Grocery store competition in my neighborhood has increased ever since I moved into the area where I now live. It used to be that we had only four stores; a Vons, Ralphs, Albertsons and a small independent store called Jim's Market. Since then, the local Target and Walmart hav established themselves as grocery stores and Trader Joe's, Smart and Final and Sprouts have built new stores. Population during the time has stayed constant or maybe even dropped a bit.
Yesterday, Albertson announced they are closing. I'm not surprised. They did it to themselves. They failed to understand that customer behavior has changed and failed to specifically target one specific customer category.
So let's examine this a bit:
- Jim's market continues to be the successful friendly neighborhood store and master butcher.
- Trader Joe's focuses on a limited range of mostly high quality organic produce, many with their own brand.
- Target and Walmart sell national brands at discount prices
- Sprouts devotes a lot of space to pick-your-own nuts and snacks, and positions themselves as some kind of farmers’ market
- Smart and Final are for bulk purchases
- Vons made shopping a luxury experience with prices to match
- Ralphs remodeled and made the store cosy and warm and also expanded their range to more ethnic and "unusual" products
Albertsons stayed in the 1970s. They tried to be the middle of the road grocer. Not focusing on anything, while bathing their customers in cold hard fluorescent lighting.
The latest competitive addition was the opening of the Sprouts store. When they did, I spoke to the manager at the local Albertsons. He said they were not worried at all by the competition and said they would meet it with selling only "Choice" beef quality at lower prices and that this would make consumers line up. I shook my head as this showed how out-of-touch with customers he was. First, beef consumption is sharply down as consumers make more healthy choices, second, consumer awareness of the various beef grades is low. And to make it worse, they did not even promote this attribute, relying solely on stickers on the packed meat.
The lesson to learn, of course, is that you need to pick your customers and focus on delivering to them what they want to buy, in the environment they want to buy it. Move with the times.....
With warm shopping regards,