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that’s the easiest thing to do. As a result, most
will be disrupted by outside forces and will
end up in trouble.”
For more than 100 years, consumers relied
solely on supermarkets as a source for
groceries, Stephens said.
“Consumers had very few other options,
and they depended on supermarkets to
provide access to brands and products,” he
added. “And if there was something the local
grocer didn’t carry, then the consumer was
out of luck.”
But with the advent of online shopping
options, that approach is unlikely to remain
appealing for much longer, Stephens said.
“Every supermarket retailer today must look
at his business with fresh eyes and ask what
value he is bringing to the table or adding
from manufacturers.
“Selling groceries is a very product-centric
business, and companies live and die by
tenths of a percent in profits, which is a
precarious position to play from because it
doesn’t afford much wiggle room to be highly
creative. It leaves everyone living on the
razor’s edge.
“But someone has to step up and say they
will create a store that’s more about the
experience than the food.”
Online selling is a competitive reality that
isn’t going to disappear, he pointed out.
“Right now it’s Amazon against the world.
Amazon’s market capitalization is higher
than Walmart’s, and grocery sales are rising
20 percent a year, whiles sales at the average
supermarket are up just 1 percent, 2 percent
or 3 percent annually.
“With 60 percent of every incremental dollar
spent online going to Amazon, Amazon is
not only massive but dominant, and with
consumers willing to buy anything online, its
grocery sales will continue to grow rapidly.”
Changes in the way most supermarket
operators think are likely to occur gradually,
if they occur at all, Stephens said.
“I’m talking with some companies that are
considering doing new things or working on
innovation. Whether or not they can come
up with a new grocery model with a strong
entertainment value within the next couple
of years is debatable, but within five years,
most grocers will realize they can’t make
money unless they create something unique
and different from what they’re doing today.”
Companies don’t need to launch experience-
focused stores on a chainwide basis in the
short term, Stephens said, “but they should
be experimenting at test locations, the same
way Amazon is testing brick-and-mortar
stores. Innovation matters.”
Stephens said the most important skill for
any business, particularly grocery stores, is
continuity, adding that all companies have
creative people within their organizations
that are assets and must be utilized.
“What supermarkets should be doing is
testing innovative stores and understanding
who their creative people are because they
will need a ton of creativity going into the
next decade,” he concluded. ■
Editor’s Note: Elliot Zwiebach was a
reporter with Supermarket News for
more than 47 years.
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