Why traditional supermarkets have been dying

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Ephrata1966
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Why traditional supermarkets have been dying

Post by Ephrata1966 » 09 Aug 2010 17:55

I have a theory as to why the big supermarket chains, but especially small stores, continue to die off. A recent Save-a-Lot radio commercial got me thinking. Many Save-a-Lots are former A&Ps and other stores. "No pharmacies, no video rentals, no aisles and aisles of merchandise your family doesn't really need..." The chains I am referring to are Safeway, Kroger, Acme, and A&P. Unnecessary acquisitions years ago seemed to hurt these chains.

What hurt Food Fair way back was their investment in several bowling alleys, drugstores, shoe stores, etc. Often this was done due to family connections. This money could have been better spent on store upgrades. Several Pantry Prides in 1978 were still run down, tiny 1940s stores.

David, I really hate the "new breed of supermarkets" too. Stores have grown much larger in recent decades and now are loaded down with features such as Starbucks. These models of stores are often NOT competitive and really do not last. Companies should spend less on overhead, but should keep traditional stores maintained such as the Marina Safeway, Kroger Greenhouse, Centennial A&P, Acme A Frame, etc. They should downsize new and existing stores too. Building all smaller stores with less extras can help these chains become competitive again, just like the Save-a-Lot/ALDI model. Eliminating pharmacies will reinvigorate the surviving drugstore chains too. I would love to see new strip-center drugstores. Here is what that would basically look like: http://www.groceteria.com/board/viewtop ... =a&start=0

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Re: Why traditional supermarkets have been dying

Post by maynesG » 10 Aug 2010 19:15

Hi, I know that we should stick to history so , I will make this short. Sav A Lot works because of the following reasons !. 98 Per cent Private label higher margin then Brand Names
2, Verry small labor costs only two or three full time persons
3 Bottom feeders of the Market
4 Often located in dangerous areas Port jervis, Camden, Wilmington
Simply put this formula would work only in lower income areas or durring poor economic times.

Ephrata1966
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Re: Why traditional supermarkets have been dying

Post by Ephrata1966 » 11 Aug 2010 01:33

Port Jervis is dangerous?

maynesG
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Re: Why traditional supermarkets have been dying

Post by maynesG » 11 Aug 2010 06:40

Hi, Yes , Port Jervis is a poor City with a high crime rate. Acme and A&P both pulled out in tthe late 70!s and early 80!s due to major floods and poverty as well as crime. The former A&P became a Sav A Lot and closed. It may not be Newburgh, but it isn!t a fun place,

Ephrata1966
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Re: Why traditional supermarkets have been dying

Post by Ephrata1966 » 11 Aug 2010 23:03

I meant to give some examples of "new" supermarkets. Genuardi's just closed their Newtown Square store. Albertsons closed a store in Spring, TX (near Houston) in early 2002 that was less than a year old. This one was full of goodies like Starbucks and Bank of America. Now it sits lonely, collecting dust.

Anyway, I would think supermarkets cost less to build 50 years ago. So perhaps chains have become more selective with towns to build in. But you have to consider inflation over the years. For example, Food Fair Properties even designed and built entire shopping centers themselves. And I hear Acme paid a well-respected artist to design this, perhaps for royalties: http://2.bp.blogspot.com/_246OMBI86f8/S ... ton_05.jpg

However, Food Fair and Penn Fruit went bankrupt due to sheer mismanagement. And A&P/Safeway have had union troubles. If none of this happened, I still see little reason for all of them to have phased out their classic stores. The basic grocery business has not changed much since say the 50's. So I wonder why so many Acme A Frames/Centennial A&Ps have been replaced with new buildings. They could just keep these stores clean and tidy, maybe expand a little for volume, and voila!

Transit Road
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Re: Why traditional supermarkets have been dying

Post by Transit Road » 11 Aug 2010 23:56

Hi, Yes , Port Jervis is a poor City with a high crime rate. Acme and A&P both pulled out in tthe late 70!s and early 80!s due to major floods and poverty as well as crime. The former A&P became a Sav A Lot and closed. It may not be Newburgh, but it isn!t a fun place,
Wow, I remember working on a disaster/flood recovery effort in Port Jervis, NY during the early 1980's as part of a high school volunteer effort. There was a great deal of mud and debris,but I also remember the residents of the area being very appreciative of our efforts at the time.

Also, parts of "downtown" Newburgh, NY have always been rough, but other parts of further west out Broadway are not too bad.

