The National Grocers Association annual conference at the San Diego Convention Center included a session called “Thriving as an Independent” in which four industry leaders told the audience why independent retailers will continue to be successful even with chain mergers, discount department stores expanding into groceries and online only companies.
Independent Grocers Alliance president and chief executive officer John Ross, Associated Wholesale Grocers president and chief executive officer David Smith, UNFI/SuperValu executive vice president for wholesale Mike Stigers and Affiliated Foods president and chief executive officer Randy Arceneaux were the panelists who explained why wholesalers are optimistic about independents, especially those who are strategic, disciplined, innovative, and willing to make tough decisions.
Stigers and Smith are also both on the NGA executive committee; Stigers is the vice chair and Smith is the treasurer.
Arceneaux believes that a closer connection between shoppers and store decision-makers is responsible for the ability of independent grocery stores to maintain customer loyalty. “They’re in touch with the consumer and understand what the needs are of the community they serve,” he said.
That includes adjusting to issues area customers have.
“The independent operator I believe will always come out on top,” Arceneaux said. “It’s because we continue to figure it out.”
Smith remarked that independent stores are compatible with customers’ desires to eat fresh food.
“Their stores reflect that,” he said.
“Perishables has always been the backbone of the independent operator,” Arceneaux said. “The perimeter of the store is what differentiates us.”
(Grocery stores often place produce and other perishable food along or near walls. Non-perishable goods are sometimes referred to as “center store” items.)
“It’s part of their identity. It’s health. It’s wellness,” Ross said. “They are looking for partners to help them and who better to do that than independents.”
The consolidation of many large chains and the expansion of discount department stores into groceries creates competition.
“There’s concern but there’s also opportunity for those who are prepared,” Smith said.
The consolidation of the large chains has led to consolidation and thus contraction of stores, which allows independent stores to take over those locations.
“They rebuild and develop and they continue that location for that neighborhood,” Smith said. “They do well in those locations. Those are opportunities for independent groceries.”
Stigers attributed community connection as a factor in the survival of independent grocers. “They’re in the communities,” he said. “They’re relevant to what they’re doing. The independent grocer beings the passion of the community.”
Customers will pay more at an independent grocery store than they would with a large chain whose volume allows for smaller profit margins, but minimizing expenses allows independent stores to have reasonable profit margins.
“It is sure a lot easier to make money when you don’t spend it,” Stigers said. “You have to have efficient operations to do that. It’s just taking every single line item and walking through it.”