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Reuters this morning has a story about the continuing competitive issues facing Fairway, framing it as both specific and as reflective of a broader trend:

"Two years after going public as a fund managers' favorite, New York City-area specialty grocer Fairway Group Holdings Corp now sees its shares selling for less than a pack of organic gum," Reuters writes. "At around 70 cents per share, the company is down 94 percent from its April 2013 initial public offering price and is in danger of being delisted from the Nasdaq for trading below $1 for 30 consecutive days.

"Yet Fairway, even with its deep wounds, is just the extreme illustration of a trend that is hurting competitors such as Whole Foods Market Inc, Sprouts Farmer's Market Inc and Natural Grocers By Vitamin Cottage Inc as well.

"As middle-income outlets like Costco Wholesale Corp , Wal Mart Stores Inc and Target Corp expand their organic offerings, the companies that pioneered the trend are being left behind."

The story goes on:

"Fairway is in perhaps the toughest position of any specialty grocer, said Andrew Wolf, an analyst at BB&T Capital Markets. Among its problems: double-digit declines in its key stores in Brooklyn and the Upper East Side after Whole Foods opened locations nearby; a debt burden of more than $250 million that has forced the company to curtail its plans to open 300 new stores and triggered a $3.5 million fine for pulling out of a lease to open a store in the Hudson Yards project rising in Midtown West; and higher levels of discounting that have kept the company from turning a profit."
KC's View:
It seems to me that Fairway's problems are organic in more ways that one ... and its biggest problem, I think, may be that its brand image has become increasingly muddled even as the company has expanded both its fleet and its debt. I can remember that when Fairway was a much smaller company, there were times when I'd be in New York City and would stop at one of its stores there because it had such a specific and differentiated specialty offering. But now, with a Fairway just a few miles from my house in Connecticut, I almost never go there ... they've rarely given me a compelling reason to do so, or to change entrenched shopping habits.

I have no idea how they fix this problem ... because the momentum is going in all the wrong direction, and reversing it would take a lot of time and money and patience. And I'm not sure that Fairway has any of these.