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Re: Why traditional supermarkets have been dying

Post by BK31 » 12 Aug 2010 17:42

Though this should mostly be in the Retail Watchers side of things, I though I'd put my 2 cents in on my theory as to why the older stores are not being reused and refurbed as much. Working in architecture and formerly on grocery stores I see firsthand all of the crazy mechanical plumbing and electrical needs of a modern store that are mostly under the floor slab or on the roof. To modify existing stores to bring them up to the newer technologies or even just to change the layout of departments can get pricey really quick, especially if they've got an old terrazzo floor which is harder to cut through and near impossible to match, or if you need to beef up the roof structure for a new Hill house or HVAC unit. Its not as simple as a retail clothing store simply moving fixtures around or adding new lights. All of the holes in the floor and extra equipment the grocers leave behind can also make them harder to rent out to new non grocery tenants which is why they tend to sit vacant longer than most retail stores.

If its a well performing store, it may be worth the reno costs, while the older stores in under performing areas may not get the Return on Investment in a timely matter to justify keeping them or refreshing them. Many times its cheaper to build from scratch and relocate to a 'better' part of town. There are a few bright spots, as evidenced by a late 80's greenhouse Kroger across the street from my office getting a good refresh, rearranging the department layout and adding new skylights, but they're completely redoing the facade and getting rid of the old greenhouse. It's been a busy store as long as I've been in GA and will help reaffirm its market stance with the other competition in the area.

As for the add ons like Banks and Starbucks, and even some of the in store pharmacies depending on the chain, they're usually rent generators for the store run by an independent owner paying the Grocer for the opportunity to be located directly inside the traffic generator that a grocery store is rather than outside down the strip like the old days. They usually help the store financially rather than drain it, and their footprints can usually be more easily eaten back up by merchandise or a service counter, etc if they go unfilled.

Lastly while most of us here appreciate the older stores for their memories, architecture, what have you, the vast majority of the buying public want to shop in the newest, brightest cleanest thing out there, and older stores tend to turn the majority of people off, which is why there are so many decor package updates and shopping center facelifts over the years to keep things looking fresh and new and attract new customers or minimally retain existing ones. Honestly, as much as I hate it sometimes, its why I still have a job in architecture, even in this economy.

Ephrata1966
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Re: Why traditional supermarkets have been dying

Post by Ephrata1966 » 22 Aug 2010 15:44

In all fairness, a good example of older supermarket preservation exists on the Philadelphia "Main Line". This is most likely due, ironically, to very expensive real estate. Examples include the Centennial A&P/Super Fresh stores in Wynnewood and Gladwyne, PA, and 50's Acme Markets in Bryn Mawr, PA and Penn Valley, PA. These stores however are neither in good shape nor original shape.

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Re: Why traditional supermarkets have been dying

Post by Super S » 06 Sep 2010 11:14

BK31 wrote: As for the add ons like Banks and Starbucks, and even some of the in store pharmacies depending on the chain, they're usually rent generators for the store run by an independent owner paying the Grocer for the opportunity to be located directly inside the traffic generator that a grocery store is rather than outside down the strip like the old days. They usually help the store financially rather than drain it, and their footprints can usually be more easily eaten back up by merchandise or a service counter, etc if they go unfilled.
When the Longview, WA Fred Meyer underwent a major remodel and expansion several years back, a Starbucks was added. I remember reading in the local newspaper that Fred Meyer either owned the in-store franchise or was responsible for staffing it, and that the people working in the in-store Staurbucks were also UFCW union employees.

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Re: Why traditional supermarkets have been dying

Post by Super S » 06 Sep 2010 11:23

And here is that article from the newspaper that I mentioned:

http://tdn.com/article_c80ba38e-8f87-5f ... b1f2a.html

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Re: Why traditional supermarkets have been dying

Post by Larcor » 21 Jul 2011 20:18

Hi Folks,

Let me add my 2 cents on this issue. Although now retired I have been in the grocery retail, wholesale, and distribution field for 47 years. In that time I have seen many grocery companies come and go. Some have gone under because as some of you have pointed out mismanagement. While others have been bought out because they were successful (ie: Lucky Stores) although it can be said that they too were guilty of mismanagement in allowing that to happen. Nevertheless there are 4 reasons necessary for a retail operation to succeed and in this order of importance.
1. Lowest Prices
2. Best Location
3. Quality
4. Service
Without #1 eventually all retailers will suffer in sales. Why else would Lucky Stores
become the 6th largest retailer in the country and Wal-Mart become the largest retailer
in the world. Also notice any retailer that doesn't have the lowest prices will advertize
and promote #3 and #4 and will soon be on the endangered retailers list of future bygones.
This topic should have more responses and discussions than any other topics on this site, as
it represents the heart and soul of grocery business.
I would welcome more discussions and input on this subject and of my opinions.

Larry Corbett

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Re: Why traditional supermarkets have been dying

Post by Groceteria » 22 Jul 2011 08:29

All, we should probably tread carefully on this topic, making sure it's based in history rather than current operations (which are are off-topic here). As stated upthread, it might be more appropriate at at Retail Watchers. If we're going to discuss the issue further here at Groceteria, the perspective needs to be exclusively historical in nature and probably should involve a new and more specific topic title.

Thanks,
David

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