The Business of Grocery Stores
by Majenica Moles
We’ve all seen it. Grocery stores that have been in business for years and years, just up and go bankrupt out of the blue. It seems like this is happening more and more, and usually it involves the smaller stores that cannot compete with the big box retail stores.
Just last year we saw the decline of a grocery store chain here in Indiana. The chain went bankrupt and sold off to another well-known chain. This particular chain didn’t manage their money well. The newspaper articles would tell us that the chain was several months to years behind in building rental payments. That is absolutely crazy! That’s really bad for business.
Pricing
The prices of this chain were extremely high. They were nearly double what the cost of the same item was at the big box retail store down the road. Yet, they persevered. There were many loyal customers, mostly the older generations. I personally couldn’t figure out how a company that size couldn’t pay their rent. But then it hit me: they were being squeezed out by big box retailers. They were losing money because people were going elsewhere to get their groceries. They were struggling financially, because they didn’t have the business size to compete with the lower pricing. Their costs for stock was higher than the competition, so they couldn’t afford to lower their prices. It’s sad, really. This company had been in business for many years, and now they aren’t anywhere. When they went bankrupt, they shut down every store they had.
Big Box & Online
You know, the big box retailers aren’t the only ones that are pushing the smaller stores out. Online grocery ordering is now a thing. You can order items to be delivered to your home, which is pretty convenient. The prices of this are still better than the smaller chains that have high prices.
You also have the option, for several chains, to place an order via an app or online, and pick up the order at the store. In most cases, they will bring the items right to your vehicle, and you never have to set foot inside the store. Now, don’t get me wrong, I think this is wonderful. Unfortunately, this feature, as well as the online ordering, really hurts the smaller stores.
The convenience that the bigger stores offer definitely makes them a better choice for some. It’s great for those with disabilities, or those with anxiety. Anxiety can really make things like grocery shopping, difficult. Effective master data management might be something that the smaller store need to make sure they have. This can help them understand so much about their business, such as customer base. It will tell them what their best selling products are, and what kinds of things their customers are purchasing.
Sales
Sales are another thing that keeps the big box retailers ahead of the rest. The bigger stores always have amazing sale prices, which is fantastic for families to save money. When you can go to the bigger store and get something for one dollar, versus the smaller store at nearly five dollars, you are going to choose the bigger store.
Overall, unfortunately, the big box retailers have a strong advantage over the smaller stores. I see more small chains closing up shop over the next few years, and the bigger stores getting even bigger.
Majenica
"Time spent with cats is never wasted." ~ Sigmund Freud
