to give his location a competitive edge against larger competitors, and he’s been pleased with the many new shoppers he’s seen in the store.
His innovation, Food Dive noted a few days ago, isn’t all that different from other food retailers’ innovative efforts to attract new customers, or, at the least, new income from existing ones. (Banking, parcel shipping, Coinstar machines and even the occasional Department of Motor Vehicles branch as well as restaurants and bars being among them.)
In all such instances, retailers are fighting as best they can to overcome competitive threats. Even more extreme, though, are the approaches of such disrupters as Lidl and Aldi, in particular, whose strategies revolve around limiting selections (reducing the need for backroom space) and cutting costs – internally and to consumers – to the bone.
The latter’s strategy is disrupting the food retailing industry more dramatically than anything before it came close to doing. The club stores – Costo, Sam’s Club – caused a lot of shoppers to rethink shopping patterns a couple decades ago, but the careful among them quickly realized that the key to successfully shopping those stores – to save money – is to ‘pre-shop’ prices of things you want at other outlets. The clubs aren’t giving anything away, so some of their prices are far from the best out there.
And that concept was further complicated as Amazon introduced an ever-broader range of products online. Now, the click-and-collect concept that Walmart, among others, are greatly promoting are presenting further challenges to walk-in-and-buy oriented retailers.
It’s only a matter of time before Walmart and others figure out how to profitably do click-and-collect on food items. Fresh and frozen food items, that is: Offering click-and-collect on dry groceries is as simple as doing it.
Meanwhile, dollar stores also are becoming more competitive against grocers. Dollar Tree, for example, has been featuring – via a big store-front banner – a several-ounce ‘pre-conditioned’ steak for around $4.00. But this is a real ‘buyer beware’ item: The product looks good, but the ‘pre-conditioning’ has involved a form of pounding that’s beat the … flavor out of the product.
Still, to some shoppers, something called a ‘steak’ is still outside the range of what they usually consume for protein. And that’s the key issue on all the retail changes the industry is undergoing: The value is in the eyes of the beholders, and consumers, having an amazing assortment of tastes and concepts of what’s good, and good for them, will respond to grocers’ changes with their own ideas of what makes sense and what doesn’t.
Watch this space!