Feb 27, 2007
Grocers Checking Out Strategies For GrowthSource: Chicago Tribune

In the past 20 years, supermarkets have seen their market share in food sales plummet from more than 90 percent to about 50 percent because of competition from supercenters, such as Wal-Mart and Target. Independent garden centers have been seeing the same sales decrease due to expansion from big box competitors. Supermarket operators say they are figuring out how to compete with the discounters and preserve their businesses. Independent garden center operators may be able to use some of the same strategies to salvage their businesses.

One strategy supermarket operators are executing is aiming for the higher end of the market. Dominick’s, a Chicago supermarket chain that announced in January plans to close 14 underperforming stores, said it is scouting for new locations to open revamped, upscale markets.

“I think we are seeing a bottoming out of the decline in the supermarket,” said Jim Hertel, managing partner Willard Bishop Consulting, in a recent Chicago Tribune article. He said many operators have realized they cannot compete on price with discounters. Still analysts predict the fragmenting of the market that defined the last decade will continue as forceful as before.

“While big box department stores such as Target and Kmart have moved into the food industry, there is still demand for full-line, fresh food products, not just the cans, bags and boxes of food that have a long shelf life,” said Mari Gallagher, principal with Mari Gallagher Research and Consulting, in the Tribune article. “You can’t buy everything you may want for dinner at a department store.”

Just as consumers can’t find all their produce needs at department stores, garden center shoppers cannot fulfill all their gardening needs at big box supercenters. In order to compete, independent garden centers have to be different. Ron Paul, president, Technomics Inc. said of competing supermarkets, “They have so many different kinds of competitors that it almost becomes a store-level decision, which makes it difficult for centrally managed stores.”

Many supermarket operators have come up with response strategies and are extremely successful in the face of competition from Wal-Mart and other supercenters, according to Hertel. As a result, he said, the rapid slide in market share is slowing. Independent garden centers may be able to find the same success in the struggle with big box competitors by becoming savvier in targeting the consumer.