Thirty years ago, small neighborhood grocery stores thrived in nearly every community. They were close, convenient, offered a reasonable selection of products, and – perhaps most importantly – the customers often knew the owners personally.
But these days, the small neighborhood grocery has become a rarity, primarily due to the explosion of big box stores like Wal-Mart and Target offering a full selection of groceries, fresh meat and produce, seafood, and deli all in one place.
Large grocery chains like Hannaford and Kroeger’s also make it difficult to compete due to their combination of huge selection and lower prices based on economy of scale.
So what can small business owners do so their independent grocery store can compete with “the big boys” in today’s grocery industry environment?
Is competing on price an option?
An important factor to understand is that you will never be able to compete with the larger stores on price. The volume at which they buy and the subsequent pressure they can put on suppliers drives their price far too low for a small independent grocery store to hope to match or beat it.
So, the key is helping your customers understand and appreciate the value you provide that the bigger stores cannot.
This value lies in being able to more effectively tailor your selection to the brands, styles, and flavors your customers actually want rather than only offering what the lowest bidder provided.
Also, you have the opportunity to choose your suppliers based on factors other than cost. For example, if you buy produce exclusively from local farmers, local consumers will likely appreciate the economic value of buying the produce from you and keeping their money within the community.
So, focus on identifying what your customers want and proving that you can provide that more effectively than a big store can. The slightly higher price you need to charge won’t seem important if you can do this effectively.
Levelling the playing field
Technology has advanced significantly inside and outside the grocery industry in recent years. These days, advanced software and equipment that used to only be available to the largest companies is accessible to everyone, even on their smartphones.
Used wisely, this technology can level the playing field for small, independent grocery stores looking to compete with the neighborhood Wal-Mart or Kroeger’s.
For example, it’s possible to have a professional iPhone and Android mobile app developed for your store at a very reasonable price. You can likely locate and hire a local freelancer or small development firm to create it for you. By offering this app for free to your customers, you can keep them engaged with special offers, coupons, a loyalty program, and an opportunity to provide important feedback.
Another technological opportunity that’s become far more affordable in recent years is scanner-based inventory control. Using a mobile app on your smartphone or an inexpensive specialized handset, you and your staff can quickly and accurately handle inventory to help control costs, restock proactively, and test various products over time.
With Point of Sale (POS) systems also becoming more powerful and affordable, you may be in an even better position than the huge chains to implement new payment technology such as accepting Apple Pay, Android Pay, PayPal, and other electronic payment options to offer new convenience for your customers.
Do what they do, only better
You’ll notice that most of these suggestions involve doing what the big box stores already do, but in a unique and valuable way that only a smaller, independent grocery store can manage.
Basically, it means beating them at their own game.
Because these options exist, now could be an excellent time to open up a small, neighborhood grocery store designed from the ground up to compete on value rather than price.