According to a panel of industry experts who responded via online discussion forum RetailWire, the answer is “Hell, no!”
A recent article posted on online discussion forum RetailWire argued that the proposed merger of Kroger and Albertsons combined with Aldi’s upcoming acquisition of Winn-Dixie and Harvey’s
could mean traditional grocery is headed for extinction. “Both of these recent mergers signal there might be increased pressure from shrinking margins, loss of profits and the rise of inflation hurting [dedicated] supermarkets more than before,” wrote the author, who also noted the growing presence of mass retailers Walmart and Target in the grocery sector.
So he asked, “Do you think the future of grocery retail will involve only Walmart, Target and the final one or two remaining grocery supermarkets that have merged?” People had opinions. Strong opinions. Here’s a sampling of responses:
“The U.S. grocery market is one of the least consolidated in the mature retail world. The top five players account for 30.8% of food market share. In the U.K., that figure is 57.6%; in France, it’s 43.1%; in Australia, it’s a whopping 68.2%. The reason markets tend toward consolidation is because consumers demand low prices and great value and, in a margin-thin category, this can best be delivered by very large corporations that trade on volume…. Everyone is jostling for the advantage of scale. While competitive dynamics will intensify, we are a very long way from an endgame.” — Neil Saunders, GlobalData
“While national mass chains are seeking continued growth and prominence, behind the scenes there is a large supply chain feeding the remaining 70% of grocers. Many of these regional and small independent grocers do quite nicely with the help of regional or local distributors, farmers, ranchers, fishers, brokers and bakers who can’t possibly support national chains, nor do they wish to. We’re far away from a mega grocery chain apocalypse.” — Brad Halverson, Clearbrand CX
“Food is essential in every neighborhood across this country, and a few mighty players cannot serve them all well. So there will always be room for innovators, disruptors and best-in-class leaders (H-E-B, Wegmans, Hy-Vee) — not to mention the community-based independent operators that dot our landscape.” — Dave Wendland, Hamacher Research Group
“National chains or not, grocery is inherently local and needs as short of a supply chain as you can get…. I feel like that pressure will continue to act even on national chains — and I think there’s growing awareness from states and local communities of just how important a grocery store is to the health of a community. If these big chains aren’t careful, they will find their hands tied more and more around what they can and can’t do, which may make these mergers more difficult.” — Nikki Baird, Aptos Retail
“The future of the non-mega food retailer is the continued search for differential advantage to maintain their place in the market.” — Richard George, Ph.D., St. Joseph’s University
“Consolidation among traditional grocers operating nationally is inevitable, but there is plenty of space in this category for strong regional players like Publix, H-E-B or Wegmans (not to mention more local chains like Schnucks, Sendiks and Lunds-Byerly…. So there may be only a handful of traditional national grocers left standing, but there is enough market share to go around.” — Dick Seesel, Retailing in Focus, LLC
“The demographics are changing in the U.S…. Formats catering to these growing demographics may offer more variety in certain markets, and these customer needs may not be able to be met with the mega grocery chain’s typical formats.” — Brian Cluster, Stibo Systems
