VIEWPOINT
The Death Of The Conventional Supermarket K EV I N CO U PE F OUN DE R , MOR N IN GN E WS BEAT.CO M
Are we living out, with apologies to Charles Dickens, a Tale of Two Industries? Is this the best of times, or the beginning of the worst of times? I’d argue that the answer to all of these questions is the same. Yes. I am persuaded in this belief by Scott Moses, the managing director and head of grocery, pharmacy and restaurants at PJ Solomon, who recently joined me on MorningNewsBeat for an extended conversation about the economic and competitive state of the industry. There has been a sense over the past year that, as consumers found the supermarket industry to be essential during the pandemic, that this is a perception that will persist and a reality that will provide the business enormous momentum going forward. It is hard to know how the resurgence of the coronavirus and the emerging threat of the Delta Variant will impact the industry; as I write this, vaccinations are increasing (though too few people still are fully vaccinated) and there is an ongoing debate about mask and vaccination mandates. Lockdowns seem not to be on the table right now, thank goodness.
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Scott’s position is that there are two different industries – one dominated by Amazon, Walmart, Target, Costco, and Aldi, as well as Dollar General and Family Dollar, which are engaged in almost unprecedented expansion efforts, and another one that includes almost everyone else, most (though not all) of which are at a competitive disadvantage because of simple economics. He’s done a lot of research in this area, and here is the number that most concerns him – between 2010 and 2020, the national supermarket industry lost some 900 conventional stores, a drop of about three percent. Compare that to “discount supermarkets” (up by more than 1,500 units, or 61 percent), dollar stores (up a whopping 12,000 units, or 62 percent), and “natural/gourmet supermarkets,” up more than 500 units, or 133 percent). At the same time, Scott points out, Amazon has a valuation of more than one-and-a-half trillion dollars, way larger than (and this never ceases to amaze me) Walmart, Kroger, Albertsons, Ahold Delhaize, Costco, Target, CVS, Walgreens, and Dollar General. Combined. Which means that Amazon
has access to financial resources that most of these companies do not (it can borrow money at lower rates than most countries), which makes it more competitive in almost any category in which it chooses to compete. All of which paints a picture of an industry in which the conventional sector, in some sense, is dying. There is an argument to be had, of course, about whether all this pain has been wreaked upon the conventional supermarket sector, or whether it is self-inflicted. Once again, my response is: Yes. Both. A couple of things here. First, can we be clear about the definition of “conventional”? “Concerned with what is generally held to be acceptable at the expense of individuality.” Whoa. That definition reads like an enormous red flag. I think it is fair to suggest that for retailers to succeed in 2022 and beyond, the last thing they ought to think about is acceptability, and the first thing they ought to be focused on is individuality. Isn’t the very definition of competing doing what the other side either cannot do or will not do?
