Why The Supermarket’s Past Is Holding It Back

ByPYMNTS

Posted on April 13, 2016

 

 

 

Oh, millennials — so fickle, so finicky and so hard for old-fashioned retailers to get a handle on. Now that more and more Instagram-posting, Snapchat-snapping consumers are coming of age, though, industries considered recession-proof, like retail grocery stores, are finding that they might not be so appropriately suited to a world driven by millennial spending power.

But instead of blaming the irascible nature of a younger generation of consumers, traditional supermarkets might have to take a long, hard look at where they came from if they are to have any hope of surviving much further into the 21st century.

This new reading of the balance between consumer expectations and retail grocery offerings comes from Benjamin Davison, a PhD candidate in history at the University of Virginia and author of an upcoming book on the history of the American supermarket. In an interview with The Atlantic‘s CityLab, Davison proffered a theory grounded in the modern history of the rise of the supermarket for why so many younger shoppers prefer to run down their grocery lists at a host of retailers that doesn’t include Stop & Shop, Giant, Kroger and more. Supermarkets developed to serve an older generation, and they’re not changing fast enough for the newer ones.

In a nutshell, Davison’s theory boils down to this: Supermarkets were the natural development of the rise of a predominantly white consumer class that gained economic mobility at the same time as they procured an affordable means of personal transportation — the automobile. With the car’s rise in the early 20th century came that of the suburb in the mid-2oth, and to serve this lucrative cohort of consumers, the old guard of general stores and mom-and-pop shops built on the grounds of full-service fill-up stations gave way to more centrally located mega-general stores — or supermarkets — that may not have been accessible on foot or by rail but most certainly were so by car.

While this might have too much of a tinge of social theory for most black-and-white retail pundits, Davison argues that it’s simply a natural result of a business seeking a steady revenue stream.

“There was this real relationship with putting [supermarkets] in areas where the real estate itself was not expensive but also in places most likely to be frequented by the kind of shoppers they wanted: well-to-do whites who had a car,” Davison told CityLab. “Food retailers really like to have reliable, predictable customers who want reliable, predicable food stuff, and they found that in predominantly white suburbs.”

Fast forward to the 21st century and not only is the economically mobile group of Baby Boomers predominantly white, but Baby Boomers aren’t even the most sought-after consumer demographic anymore. Millennials, however, have shown everything but a preference for supermarket shopping. A study conducted by YouGuv and Millennial Marketing on grocery store brand preferences found that, of 31 stores, the only full-price supermarket chain (as opposed to discount retailers, like Aldi and Publix) to break into the top five among 18- to 34-year-olds was Kroger in third place. Above was Whole Foods in second and Trader Joe’s in first, with the latter nearly doubling up on preferences scores compared to Kroger, the nation’s largest supermarket retailer.

But if the social development of supermarkets is partly to blame for their poor performance with the younger generations, it can’t be said that millennials simply “don’t like” those same chains. Rather, it may be more accurate to say that supermarkets aren’t offering the product that millennials want geographically, along with a dozens other factors, like pricing, selection and more.

According to Davison, this is a two-pronged problem for supermarkets. As more millennials move to urban locales, it’s harder for supermarkets to bring their large footprints with them. However, the most recent data from the U.S. Census Bureau showed that about 100,000 more millennials are actually moving from cities to suburbs — but not to the same effect as their parents before them. Demographic research group Livability explained that millennials aren’t moving to any old suburb they can find but rather those that function as self-sufficient cities in and of themselves and don’t require their residents to drive miles outside their borders just to get some weekly grocery shopping done.

Millennials have acquired a taste for city living, wherever they can get it, and while supermarkets might experiment with delivery services, self-checkout and whatever else the advancing wave of retail tech innovations affords them, the legacy that gave rise to a generation of supermarket dominance might be the same thing that holds them back.