Author Topic: I have seen the future of grocery stores  (Read 5609 times)

DTEJD1997

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I have seen the future of grocery stores
« on: January 02, 2018, 09:35:52 AM »
Hey all:

I did some traveling over the Christmas Holiday and I think I've seen the future of grocery stores, as I went into several of them.

A). Kroger is building MEGA grocery stores.  These stores are almost the size of a Wal-Mart, but they sell mainly groceries.  The one I went into had a health clinic in it.  It had 52 isles of food for sale.  The selection was pretty good, just about as good as anything outside of ethnic grocers or specialty places.  Prices were decent.  Store was simply MASSIVE, bordering on insane.  Arguably the best grocery outside of Wegman's.

B). I have seen and shopped in Lidl's.  This is an upscale German competitor of Aldi.  These guys are going to be a big threat to everyone else.  There prices are almost as low as Aldi, but they have a larger selection.  They have a small in store bakery.  I don't think their distribution network is built out yet in the USA.  They had a bunch of name brand frozen foods, I think they don't have their generic manufacturers fully up to speed.  Store was maybe 2-3X larger than the typical Aldi.  Very open & clean.

C). I went into an Aldi down the street from a Lidl.  This store is about 2X the size of a typical Aldi up North.  They have a slightly larger selection of products.  The store is also looking more upscale.  For instance, the isles are wider, there is somewhat softer & better lighting, there is exposed brick.  They also have an expanded and better produce section.  Employees seem more engaged.

So I think the days of "regular" grocery stores are rapidly coming to an end.  The low end is going to get taken up by Lidl & Aldi.  The mid-range is going to go to Kroger & Wal-Mart & regional "super stores".  The high end is going towards Whole Foods & Trader Joes.

The thing that really surprised me is the entrance of Lidl & reaction of Aldi.  These guys are really going to take market share.


gg

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Re: I have seen the future of grocery stores
« Reply #1 on: January 02, 2018, 09:39:23 AM »
Where was the mega Kroger? Was it under any specific branding indicating its a better than normal kroger?

DTEJD1997

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Re: I have seen the future of grocery stores
« Reply #2 on: January 02, 2018, 09:43:59 AM »
Where was the mega Kroger? Was it under any specific branding indicating its a better than normal kroger?

The Mega Kroger was branded as a "normal" Kroger.  It was located in NW Ohio.

There is a Mega Kroger not too far from me in Metro Detroit.  It opened less than a year ago. 

I seem to remember that the "average" grocery store was about 35K sq. ft. of space.  These new Mega Krogers are probably double that in size (or more)!
« Last Edit: January 02, 2018, 09:51:51 AM by DTEJD1997 »

boilermaker75

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Re: I have seen the future of grocery stores
« Reply #3 on: January 02, 2018, 09:50:06 AM »
They are turning the Kroger in West Lafayette, IN into one of these. It was already a large grocery store and it looks like it will at least double in size.

DanielGMask

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Re: I have seen the future of grocery stores
« Reply #4 on: January 02, 2018, 09:52:40 AM »
I think the future of grocery stores is like the Whole Foods store at Bryant Park in New York. This article is very good about explaining the future of food retailers.

The rise of the Grocerant:

http://www.therobinreport.com/grocerants/
You should follow me on twitter @DanielGMask

sjh

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Re: I have seen the future of grocery stores
« Reply #5 on: January 02, 2018, 10:13:54 AM »
Yeah, I would bet quite some money that Lidl and Aldi will take a lot of market share in the US over the next few years. Both come from a much more competitive market for grocery stores (Germany) and offer great value for money compared to many other stores in the US. Also they did a lot in terms of branding recently, the stores are much nicer now (e.g. in-store bakeries).

There is a great biography on the Aldi founders (unfortunately only in German as far as I know), it's amazing how frugal those guys were and how they ingrained it into the corporate culture.

https://www.amazon.de/Die-Albrechts-Auf-Spuren-ALDI-Unternehmer

Sullivcd

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Re: I have seen the future of grocery stores
« Reply #6 on: January 02, 2018, 10:19:01 AM »
The mega Kroger in my town is 113k square feet and always packed with college students who refer to it as Kro-Gucci. I almost never go because we have an Aldi and 3 other Kroger options and it is a 10 minute walk from frozen pizza to beer sections.

rb

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Re: I have seen the future of grocery stores
« Reply #7 on: January 02, 2018, 10:23:51 AM »
Some thoughts on this.

Trader Joe's is owned by a branch of the family that owns Aldi. I think Trader Joe's is owned by Aldi Nord while the Aldi Stores in the US are owned by Aldi Sud or something like that.

Lidl in Europe is pretty much like Aldi. Not really upscale at all. Maybe they're following a different strategy in the US or maybe they seem more upscale because the stores are new.

These German guys do not mess around. When they came to Britain the destroyed the grocery business and there were some really fierce players over there.

I think Kroger's strategy is wrong. The global trend is towards smaller, more focused stores and they're building behemoths.

Foreign Tuffett

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Re: I have seen the future of grocery stores
« Reply #8 on: January 02, 2018, 10:27:18 AM »
The grocery business is fiercely competitive, and is growing more so every day. As a consumer I love it, as an investor I'm staying away.

Foreign Tuffett

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Re: I have seen the future of grocery stores
« Reply #9 on: January 02, 2018, 10:36:45 AM »
I think the future of grocery stores is like the Whole Foods store at Bryant Park in New York. This article is very good about explaining the future of food retailers.

The rise of the Grocerant:

http://www.therobinreport.com/grocerants/

The first sentence of that article reads "We live in an era of chaos." I'm all about writers getting the attention of their audience with an exciting intro, but that's a little too over-the-top.  :-\