In the 1990’s, the retail grocery industry underwent significant consolidation with a flood of store acquisitions and mergers throughout the nation. Amid this volatility, the U.S. saw a surge in mammoth superstores and colossal discount warehouse clubs. These cavernous supermarkets began popping up everywhere and soon dotted states across the country’s map.
However, it seems that the grocery industry is experiencing another momentous shift. In the past couple of years, independent retailers have started to re-emerge and flourish within their local markets. Most of these independent retailers never went away in the first place. They simply held on through the consolidations and the swell of retail giants, patiently waiting for the tides to turn.
Right now, the tides are definitely turning. As many consumers become disenchanted with the grocery giants, they are running back to independent stores for the personal attention and specialized products they crave. Consequently, independent grocers are back in the game and holding their own against the big box giants.
“I think a lot of customers are getting tired of the big stores,” says Archie McGregor III, owner of Archie’s IGA, an independent grocery store in Saint Maries, Idaho. “They just want to get in a store where they can shop and find everything they want without having to spend all day there.”
The comeback kids
The numbers prove that independent grocery stores have incredible staying power. According to the publication Progressive Grocer, total U.S. grocery sales reached $478.9 billion in 2005—but independent stores pocketed only $45.7 billion that year, less than 10 percent of the total. However, that same year, the number of small, private grocery stores in the U.S. held steady at about 8,160 while the number of large chain stores continued to diminish.
Despite the peaks and valleys the major chains endure, it seems that independent stores continue to survive—and in recent years, these stores have been thriving.
“There has been a pretty strong increase in the number of independent grocers,” says Derek Katz, head of Member Services with the California Independent Grocers Association (CIGA). “Part of that is kind of a resurgence against the growing chains. A lot of people just aren’t really interested in the sort of inequities that are caused by those chains, so they tend to be leaning more towards independent groceries in their neighborhoods.”
As a matter of fact, some independent stores see a boost in sales every single year. “Our business has been strong, and we’ve had increases in sales every year for the past 20 years,” says David Green, part owner and manager of the Grocery Kart in Broken Bow, Nebraska. Green explains that his store’s location has a lot to do with their success. “We’re isolated somewhat from the big merchandisers because we don’t have any supercenter or large competitors within 50 miles.”
But the success of independents is not limited to remote areas of the country. It seems that independent stores in burgeoning towns are enjoying growth, as well. “Our customer base increases every year,” says Debra Opolski, Office Manager of Roselawn IGA in Roselawn, Indiana, a growing area. “We’ve seen a big increase in our organics and Hispanic products.”
In the face of this mounting success, many independents have plans to expand. “We’re gaining momentum,” says Adi Mor, President of Garden Fresh Market, an independent store in Wheeling, Illinois. “We have plans to open two stores this year.”
“I think Chicago area independents have expanded, a lot of them have gone from smaller stores to open up some bigger stores with a 50,000 to 60,000 square foot range,” says William Dietz, Jr., President of Heartland Produce Co., a supplier in Kenosha, Wisconsin. “In the Milwaukee area, there’s been a re-emergence of independents.”
All in all, it appears that independent retailers across the nation are thriving. “I still think independent is the backbone of the industry,” says McGregor. “We’re the ones that consistently show growth and introduce new products.”
Secrets to their success
U.S. independent grocers are definitely standing their ground against the megastores. But the million dollar question is—how do these independent retailers manage to compete with the massive national chains? Much of it comes down to good, old-fashioned service.
“We’ve always catered to the customer that doesn’t necessarily want or need to shop in a big club store and get mega-packs of everything,” says Ted Theodoris, owner of Costa’s Food Market, an independent store in Pennsauken, New Jersey that’s been in business since 1920. “They’re more interested in quality or service. Nobody really likes to go grocery shopping, so you have to make it a little more pleasurable.”
Many local shoppers choose Costa’s because it’s a place where everybody knows their name—literally. “You recognize their face and they recognize yours,” he says. “Sometimes our customers walk in and tell our butcher, ‘The usual.’ You’re not going to get that kind of feel with a big box store.”
Jim Baugher, general manager of Mike Olson’s Food Emporium, an independent grocery store in Lynnwood, Washington, believes an enjoyable shopping experience is important to many consumers. “I find that in the independent market, the customers who shop in our store want a more intimate experience,” he says. “They want one-on-one service, they want to know that the products were selected carefully.”
Incredibly agile
Independent grocery stores are typically smaller and more nimble than gigantic, lumbering mega-stores—which means they can often respond to market fluctuations more swiftly than the national chains.
“I think independent operators have a little more savvy. The independent stores can react more quickly to market changes and other situations and therefore can remain competitive,” says Green with the Grocery Kart. “Independent stores are by nature survivors, and they’re always going to find a way to get it done.”
“We can turn on a dime, much faster than the big boys,” says Adi Mor. “We don’t have the overall costs that they do. We can adjust price daily, and we let our store managers basically dictate what product they’re going to sell and what they sell it for.”
Because these independents understand their customer base, they can react quickly to shoppers’ needs. “Smaller companies and independents in particular tend to be more in touch with their consumers,” says Bill Greer, Director of Communications with the Food Marketing Institute (FMI) in Arlington, Virginia. “They are more agile in responding to consumer needs.”
“Independent grocers are very connected to their customers,” says Jim Walz, Vice President, Marketing Branding & Business Development with Independent Grocers Alliance (IGA). “They are very responsive to the needs of their communities, and I think consumers respond to that very favorably.”
Finding their niche
Besides personal service and amazing agility, another factor feeds the growth of independent retailers. Unlike most national chains, independent grocery stores often focus on a niche market.
“You’ve got to stay with your niche. Sell what people want to buy,” says Johnny Farmer, owner of Farmer’s Foods in Chase City, Virginia. Farmer explains his store is located in an area with a strong blue-collar population. Understanding this demographic is what has allowed him to expand Farmer’s Foods into a 9-store operation, with locations in Virginia and North Carolina.
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