What’s the Ghetto Grocer’s take on the future of the business?

-Jeremy

Jeremy, reasons 1-3 have been killing us for decades. I knew guys who had worked fro A&P and Grand Union, mentioned in the article below. Aldis has invaded with a workable discount food model that removes 80% of the normal operating staff. The biggest disaster that could strike retail food would be mandatory minimum wages, which could only be compensated for by massive lay-offs and restructuring to the model that Aldis uses, which I suggest was based on this eventuality. If mandatory minimums hits, that is sign #7—end of game.

Sign #5 is staffing. The quality of people willing to go into retail food has dropped to the point—this was 20 years ago—that no one young enough to be inclined to implement major changes has the raw ability to think outside of the very narrow box the business operates in.

Sign #6 is security. Operating in urban environments where the food stamp dollar encourages traditional shopping patterns has saved many small grocers. People on foodstamps in urban areas tend to spend most of their money in one or two locations with a high price-based loyalty, which makes urban markets better insulated from the massive super retailers that suburban markets must contend with, operations that are too massive to set up in a congested urban center. Unfortunately, since Baltimore police have pulled back from enforcement in the face of liberal oversight and the rapidly expanding violence epidemic the necessary security outlay is set to sink the businesses, not to mention the blooming shrink. A 15-million dollar a year gross operation, working on a 1% margin, will lose 500K per year in looting, which is 350K more than it netted, unless it lays out 100-120K in security expenses. Security guards do nothing, can do nothing, due to liability concerns with rent-a-cop agencies. One must hire 2-3 store detectives. These are management level jobs that cost 30-40 K, or pay for equivalent On Duty Police Overtime Officers.

There are methods to counter dollar stores and large retailers. Ironically, management comes from an era that believed in cookie cutter solutions and the giant outfits own the cookie cutters. I had to fight my employers every step of the way, the business models are that rigid and the minds so mediocre. The people I work for now have resisted all of my free offers of advice, advice that worked and is checkable, but which can not be implemented with existing quality staff.

In case a reader owns a supermarket, what could they do?

There are brand label packers willing o sell direct to retailers on fair terms. Find them and set up an account.

There are restaurant supply houses who own manufacturer overrun contracts with people like Proctor and gamble, who can offer you trailer loads of merchandise discounted up to 10 cents on the dollar, name brand stuff you can sell off the fly that chains are not set up to accept.

In the end you will have a retail food business that looks like this:

-Giant retailers like Wal-Mart and membership clubs

-Discount box stores like Aldis and save a lot

-Gourmet pseudo-Restaurant grocers who make meals for upscale customers

-Drug Stores

-Dollar stores

-Independent grocers on the edge of urban food deserts

The traditional supermarket chain is as good as dead, with only the dying left to do.

4 Signs That Spell Doom For Traditional American Grocery Chains

www.zerohedge.com |

The grocery business in the U.S. is, and always has been, a fairly miserable one. In fact, from A&P to Grand Union, Dahl's, etc., bankruptcy courts have been littered with the industry's failures for decades.

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