This is a continuation of a topic from the Groceteria message board that was interesting but frozen by the moderators over there:
http://www.groceteria.com/board/viewtop ... f=2&t=3034
In the last response larcor had noted these four traits in order for a store to be successful:
1. Lowest Prices
2. Best Location
3. Quality
4. Service
I agree those are all important but in reality price isn't as important as people might think. If you look at the top 4 grocers in the U.S. by sales (WalMart, Kroger, SuperValu and Safeway) only WalMart would be ocnsidered a low price leader.
Why traditional supermarkets have been dying
Re: Why traditional supermarkets have been dying
Price is definitely not the most important factor.
Whole Foods Market is very popular. Their stores are packed with people who want high quality food. It is expensive, but people are willing to pay for high quality organic and gourmet products.
Safeway is one example where price is not the most important factor. Safeway is expensive on many products. You can find lower prices at many other stores such as FoodMaxx and Walmart. However, people seem to love Safeway. There are long lines and people just flock to their newly remodeled Lifestyle stores.
Why is this? Safeway has a monopoly in the San Francisco Bay Area. They have stores in practically every single city. Everywhere you go there is a Safeway taking up the most convenient locations for a supermarket.
Safeway also has good deli products and prepared food. When you walk in, you immediately see and smell rotisserie chicken. You then get a huge display of prepared sandwiches and tasty salads.
Then you walk a little further and see their extensive wine selection. It is expensive, but it is displayed in such a tempting manner.
Once a store is remodeled into the Lifestyle Format, customer levels pick up. Why is this? When a store is made to look nice and new, people love to go there and shop. It makes them feel like they have high status for shopping in such a posh environment.
When you go to Walmart, you certainly don't feel like you are rich and high class. You want to get out of there as soon as you can. It isn't glamorous and you don't want to stop and browse like you do at Safeway. It is not just the atmosphere. It is the fellow customers and their screaming children running wild in a dirty and messed up store.
Walmart lacks selection. You won't find gourmet brands and organics. The selection is limited only to certain brands and junk food. People want more gourmet products. Their prepared foods are not as visually appealing as Safeway sandwiches and salads. You can't get high quality sushi at Walmart. Some Walmart stores offer sushi, but it looks low quality.
I know Safeway is overpriced, but they do offer prepared foods that are appealing and addictive. It keeps the customers coming back despite the high prices. They serve it up in a stylish and posh environment with a Starbucks Cafe to lure you in. Walmart doesn't have that.
Whole Foods Market is very popular. Their stores are packed with people who want high quality food. It is expensive, but people are willing to pay for high quality organic and gourmet products.
Safeway is one example where price is not the most important factor. Safeway is expensive on many products. You can find lower prices at many other stores such as FoodMaxx and Walmart. However, people seem to love Safeway. There are long lines and people just flock to their newly remodeled Lifestyle stores.
Why is this? Safeway has a monopoly in the San Francisco Bay Area. They have stores in practically every single city. Everywhere you go there is a Safeway taking up the most convenient locations for a supermarket.
Safeway also has good deli products and prepared food. When you walk in, you immediately see and smell rotisserie chicken. You then get a huge display of prepared sandwiches and tasty salads.
Then you walk a little further and see their extensive wine selection. It is expensive, but it is displayed in such a tempting manner.
Once a store is remodeled into the Lifestyle Format, customer levels pick up. Why is this? When a store is made to look nice and new, people love to go there and shop. It makes them feel like they have high status for shopping in such a posh environment.
When you go to Walmart, you certainly don't feel like you are rich and high class. You want to get out of there as soon as you can. It isn't glamorous and you don't want to stop and browse like you do at Safeway. It is not just the atmosphere. It is the fellow customers and their screaming children running wild in a dirty and messed up store.
Walmart lacks selection. You won't find gourmet brands and organics. The selection is limited only to certain brands and junk food. People want more gourmet products. Their prepared foods are not as visually appealing as Safeway sandwiches and salads. You can't get high quality sushi at Walmart. Some Walmart stores offer sushi, but it looks low quality.
