Bright lights, big challenges: Can grocery stores make it in America’s cities?

Grocery Dive – The big boxes that are so successful in the suburbs face a host of issues when they try to adapt to urban living.

As consumers — particularly affluent millennials — have moved into America’s urban centers over the past several years, grocers have eagerly followed suit. But while cities offer bright lights and big opportunities, the reality is that breaking into the market is a huge challenge. This is especially true for grocers used to operating in suburbs and rural areas. And yet, despite the many past failures, retailers like Target and Wal-Mart remain determined to make it in America’s cities.

“With suburbs and small towns already saturated with grocery stores, urban areas are virtually untapped by the big chains,” Ken Morris, principal at BRP (retail consulting firm), told Food Dive. “There is a large captive audience that is ripe for the picking.”

Retailers also must optimize their product assortment for customers who make smaller trips and live in smaller spaces. Morris with Boston Retail Partners noted this makes it challenging for stores to achieve the high sales per square foot they need, but that focusing on carefully chosen selections of consumables, prepared foods and other items that appeal to local customers — “micro assortments,” he calls them — creates the best chance for success. “Localizing the product mix based on the customer base is critical to turn inventory quickly,” he said.

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