Business Columns & Blogs

Hope you’re hungry. Banquet of grocery stores getting bigger

In this June 5, 2017, photo, a woman and child walk from Aldi food market, in Salem, N.H. Low-cost grocery chain Aldi says it plans to add more stores in the U.S. over the next five years.
In this June 5, 2017, photo, a woman and child walk from Aldi food market, in Salem, N.H. Low-cost grocery chain Aldi says it plans to add more stores in the U.S. over the next five years. AP

You’ve told yourself, probably just the other day, “Gee, we don’t have enough choices for grocery stores. We need a few more options.”

You haven’t? Too bad, you’re getting them whether you asked for them or not.

Aldi and Lidl sound like characters in an obscure Brothers Grimm tale that you missed in childhood. Instead they’re the latest companies to believe there’s enough room for still more players in the American grocery store industry.

Both companies are based in Germany, and the two operate with much the same mode — heavy on store and private-label brands, and an emphasis on low prices.

Of the two, Aldi has the bigger presence in the United States and bigger aspirations for expansion. It already operates 1,600 stores in 35 states, and last week announced plans to increase its total to 2,500 stores by 2022. That would, the company says, make Aldi the third largest grocery chain in the United States by store count.

Lidl, meanwhile, announced the opening of 20 stores on the East Coast, with plans to be at 100 stores by next summer.

None of Aldi’s 1,600 stores are in Washington, or in the Pacific Northwest for that matter, and Aldi isn’t saying where the additional 900 stores will be located.

Given how Aldi has blanketed the East, South and Midwest, and that it has 38 stores in Southern California, and that the local economy’s performance makes this an attractive place to operate, Tacoma-Seattle-Everett-Bellevue would seem a likely nominee for that expansion.

What wouldn’t make it attractive is that this market is hardly hurting for grocery store choices.

We’ve done this exercise before, but let’s remind ourselves as to just how crowded the market is by listing all the players locally (to test lung capacity, try reciting this list in one breath) that in some form are after the consumer’s grocery dollar.

Ready? Go: Safeway, Albertson, QFC, Fred Meyer, Thriftway, Metropolitan Market, Grocery Outlet, Whole Foods, Uwajimaya, Costco, Sam’s Club, Walmart, Target, 99 Ranch, Trader Joe’s, New Seasons, Saars, Winco, PCC, Red Apple, Haggen.

That all of them? Not by a long shot.

How about the drug store chains like Bartell, CVS, Walgreen and Rite Aid, which increasingly stock packaged and refrigerated food items? How about convenience stores? How about local independents such as Tacoma Boys? Or farmers’ markets? Or co-ops and organic/natural-food stores? Or specialty-food stores?

Heck, even Ikea sells groceries, maybe not enough to get you through the week, but it’s an example of how everyone is grabbing some, or a lot, of the home food budget.

And let’s not forget that little outfit, based just up the road, that has designs on the grocery business, just as it does with every other segment of retailing — Amazon.

Amazon was already a formidable player in the grocery business, what with home delivery (although not yet in Tacoma), online-order pick-up locations, which it is rolling out in Seattle and its experiments with a tech-intense small store, tied together with its own version of a loyalty-card program, its distribution network and its expertise in logistics.

And now the company is proposing to buy a full-fledged, full-sized bricks-and-mortar grocery-store chain, in the form of Whole Foods.

There’s one more factor creating so much turmoil and competition in the grocery sector: You. The days of a family having a lifelong loyalty to one traditional-model grocery store, aren’t kaput yet, but loyalty is steadily eroding.

The Food Marketing Institute — the grocery industry’s trade group — makes the point that “loyalty to a single ‘primary store’ is giving way to a diversity of stores,” and shoppers are increasingly comfortable with using multiple stores and types of stores on a regular basis, including online.

Who does the shopping is changing as well, with more men saying they’re the household’s primary shopper.

Just to complicate matters, tastes in foods change. Consumer interest in organics means retailers need to cater to them or risk losing out on a large segment of the market. Price, location, selection and amenities are merely the starting points in decisions about what dollar gets spent where.

Thus it’s hardly a surprise that existing chains are furiously tweaking, or in some cases overhauling, their stores, and new entrants are constantly popping up, certain they’ve got the formula that will lure today’s food shopper and snag market share. Some won’t make it, but that won’t keep others from trying.

For the moment, the number of options for answering the question, “What’s for different,” will be rivaled by the number of options for answering the question, “Where are we buying the ingredients for dinner?”

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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