Battling market fragmentation
Published 12:00 am Sunday, September 3, 2006
There may be some changes coming soon to the local grocery store scene.
Currently in Suffolk, we have two Wal-Mart Supercenters, one Farm Fresh, with another on the way, and a Food Lion, it seems, near every neighborhood.
My family often goes to a Wal-Mart when we are out of everything n paper towels, toilet paper, plastic wrap, condiments, etc., and when we know the grocery bill is going to be in the triple digits. There are several items we can’t live without, however, like Bob’s Red Mill organic steel cut oats and Quorn brand vegetarian chicken patties, that are not available there. For those organic and other higher-end and higher-priced items, it’s Farm Fresh.
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We typically use Food Lion as families formerly used a convenience store n when we need just a few things. Things seem to cost a little more than Wal-Mart, but there is always a Food Lion close, and it’s easy to navigate and get in and out. Time is money, too.
Apparently, many others shop the same way. The Washington Post reported recently that Food Lion is re-engineering itself to better cater to the fragmented manner in which we shop.
In the Washington, D.C. metropolitan area, Food Lion has recently unveiled two new stores n Bottom Dollar and Bloom. Bottom Dollar, as one might imagine, focuses on no frills, discount pricing. Customers are expected to bag their own groceries. A study by the Post found Bottom Dollar stores were located in neighborhoods of “aspiring young families,” who have less discretionary income and may rent their homes.
Bloom stores, on the other hand, carry more than 50 types of cheese. Interactive kiosks help customers look up products and prices. Blooms are located in what the company calls “Bloomburgs,” populated by wealthy dual-income young families with busy, prosperous lifestyles.”
Food Lion company officials had found sales slumping in the
long-running grocery store wars. Squeezed between Wal-Mart’s low prices and what the Post described as the “organic abundance of high-end retailers, Food Lion officials came to the realization that the traditional grocery store paradigm of trying to be all things to all people just wasn’t working.
“We were stuck in the middle,” Michael J. Haaf, senior vice president of sales, marketing and business strategy for Food Lion told the Post. “We didn’t really stand for anything, and that was a really untenable position.”
I found this particularly interesting, and not just because I have to grocery shop and typically eat some kind of food on most days. What Food Lion is facing sounds eerily similar to what the newspaper industry is facing.
Traditionally, we’ve tried to be all things to all people. A 30-plus-year decline in circulation at major newspapers indicates that model is not working so well. Many of the major metros are using the Food Lion model to fight the loss of readership. The Virginian-Pilot, for instance, recently announced that it will soon launch a free distribution newspaper called “Link,” that is aimed at young people who are not reading the traditional product in the numbers the company would like. That would be their “Bottom Dollar” newspaper.
I wouldn’t be surprised to learn that a higher-end “Bloom” newspaper is on the drawing boards, too.
It will be interesting to see how these efforts to battle market fragmentation work out.
Incidentally, I talked to a Food Lion media liaison Monday morning who told me that the company is pleased with the results of its strategy so far. It will be extended to other markets in 2007 and it has not been decided whether the Hampton Roads market is among them. You can bet it won’t be long.
Prutsok is publisher of the News-Herald. He can be reached at 934-9607 or at firstname.lastname@example.org.