More Than Any Segment, Independents Feeling Impact Of Competitive Landscape
Business is as tough as it’s ever been. The overstored, diverse makeup of virtually every market in the U.S. has been well documented as have other day-to-day challenges – a still unsettled economy, an 11 percent reduction in SNAP benefits, rising health care costs, $4 per gallon fuel prices and low price inflation.
All those factors have made food retailing no place for the meek. And among all retailer segments, none has felt the pain more than the independent retailer. For me to report this is painful because I learned the business from some of the best independent retailers in the country while starting my career in New England (which once was a haven for great independent retailing) in the early 1970s.
And I don’t want to throw all independents in the same bathtub, because surely great independent retailing can and will continue to survive and prosper. The 50 member/owners of Wakefern (ShopRite), Redner’s, B. Green (Food Depot/Cost Plus), McCaffrey’s Market, Darrenkamp’s, Karns, Graul’s, Eddie’s of Roland Park, Boyer’s and Lauer’s remain strong and viable entities that have survived several generations of leadership and tremendous industry change. And part of their successes have stemmed from an ability to adapt to changing consumer habits and also use their inherent street skills to continue to make themselves meaningful. People like Herbie Beckenheimer and Bernie Meizlish of Food King, Ron Murphy at Murphy’s Markets and Dave Snider at Snider’s in Silver Spring are not only great entrepreneurs, they’re also terrific merchants who have intangible connections with their customers that most retail organizations will never be able to replicate.
But the facts don’t lie and the number of independent retailers is shrinking both in the Mid-Atlantic and nationally. Sure, perpetuation issues remain a major factor in the long-term survival of the independent retailer. However today this issue is more acute given the fierce level of competition and the unwillingness of future generations to enter the fray. And capital investment is still a hurdle that will always challenge the independent operator more than a chain store merchant. But the amount of capital investment needed to stay relevant has escalated significantly over the past decade and so have the stakes to keep an independent store relevant on the technology side. There are no more weak sisters to battle – everyone is in the heavyweight division today.
So, it’s not just the Camellia Foods or Farmer’s Foods that we mourn. Last year it was Santoni’s, and the year before Magruder’s called it a day. Fresh & Green’s, the ill-fated attempt to open healthy natural and organic supermarkets by Canadian private equity firm Catalyst Capital also went bust less than three years after it debuted. Even the independent retailers who are members of wholesale grocery co-op AWI are somewhat endangered as a collective organization with the pending sales of its White Rose unit and its reduced rebate payment this year. And just before presstime, we learned that Henry Baines will be closing his remaining four stores in Baltimore City.
As I’ve said too often recently: “There are no more lay-ups – every shot is contested today.”
And while there will always be opportunities for great independent retailing, the herd has clearly been thinned in recent years. That in itself is sad when you consider that it was truly the independent merchant that provided the foundation of this great business.