Will supermarkets fade?

Reporters and consultants are asking me (and any other consumer and industry watchers they can find) whether the combined power of P&G and Gillette will restore the balance of retailer-vendor power. They are also asking and speculating on what it might do to help or harm supermarkets, drug stores, specialty stores, club stores, convenience stores, dollar stores, and other not-yet-invented formats as they struggle to compete against the Wal-Mart colossus.

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From our vantage point, consumer needs and wants do have the power to drive many business and format developments. But when it comes to who will win the retail format wars, consumers are up for grabs. They are responders as well as drivers, which means that the winners will be the best and friendliest providers, marketers, packagers and retailers, those who do the best job of defining their turf and befriending (not just serving) their consumers.

If supermarkets keep losing share of mind to other classes of trade, their share of market will surely shrink and fade. If more food is consumed within a few hours of purchase and consumers don't think of supermarkets in connection with "food for soon," supermarkets will fade unless those who consumers think of first do a lousy job of it.

Let's stick with salads as an example:

One young woman we talked with buys salad-bar salads from Whole Foods six or more times week. She didn't know that that ready-to-eat salads were also available at a convenience store and a supermarket she passes on her way to and from work.

A part-time working mother buys bagged salads and cleaned heads of romaine on her weekly trip to the supermarket, but stops at a convenience store on her way to work to pick up a single serving salad for her boss, and some days for herself as well. Is she aware that single serving salad bowls are available at the supermarket where she buys bags of salad? No, she has never noticed them there and doesn't think of supermarkets in connection with food for soon.

Does this mean that convenience stores will keep taking food-for-soon business away from supermarkets? Could they even take it away from Whole Foods and Wild Oats? Spot checks of packaged salad offerings at convenience stores and supermarkets in the Philadelphia area found grab-and-go salads more visible at convenience stores but slightly fresher (less tired or further from sell-by date) product at supermarkets. Who wins the salad-for-soon customer is going to depend on who has fresher product as well as who has the share of mind.