Just when Americans seemed sold on big-box grocery stores as the answer to meeting or beating the monthly food budget – and, depending on where you live, one-stop prepping for doomsday while holed up in a shipping container buried somewhere in them thar hills — along come several national chains that want to sell people on an idea once thought extinct: Buying household groceries from the friendly neighborhood market.
Either the economy is getting better than any politician believe or smaller stores will soon admit only those who meet certain income and asset levels. Or a significant change is afoot that food retailers are scrambling to catch up to before the long market tail eludes their grasp.
And the retailers aren’t the only ones looking at a major shift in strategy. Product makers relying on bulk sales and petty couponing to drive revenues may soon see those efforts gone to waste as consumers flock to all things specialty. Specialty, that is, with a smile. And a touch of down-home charm.
The Delight Index
Those are some of the ideas suggested by the findings of a new survey from Market Force, which polled 6,600 consumers to find out which grocery store chain ranks as North America’s favorite.
The winner, by a comfortably clear margin, is Trader Joe’s, which operates almost 400 outlets across America and which has enjoyed decent growth year-over-year, especially recently. The major selling points for consumers? The chain’s strong focus on an enjoyable customer experience, coupled with a rotating stock of products that bear the Trader Joe’s brand. In other words, it’s a fun place to shop and there are always new products that both surprise and delight.
Take that Walmart, which, by the way, finished a distant last on the survey’s “delight index”.
All well and good, far as a clear overall favorite goes. But which grocers do consumers actually visit most often, and by which region? One area’s tried-and-true chain, after all, may be completely unheard of in another part of the country. Grocery stores – at least up until now – have never much relied on “playing in Peoria” as a measure of broad national appeal. Regional has long been where the action is.
The stores where consumers spent most of their money in the 30 days prior to the survey:
- Northeast – Stop & Shop snagged 11% of the votes, followed by GIANT (6%) and a tie between Wegman’s and Market Basket (5%).
- South – Kroger (16%) edged out Publix (15%), which handily outdistanced H-E-B (5%).
- Midwest – Kroger on top once again, this time with 11% of the vote. Meijer took 9%, with Hy-Vee close behind at 8%.
- West – Safeway led the pack at 12%, with Kroger second at 9% and Costco garnering 7%.
Canada is a whole other animal and can be overlooked for purposes of this discussion, apart from one major point, reported widely in the news media: Trader Joe’s recently sued a Vancouver businessman for buying up Trader Joe’s products in America and re-selling them as items in the man’s own store, known as Pirate Joe’s. (And, since the suit, the “P” has apparently gone missing from his store’s name, turning him into “irate Joe’s”). Whatever the outcome, it’s likely to look good for Trader Joe’s, which as yet operates zero stores in Canada.
Hitting to the opposite field
It’s important to note that Trader Joe’s fell short of knocking it out of the park in all aspects of the survey. In fact, the California-based grocer didn’t finish in the top five when it came to factors such as Convenient Location, Low Prices, Good Sales & Promotions or One-Stop Shopping. On the other hand, the purveyor of the discount Charles Shaw-made wine, nicknamed Two-Buck Chuck, finished first in the categories of Atmosphere and Fast Check-Out, and second when it came to Cleanliness, Accurate Pricing and Courteous Staff.
Another chain that aims for a customer-centric, neighborhood-market feel is Whole Foods, which took first place across the board in the categories of High-Quality Meat, High-Quality Produce, Natural and Organic Options, Nutritional Information and Sustainable/Green Practices.
The survey report perhaps summed it up best with a telling sub-headline, “Brands That Delight Are Operationally Excellent.”
And brands/products that don’t, it seems just as clear, are destined for trouble, including lower-scale product placement (unless those companies want to pay higher premiums for prime shelf space, which will only raise prices for their cost-conscious consumers) and declining relevance in consumers’ everyday lives.
Out or in with the tide?
When customers are willing to go out of their way to find the likes of a Trader Joe’s or a Whole Foods (not to mention risk getting mowed down in their ultra-busy parking lots), pay more money for purchases there and keep returning, the specialty stores are not only doing something right. They’re capitalizing on a major sea change.
Manufacturers and big-box retailers are already seeing the pinch and some are responding with specially decorated product areas set aside in their stores. Wood, hanging plants and even folksy music help to contribute to a neighborhood atmosphere. Not really, but the attempt is telling. And a major fail.
The question is: Will the larger chains make a convincing enough switch in operational excellence to confirm the neighborhood market movement as here to stay? Or will they try to hold off the trend with window dressing – and, in the process, go the way of retail dinosaurs like Montgomery Ward and Sears?
As it stands, the specialty operators aren’t just eating the big boys’ lunch. They’re picking the larder clean, and re-stocking it with products of their own. The tide may not yet have turned completely. But the forces that could bring that situation about are creating some serious momentum that way.
Coupons or no coupons.
- Shopping, Trader Joe, Walmart, Whole Foods