Friday, January 14, 2011

Independent grocery stores may soon be a thing of the past

I listened in on a conference call yesterday about supermarket consolidation. Meredith Adler, managing director at Barclays Capital, had lots of interesting stats (and I love stats… see Montgomery County, PA - the land of the Supermarket), including the following:

  • 35,000 – number of food stores in the U.S. (not including drug and dollar stores)
  • $557 billion – annual food store sales
  • 1.8% - industry growth in 2009, the smallest growth figure in many years


The stat that struck me the most, though, was the fact that independent grocery stores – defined as chains with 10 stores or less – currently make up about 5% of the market, as compared to 10 years ago when they comprised 20% of the market.

To make matters worse for these independents, Andy Graiser, co-president of DJM Realty, suggested that the economic recovery will not come fast enough to reverse this trend. Graiser believes we will see independents continue to struggle – and close – in 2011.

In addition to numerous operators with less than 10 stores, independents in the Philadelphia market include:

  • Landis – 4 stores
  • McCaffrey’s – 3 stores
  • Swann’s Pantry - 2 stores
  • Hennings - 1 store


My guess, based on where I live and shop, is that Hennings will be fine. Despite their high prices, they have developed a niche (high quality foods and customer service), not to mention the best chicken salad around. Landis is a nice grocery store, and my family shops there regularly. However, it's never crowded, and rumors have swirled for quite some time now about their long term prospects.

In less than 12 months we’ll know whether Mr. Graiser is on target or not.

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