I know Safeway is overpriced, but they do offer prepared foods that are appealing and addictive. It keeps the customers coming back despite the high prices. They serve it up in a stylish and posh environment with a Starbucks Cafe to lure you in. Walmart doesn't have that.
-
storewanderer
- Posts: 14632
- Joined: February 23rd, 2009, 3:54 pm
- Has thanked: 3 times
- Been thanked: 322 times
- Contact:
- Status: Offline
Re: Why traditional supermarkets have been dying
Price is not important? How did Wal Mart become the largest grocer then? It is all about price.
Safeway's (and many other failed grocers) problem was trying to charge double or triple what Wal Mart was charging on packaged center store items. There is no quality difference on these items between stores. The quality difference and area where you can justify a little higher price for better quality is perimeter.
Safeway does well in northern Caliornia due to poor competition. Save Mart is a horrible operator and for some reason Raleys just can't get center store volumes to pick up. Given the choice of the three I'd pick Safeway for its selection and consistent product mix and quality between stores. When I walk into a Save Mart I have no idea what I'm going to get but more often than not it is a poorly stocked perimeter, understaffed store, and questionable pricing. And Raleys... I've just never really liked. But they are a pretty good operator objectively speaking.
Safeway is struggling horribly in other regions going against various Kroger divisions and Wal Mart. They have some pockets where they do well usually in cases where there is limited competition or a poor condition Kroger banner nearby but in general they are not doing as well as Kroger's stuff or Wal Mart. Their anemic sales numbers over the past few years show what a rut they are stuck in. Safeway seems to run every store as if it is in California, sort of like Albertsons ran every store as if it was in Boise. But I actually think the rigid similarity between regions of the current Safeway operation is worse than that of Albertsons. Safeway has backed itself into a corner with a lifestyle strategy that is not executed very well in a lot of places. Many areas that are middle class or lower middle class are shopping on a price basis. Safeway may offer a little better quality than some Kroger divisions yet due to their high price reputation they are unable to successfully capture that middle and lower middle class customer segment if a strong Kroger operation like a Fred Meyer, Frys, King Soopers, etc. is nearby. Even old junky Smiths give nice lifestyle Safeways a run for their money.
It is a shame. Safeway has a nice quality product mix for the most part, good marketing, and a lot of good people in their stores. But the arrogance and rigid attitudes on pricing, merchandising, and other things are not doing them any favors.
Safeway's (and many other failed grocers) problem was trying to charge double or triple what Wal Mart was charging on packaged center store items. There is no quality difference on these items between stores. The quality difference and area where you can justify a little higher price for better quality is perimeter.
Safeway does well in northern Caliornia due to poor competition. Save Mart is a horrible operator and for some reason Raleys just can't get center store volumes to pick up. Given the choice of the three I'd pick Safeway for its selection and consistent product mix and quality between stores. When I walk into a Save Mart I have no idea what I'm going to get but more often than not it is a poorly stocked perimeter, understaffed store, and questionable pricing. And Raleys... I've just never really liked. But they are a pretty good operator objectively speaking.
Safeway is struggling horribly in other regions going against various Kroger divisions and Wal Mart. They have some pockets where they do well usually in cases where there is limited competition or a poor condition Kroger banner nearby but in general they are not doing as well as Kroger's stuff or Wal Mart. Their anemic sales numbers over the past few years show what a rut they are stuck in. Safeway seems to run every store as if it is in California, sort of like Albertsons ran every store as if it was in Boise. But I actually think the rigid similarity between regions of the current Safeway operation is worse than that of Albertsons. Safeway has backed itself into a corner with a lifestyle strategy that is not executed very well in a lot of places. Many areas that are middle class or lower middle class are shopping on a price basis. Safeway may offer a little better quality than some Kroger divisions yet due to their high price reputation they are unable to successfully capture that middle and lower middle class customer segment if a strong Kroger operation like a Fred Meyer, Frys, King Soopers, etc. is nearby. Even old junky Smiths give nice lifestyle Safeways a run for their money.
It is a shame. Safeway has a nice quality product mix for the most part, good marketing, and a lot of good people in their stores. But the arrogance and rigid attitudes on pricing, merchandising, and other things are not doing them any favors.