Introduction
The grocery stores industry of the US is one of the largest industries and contributes immensely in the GDP of the economy. The grocery industry comprises of numerous business ranging from the supermarkets and convenience stores to the wholesale clubs. The grocery industry experienced a remarkable decline in the quantity and quality of purchases in past five years, due to low household disposable income, and reduced spending on premium brand products. However, with the recovering economy and increasing household spending the grocery industry is growing steadily (Martens, 2006).
Kinds of Competitive Forces in the Grocery Stores Industry
Competition is extremely fierce in the grocery industry where brand promise and differentiation in terms of price, product selection, convenience and variety are some of the major competitive forces and are critical to success. The rivalry in the industry is extensive due to which competition is stemming at a huge rate and this makes the force more strong. The barriers to entry and exit are high because it involves heavy for entering the industry, and this makes the threat of new entrants is low. However, bargaining power of suppliers is high in the industry in terms of product’s price. The bargaining power of buyers is also high as they can switch to producers, who offer them better products at reasonable price. It is thus, considerable that companies should initiate actions, which enables them to gain high competitive advantage and transfer competition in their support (Ingdahl, 2006).
Forces that are Driving Changes in the Industry
There are some significant forces in the grocery stores industry that are driving changes and the foremost one amongst them is, technology enabled shopping behaviour of customers. It is notable that, digital technology is now omnipresent in people’s lifestyle and grocery shopping, is no exception. Now, at a wide level consumers are employing technology for their grocery shopping. Sophisticated shoppers are buying products directly from the retailers or manufacture’s website and are readily accessing different websites from their personal computers and Smartphone. This changing consumer behaviour is making the competition more intensive as store owners have to share their profits with online websites. The encroachment of online grocery stores is making the grocery industry more competitive. In addition, the format and merchandising innovation is also driving change in the grocery stores industry (Laseter & Rabinovich, 2011).
Market Positions of Industry
As mentioned, the grocery stores industry is extensively competitive with large number of rivals competing with each other, for high revenues and loyal customers. Kroger is one of the largest retail chains of the US and has moved to number one position, in recent years. Besides this, Whole Foods Market and Wegmans also stand amongst the top grocery retails of the US grocery stores industry. Trader’s Joe is another pertinent industry rival, whose consumers and revenues are increasing at an enormous rate.
Trader’s Joe is enjoying high position in the industry because of its unique and niche products, innovative package sizes and attractive pricing of products. In addition, super market chains are tough rivals in the grocery stores industry, such as Wal-Mart stores, Safeway, Ahold, Supervalue. However, the grocery stores that are downsizing and are not strongly positioned in the industry are SaveMart, which has fell down in the global rankings; Albertson and Roudy are companies of the grocery stores industry that are not positioned in a strong manner (Randall & Seth, 2011).
Next Strategic Moves of Rivals
The competitors of the grocery industry are constantly making strong strategic moves in order to sustain the competition in the industry and maintain their top position. In this context, rivals are planning to take innovative strategies such as espousing on digital marketing as digital world is a significant part of today’s consumers everyday life. In addition, another strategic move of rivals will be multichannel retailing. It is considerable that traditional grocery stores are slowly eroding online retailers.
Retailers are now strongly boosting the in-store experience and multichannel capability as a competitive strategy to survive competition. Additionally, another significant strategy to survive in this competitive industry will be innovation in terms of products and merchandising to attract customers. These are some of the vital strategic moves, which rivals are likely to make in near future. It is considerable that large supermarket chains will likely to be strong contenders in the industry (Martens, 2006).
Key Factors for Future Competitive Success
They key factors that will enable companies in the grocery stores industry to attain competitive rivalry are innovation in products and product labels, unique and convenient customer service and high quality. It is prominent that, convenience and quality are some of the non price reasons that push customers to buy from grocery stores, and thus, they are key success factors in the industry. Moreover, offering competitive pricing products to consumers is another key success factor, for future competitive success. Furthermore, it is essential for companies to present environmentally sustainable products, clear prices on products for customer understanding and feature speciality departments, as well differentiated stores tio attain competitive success (Profile America, 2006).
Outlook of the Industry
The industry’s profit aspects are above average, and the outlook is highly conducive to good profitability. In this regard, it is essential for companies in the grocery stores industry to espouse on strong strategies and made significant efforts to confine the opportunities, which industry presents to them. It is noteworthy that, rivals should formulate highly competitive strategies, which enable them to attain competitive position and survive for long term in the industry.
References
Ingdahl, O.J.E. (2006). Analysis of Diversion in the U.S. Grocery Industry. Cornell University.
Laseter, T.M., & Rabinovich, E. (2011). Internet Retail Operations: Integrating Theory and Practice for Managers. US: CRC Press.
Martens, B.J. (2006). An Analysis of the Retail Grocery Industry: The Spatial Effects of Supercenters. US: ProQuest.
Profile America. (2006). Grocery Stores. Retrieved on: November 16, 2013, from http://www.heraldtribune.com/assets/pdf/advtips/IQ_GrocersSupermarkets.pdf
Randall, G., & Seth, A. (2011). The Grocers: The Rise and Rise of Supermarket Chains. Kogan Page Publishers.
