Market View

Market View: Help Your Retailers Fight Back

Marketing expert John Stanton offers this advice: Not all grocers will disappear; place your bets with the likely survivors.

By John Stanton, Contributing Editor

Usually, my articles are about and intended for food processors. But this month I am writing about food retailing, which of course has serious implications for food marketers and salespeople.

Most retailers have seen headlines announcing the end of brick-and-mortar stores. To paraphrase Mark Twain, reports of the death of supermarkets is greatly exaggerated. A report by Nielsen that announces that 70 percent of food will be bought online by 2025 is misleading. It also says that about 2 percent of food is sold on-line today.

I am sure that online food sales will grow, and as I have previously written, we will see many new channels of distribution to take sales from traditional supermarkets. What appears to be missing from the dire forecasts is that the traditional supermarkets can and will change.

There was a quote in the Wall Street Journal many years ago that proclaimed (paraphrased) if things continue as they are, every supermarket in America will be an A&P. We know that prophecy was dead wrong! However, the unchanging supermarkets will be gone.

There are some chains and independents that are acting similar to the call from Stalin during the battle of Stalingrad in which they had no chance to win. He said “ни шагу назад” or “not one step back.” There are examples of supermarkets that are not giving in to the new interlopers. For example, Wakefern is using every tool to get customers their food and kindred products anywhere and any way they want it ... and that includes in store.

You may ask, "Why should I care whether consumers buy my products online or in stores, as long as they buy my product?" There will be some brick-and-mortar stores left and they will account for a significant amount of sales, albeit not like today. Everyone will be competing for space in those remaining stores. You can either be a hero with them or an also-ran.

Ideas for supermarkets to stay in business and how you can help them

Let’s begin with what not to do: You cannot continue to give them money (disguised by names like slotting, etc.). Giving money often just keeps a loser in business longer and does not increase the chances of them being a good customer for you and a good return on your investment.

Now, here are a few things food processors can do to keep grocery stores alive and well.

First, help them make stores more entertaining. I find most supermarkets as exciting as a wake (excluding an Irish wake). Participate in displays that are fun and amusing. Provide amusing signage. If you search the internet, you can find hundreds of entertaining signs such as “Three items for the price of three.” Get away from signage that only has the product and the price. Do you really need a sign to say Apples? What do you think consumers thought they were!

Help stores figure out how to make themselves more convenient to shop. While this may not be just for your product, if it helps these retailers stay in business, then it helps your business. Help with considering and implementing new technology. Retailers do not have a track record of innovation, so this is something where branded companies can make a major enhancement. If you must provide greater funding to retailers, make sure it goes to the uses that will cement their survival not extend their eventual demise.

It may be difficult but I love the idea of branded checkout lines. That is, if you have any Campbell’s products or Kellogg, etc., you can use this checkout line. The branded company would have to pay to keep the extra lane open, but it builds brands and may help keep the store open. You see things like this all the time in other industries. How many of you reading this list can use a preferred airline line?

I know many retailers will say, “Just hand over the money, we know how to run a retail store.” In fact, many do not know how to run a modern food store. They knew how to run a store in the 1990s but not in this new century. You, the food manufacturers, have to decide which of the chains you think will make it, and that is where you should put your efforts.

I am sure many of the current chains will not be in business in the near future, but it is not like a Wheel of Fortune, where random results occur. You can study and examine the chains. Ask what they are doing to stay in business and decide which ones are worthy of your investment.

Darwin has often been misquoted as saying only the strongest survive. However, what he really said was, “In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.” Look for the retailers that are adapting themselves to the new consumer. They will survive.