Porter Competition in Mature Markets and the Tiny Store on Grand
If you live in Chicago and follow the grocery business like I do, you'll know that the closing of produce seller Stanley's has received a great deal of attention. Stanley's was a fixture for many shoppers as it offered rock bottom prices on produce and had been in the business for years so had a loyal following who came from near and far to save money.
Sources cited in today's Tribune article (SUN APR 28) mention the increased competition of recent openings by grocery giants Mariano's and Whole Foods. These are indeed two heavy weights that enjoy punching welter and fly weight independents like Stanley's into submission with the goal of forcing a KO (exit from the market) if not a TKO (bankruptcy)!
So how to compete?
I have reread Michael Porter's excellent chapter from Competitive Strategy on competing in a mature market several times. And it's clear that the organic produce and grocery business has changed dramatically. It's no longer "new" and Big Ag has come in to capture market share from smaller players who enjoyed little competition up to five years ago.
With shoppers demanding convenience as the primary driver for choosing a grocery store, it's increasingly becoming the key differentiator on where and how people shop. Consumers are now highly knowledgeable and "organic" no longer unusual or hard to find. When Amazon is in the space, it's no longer hippies farming out in the country bringing in their wares on Saturday mornings in a VW van with peace symbols painted on the sides.
So how can a fly weight like our store, Green Grocer Chicago, compete with an Ali/Foreman combination like Whole Foods and Mariano's?
The Tribune article does offer a few hints that we're going to try:
> We're expanding our beer and wine selections to tilt towards labels and varietals you can't get at the Big Guys. Our craft beer selections offer the best of varieties from #Chicago breweries which change flavors and styles almost weekly. By the time they could get slotted into a larger store, we'll have sold out of our purchase and moved on to the next best thing! We have excellent long standing relationships with all our local beer producers and they like us since we were often one of the first to start buying from them. We're also starting a wine club that will offer tasting notes and educational tastings to members. We think this level of personalized service and education will go far.
> We think shoppers are going to be looking for more focused selections based on the diets that they adhere to (think Keto or Vegan) and will want a quick and convenient shopping experience with staff who speak their language and understand their dietary needs. We're going to train our staff to be conversant on the diets that are popular and have followers who need help in their shopping selections. Try getting that when you pull a hired hand at a larger store.
> Our area of Chicago is near the booming tech area called the West Loop. There are more families of East Indian and Chinese descent moving into the area and we think that slotting ethnic items that they are familiar to these families with may help in attracting their custom. (fingers crossed...)
> We're going to create community around our brand by offering Tiny Store Concerts (modeled after the NPR Tiny Desk series), sponsoring a kick ball team during the summer, and offering cooking classes that cater to busy lifestyles. We think that this will move our store to be more than just a grocery store but something that is unique and special with our core customers.
As the closure of Stanley's indicates, the grocery business, with it's razor thin margins, is a very tough business to navigate when you want to pay your staff well, carry the best ingredients, pay your suppliers top dollar, and offer value while avoiding deep loss-leader discounting.
But we think we can come up with a formula that will make us special and attract enough customers to stay in business and be part of the Chicago small business community.
We look forward to your support!
#craftbeer #wine #winetasting #Chicago #shopping #healthandwellness #culinarymedicine #cooking #foodandwine