retail news in context, analysis with attitude

by Kevin Coupe

The Atlantic has a terrific story about the impact of the pandemic on consumers and the supermarkets they patronize.  An excerpt:

"For years, the cumbersome grocery business has seemed a relic ripe for a Silicon Valley 'disruption' - one that might erase and utterly remake supermarkets as we know them. In a way, the pandemic is that moment. When this all ends, it will have changed supermarkets forever. People will shop differently. Grocery workers’ jobs will shift. Stores will take on new shapes and sizes. But those changes won’t spell the end of supermarkets. Instead, they’re likely to tighten supermarkets’ grip on American life."

The story goes on:

"Just as a new appetite for one-stop, self-service shopping led to supermarkets after the First World War, the pandemic could inaugurate a seismic shift in grocery shoppers’ habits. Right now, consumers are not dining out, because of lockdowns, but they still have to eat. Restaurant delivery is growing, but online grocery shopping - both delivery and pickup - is cheaper, reduces the number of trips that food workers have to make, and keeps shoppers out of stores, where personnel are at serious risk of infection."

You can read the entire analysis here.

The Atlantic (which, by the way, has been doing great work covering the various components of the pandemic) suggests a number of likely developments in the grocery business, one of which seems almost inevitable to me - that the bigger are going to get even bigger and more powerful - because the likes of Walmart, Costco, Kroger and Amazon have, despite glitches, been largely better able to adapt to the crisis because they have more resources, they are going to emerge in a post-pandemic world as even more dominant.

This isn't to say that smaller companies and independents will become obsolete.  There are plenty, I think, that have done an excellent job taking care of their shoppers.  (I'd bet that food co-ops largely have kept their customer bases, for example.)  But it will be the exceptional ones that maintain their differential advantages, because they will continue to work those advantages, never becoming complacent.

The Atlantic notes that "the shift to smaller-scale, more attentive grocery service has already taken place, in part," and will continue … though I suspect that if the economy recovers more slowly than some are predicting, even some of those retailers will have to shift their focus a bit.

I do think that these changes will play out differently for different retailers and demographics - shoppers who go to Walmart and WinCo will want and need something different from those who shop at Dorothy Lane Market and Zupan's, in part because they may live in different financial circumstances but perhaps even more importantly because they have different priorities and a different relationship with the food they eat.   And that's okay … even in an economic downturn, there is room for a lot of players.

Not all players, though - the middle-of-the-road, undifferentiated stores will be more at risk in the future than they were six months ago, and they were skating on thin ice then.

One big piece that The Atlantic  didn't explore was the role of auto-replenishment in grocery's future.  Services like Amazon's Subscribe & Save will, I think, be even more prevalent and relevant in the future, especially because they will bring commodities and frequently bought items right to the home, reducing the number of times people have to go the the store to the times when it actually matters.

How this plays out in the future will be a real Eye-Opener.