Published on: February 15, 2012Notes and comment from the Content Guy...
LAS VEGAS -- Tuesday’s opening session at the NGA Show here looked at “how to compete with non-traditional formats, and win.”
There were 10 suggestions. Nine of them sounded, well, familiar...
Product variety. Meat quality. produce & floral. Differentiate through bakery. Event merchandising. Ethnic marketing events. Employee engagement. Dedicated, trained associates. Community involvement.
Only one competitive tactic mentioned - using social media - seemed like it might have been something new...and, quote frankly, something not embraced and pursued by pretty much every independent retailer in the room.
My sense, from talking to a few folks, was that the people in the room loved the presentation. But at the risk of insulting someone - and that certainly is not my intention here - I think that perhaps they loved it because it reinforced extant priorities and programs. All those things are important - so much so that they already are being done, to varying degrees.
I think many of the retailers liked the presentation because it made them feel good about the tactics they are using to combat non-traditional formats. Feeling good is important, but it isn’t the only thing. Sometimes you have to face the truth.
Now, we all have our own versions of the truth. I certainly have my biases.
But I would suggest that some independent retailers make the mistake of believing that because they are independent and locally oriented, they are somehow morally superior to chains and behemoths. I would argue that there are things about their business model that can give them an advantage, but this is not about moral superiority.
This is about understanding that every day can be a fight to the death.
As was pointed out earlier in the week, things like social media can give big companies the ability to localize their promotional, marketing and charitable activities. Which can erode an independent’s advantage, unless the smaller company is fighting that battle every day, being more granular, more intimate, more committed to really understanding and catering to customers’ individual needs and wants. (Better produce, meat, floral, bakery, etc... is just the cost of admission, the cost of getting into the game. It’s what you do beyond these basics that can make the difference.)
Alternative formats have been created not just because big retailers wanted to create different sized boxes. They usually grow out of some understanding of the public mood. They are not evil. They’re just alternatives.
(I will give them this. There seemed to be a real recognition that dollar stores are an enormous threat to the independent sector, as the universe of dollar stores expands and swallows up more and more market share.)
And by the way...if you are going to look at the advantages and problems inherent in Walmart’s new smaller stores, it might make sense to consider the possibility - or probability - that these small stores are being designed in part to serve as delivery depots for Walmart’s e-commerce business, which sort of changes the economics and competitive set. And, while you’re at it, you might want to think about companies like Amazon and Peapod and Alice and FreshDirect and the other entities that are trying to revolutionize the grocery space.
Sure, revolutions don’t often happen. E-commerce is not likely to take over the food retailing world. But in the words of Leo McGarry, “In the history of everything that works, there was a time when it did not.”
The grocery space remains a highly competitive environment. It likely is only going to get tougher.
In a separate presentation, Mark Batenic of IGA and Joe Sheridan of Wakefern both agreed that growing private label sales - and improved products in this segment - are a bright spot for independents, though it was clear that there is no time for the industry to rest on its laurels. And Todd Hale of The Nielsen Co. painted a picture of the current economy that, while better than during the recession, suggested that plenty of challenges remain.
Sheridan said something that caught me by surprise - that between 30 and 40 percent of the people being hired by his company are bi-lingual. That was a “wow.” That kind of attention to detail can be a real differential advantage for any store.
Independents can be different. Can be innovative. Can change the rules of the game. Take RF Buche, of Buche Foods in South Dakota. His company took an enormous amount of money out of their operating budget by switching to all-digital advertising, completely getting rid of their newspaper circulars. It went smoother than anyone could imagine, is more effective than the old method, is using weekly “barn burner” specials to drive traffic and sales, and seems to have caught the competition flat-footed. He told a panel that I moderated about “Marketing on a Budget” that one competitor tired to replicate the move by going digital-only, but didn’t do anything else special ... and that competitor is no longer in business.
It is about going beyond the basics. it is about changing the rules of the game.
I have enormous respect for the independent sector. Most of the independent retailers I know have the basics covered, and are seeking the innovative opportunities that can help them stand apart. And they should feel good about that.
But not too good.
Not long ago, Michael Sansolo wrote here about the scene from War Horse
when, during World War I, rifle and bayonet-carrying British soldiers on horseback come face-to-face with German soldiers carrying machine guns.
The Brits probably thought they were on the side of good and right, that they were morally superior. But they also probably figured out pretty quickly that in a fight between a machine gun and a bayonet, moral superiority means very little.
In other news from the NGA Show...
• Stephanie Teteak of Larry's Piggly Wiggly in Kaukauna, Wisconsin, won the 2012 NGA Best Bagger Championship.
• The 2012 NGA Creative Choice for Merchandising went to Broulim's of Rigby, ID, for its "Wild Alaska Seafood Sale". For advertising, the Creative Choice was awarded to Niemann Foods, Inc. (County Market) of Quincy, IL, for its "Free Turkey Loyalty Promotion".