retail news in context, analysis with attitude

F. Scott Fitzgerald once wrote about New York that "the city seen from the Queensboro Bridge is always the city seen for the first time, in its first wild promise of all the mystery and beauty in the world."

Which is what I thought about this weekend when reading two different stories about Fairway, the once iconic New York food store that started during the Depression as a fruit-and-vegetable stand on the Upper West Side, was managed successfully by several generations of the same family before they sold it to a private equity group that then brought the company public ... only to see it declare bankruptcy three years later.

The New York Times has a piece saying that "this shouldn’t necessarily occasion a eulogy; the grocery chain will continue its operations as it restructures and reduces its debt load. At the same time, it is hard to feel optimistic about the future of the endearingly chaotic, unpolished New York retail style that Fairway has embodied.

"As business reporters have duly noted, Fairway’s difficulties have stemmed in large part from the greed of private-equity investment, which has fueled an aggressive and miscalculated expansion ... Simultaneously, of course, came the guerrilla incursions from FreshDirect and Blue Apron and the countless other three-steps-to-vegetarian-cassoulet meal-delivery services that the Internet economy has facilitated. Arguably, though, Fairway has also fallen victim to a culture of increasingly tiered consumer experiences, for which it remains almost too quaintly ecumenical."

Good piece, and you can read it here.

At the same time, Fortune has a story suggesting that the Fairway story is one that provides "is a good case study in (the) risks of premature IPOs."

An excerpt: "Fairway was just never in a prime position to outmaneuver bigger, far more profitable rivals. The chain was also too highly leveraged to be able to effectively move out of the New York City region to hunt for growth along the Northeast. It went public too early – or perhaps was never meant to launch an IPO. Other grocers, like Wegmans Food Markets and Publix Super Markets, run smooth, well-regarded businesses outside of the grasp of Wall Street."

You can read the Fortune story here.
KC's View:
Fitzgerald also once wrote, "Never confuse a single defeat with a final defeat." Fairway better hope that he got this right, and that it will live to succeed another day; I don't think that it is going to go belly up anytime soon, but I'm not sure that its past glories are any guarantee of success. And the most important thing to remember is that Fairway's wounds are almost all self-inflicted ... which is not to suggest that there isn't tough competition, but that ownership and management made a series of decisions that seemed to be more about money than food, more about management's priorities than shoppers', more about Wall Street than Main Street.