Competition in grocery industry is in the bag

Filed under: Retail |

Competition is brutal for smaller retail grocers. Yet as grocery sales approach more than $800 billion a year, many of these companies are growing at an explosive rate.

Wal-Mart, the nation’s largest food retailer, accounts for about 14 percent of all grocery sales.

But smaller, more agile, risk-taking companies, such as Stew Leonard’s (Connecticut and New York), Whole Foods (32 states), Trader Joe’s (19 states), Lunds and Byerly’s (Minnesota), Wild Oats (24 states), Bristol Farms (Southern California) and Central Market (Texas) are growing.

The companies say they’re successful because they have found a way to tempt customers away from the convenience of 7-Eleven and the low prices of Wal-Mart by teaching employees to build relationships with shoppers through personal service.

Another reason specialty stores are successful might be that their employees –and some stores employ 700 or more people – are happy to be there. Stew Leonard’s and Wegmans have been on Fortune magazine’s list of best companies to work for. Last year Wegmans was No. 1.

The result: America is a Wal-Mart nation and a Wegmans nation.

And even Wal-Mart is trying to look more like Wegmans or Whole Foods. The retailer just announced it is going to double the organic offerings in many of its 3,800 stores.

Likewise, Safeway has tried to follow the Whole Foods and Trader Joe’s model by introducing Lifestyle stores, which feature such amenities as hardwood floors and prepared meals.

Whole Foods, now the largest organic and natural foods retailer in the world, has prospered because of its reputation for purity. It cultivates an image for its stores as gathering spots; some feature live music on the weekends. Whole Foods opened in New York’s Time Warner Center last year.

The family-owned companies also say they have more leeway to take chances on new products or services because they don’t have to answer to stockholders.

RadioShack closing 480 stores

RadioShack Corp. has closed 40 stores this year and is targeting a total closure of 480 locations.

The consumer electronics retailer will suffer charges between $50 million and $90 million related to the closings, said CFO David Barnes during the chain’s first quarter earnings conference call.

RadioShack has been struggling to deal with a couple of major headaches during the past few months, including a switch in its wireless phone service providers, which has hurt sales, and the resignation of chief executive David Edmondson.

During the first quarter, profits plunged 85 percent because of weak wireless sales and inventory write-downs. Earnings fell to $8.4 million, or 6 cents per share, from $55 million, or 34 cents per share, for the same period last year.

The poor first-quarter performance follows an equally disappointing fourth quarter during which earnings dropped 62 percent.

For the first quarter, analysts were expecting profit of 18 cents per share and sales of $1.13 billion, according to Reuters Estimates. The chain outperformed expectations with sales of $1.16 billion, a 3 percent increase.

However, RadioShack’s comparable store sales for the first quarter were down 1 percent.

Cargo scanning opposed by retailer federation

The National Retail Federation is urging Congress to reject legislation that would require “scanning” of all cargo bound for U.S. ports. NRF representatives are afraid the term was not adequately defined and that the proposal could result in costly delays that would harm the nation’s economy.

H.R. 4899, the Sail Only if Scanned Act, or SOS Act, sponsored by Rep. Jerrold Nadler of New York, would require that 100 percent of cargo containers bound for U.S. ports be “scanned” in foreign ports before being loaded on vessels headed to the United States. The measure is expected to be offered as an amendment to H.R. 4954, the Security and Accountability for Every Port Act or SAFE Port Act, sponsored by Rep. Daniel Lungren of California.

NRF notes that the bill does not outline who would perform the scans and provide results to the Department of Homeland Security, does not address who would pay for the equipment required and its operation, and does not address health concerns for port workers if gamma ray inspections are used.

In a separate letter, NRF urged a number of changes to the SAFE Port Act measure, but called it “part of a legislative initiative that has endeavored for several months to take a reasoned and considered approach to the port and cargo security issue.”

Antique market to open at The Promenade Shops

The Gallery, an antiques market, will be opening on May 6 at The Promenade Shops at Briargate. Several local dealers are involved in the partnership.

The Gallery will occupy Suite 615, which is between J. Jill and Talbots, and will feature antiques, collectibles, art vintage textiles, jewelry, rugs and decorative accessories.

Joan Johnson covers retail for the Colorado Springs Business Journal.