National 'Grocery Wars' hit St. Louis region prompting stores to adjust to more competition
The retail grocery industry in the St. Louis region and throughout the country is more competitive than ever.
Local chains that have been around for decades are adapting to customer expectations as they face increasing pressure from big-name national stores and even discount outlets.
The national battle is being played out in a roughly two-mile section of Manchester Road through Des Peres and Kirkwood.
That is where Dierbergs and Schnucks have higher-end stores. An Aldi’s is nearby and construction is about to start on a Fresh Thyme location. Schnucks and Dierbergs have other stores just beyond that two-mile limit along with a Shop-N-Save.
At least one industry expert thinks it's common for such an intense concentration of grocery stores in a relatively small area.
“It centers people's shopping trips. So, I might go to Dierbergs for something. I might go to Schnucks for great prepared foods,” says Supermarketguru.com’s Phil Lempert.
“I might even shop at Dierbergs and then go to Schnucks for dinner and have an enjoyable great dinner and listen to some music.”
Live music is one concept that many grocery chains are using to attract modern shoppers. The Dierbergs and Schnucks in Des Peres have musical acts on most weekends along with a focus on a restaurant-type atmosphere, with cooked-to-order food, wine and even some dancing.
The approach builds on a concept called third place.
“Starbucks really started this third place meaning home, your work and Starbucks,” says Washington University Olin School of Business Associate Marketing Professor Joseph Goodman.
Maybe have a glass of wine or a beer. Learn a little bit about cooking. And establish that relationship with the store and that takes people away from being price sensitive. - Phil Lempert, Supermarketguru.com
“They want to create a community place where you can hang out and people kind of know your name and the barista knows you. Well, we are also kind of seeing that in grocery stores.”
Nationally, the intense competition has been dubbed the grocery wars, with stores relying on added-value concepts to set them apart.
"You can't win based on price,” says Lempert.
“Somebody can always build a store that's cheaper, that's newer, that's prettier.”
It's about that relationship that they have with the shopper. Creating a Wow shopping experience. -Joseph Goodman, Washington University Associate Marketing Professor
Research from food retail consulting firm Willard Bishop, which Lempert highlighted during a presentation on the Grocery Wars during this year’s South By Southwest in Austin, suggests market share for traditional grocery stores will decrease roughly 3 percent by 2018, while increases are expected for other outlets including non-traditional stores, convenience stores and even dollar stores.
In the next three years, non-traditional stores are expected to have roughly 40-percent of the market, compared to slightly more than 35-percent for traditional locations.
The research seems to back up the perception that traditional grocery stores are dealing with increasing pressure to keep customers, attract new ones and pay attention to the bottom line – especially with big box retailer including Target and Walmart muscling into the sector and expanding online options.
“Schnucks and Dierbergs are playing with that. And it's still a work in progress,” says Goodman.
“All the grocery stores are trying to figure out what's the best way to do this. Where can we keep customers satisfied but also we've got to make a profit too.”
As grocery companies and others battle it out in some affluent sections of the region, some urban areas of St. Louis are still dealing with a lack of options for groceries - especially fresh fruits and vegetables.
St. Louis Public Radio examined the food desert in the city of St. Louis a couple of years ago and we have updated this map of grocery stores locations in the city.
Schnucks executives declined an interview request, but allowed sound recording in the Des Peres store for an accompanying radio report. Dierbergs responded to an initial inquiry via email, but did not formally respond to an interview request.