Changing habits challenge grocers

Published 5:00 am Saturday, April 13, 2013

Like increasing numbers of grocery shoppers, Ty Rushmeyer doesn’t have a regular store.

The 28-year-old and his wife shop at Rainbow once a week, but they also stock up their pantry at Target. Then there are “fun runs” for unique products at Trader Joe’s, Whole Foods, an Asian market, a local co-op and, in season, the farmers market.

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“We’re looking for healthier options,” Rushmeyer said. “But we’re also deal-seekers. We know which store has the best price for each item.”

Welcome to the new grocery landscape, in which traditional grocers are less able to count on loyal customers who buy everything they need in one visit.

Instead, shoppers are spreading their money around and constantly looking for deals. Traditional grocers are getting squeezed, not only by Target and Wal-Mart, but also by co-ops, farmers markets, specialty gourmet stores, budget grocer Aldi, dollar stores and drugstores.

“Consumers are constantly comparing from retailer to retailer,” said John Rand, a supermarket analyst for Kantar Retail in Cambridge, Mass. “If a store starts to slip because its prices are out of line or quality is suffering, people will quickly move on.”

Traditional grocery stores nationwide have lost 15 percent of their market share in the past 10 years, said Phil Lempert, a food industry consultant at SupermarketGuru.com.

Although shopping habits have been shifting for a decade, the recession accelerated the change. Everyone is a value customer now, analysts say, and traditional grocery stores are finding it difficult to compete on price.

Not only will Wal-Mart and Target match lower prices in competitors’ ads, but their prices are already 9 to 14 percent less than those at Supervalu-owned Cub Foods, according to a 2011 price survey by Checkbook, a Washington, D.C., nonprofit.

It’s a dynamic that complicates a competitive landscape for Cub Foods, whose parent is leaning on the brand to help revive its fortunes after it recently sold several major chains but kept Cub. Supervalu recently said it was cutting 1,100 corporate jobs to get its head count more in line with the company’s reduced size.

Not long ago, Cub was using “low price leader” as a slogan. More recent ads describe Cub as a shopper’s neighborhood store. Supervalu spokesman Mike Siemienas acknowledged the industry is changing but said the company is working to give shoppers reasons to go to its stores.

“The grocery industry is becoming more competitive every day,” Siemienas said. “We work very hard to differentiate ourselves from the competition.”

One way to do that is a bigger assortment of products. Target and Wal-Mart stores typically stock far fewer items than does a traditional grocery store, and Rand said discounters are more likely to run out of a particular item.

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