“Ninety percent of the U.S. population lives within 10 miles of a Walmart, and a lot of these smaller grocery retailers are just expendable,” said Brittain Ladd, a grocery analyst who has consulted several big players.
Josh Urlage’s customers at his Sutton’s Foods in Arcanum remember him as a kid, playing high school football and working in the community. This personal connection is one of the few things keeping small grocers alive as highly competitive grocery wars continue boiling.
But Urlage, his wife Shala, and her parents Kirby and Lori Sutton were forced to close their Union City Sutton’s store at the end of July after just two years in business. The biggest difference, Urlage said, is that the Union City customers didn’t know his family in the same way.
Sutton’s is among the many independent grocers facing major hurdles as ongoing grocery wars continue heating up, consumer shopping habits change and larger companies increasingly enjoy the benefits of economy of scale.
»BIZ BEAT: Robotexts a growing concern for fraudulent activity
Unless owner Jim Davis is able to find a buyer, two of his four Foodtown stores in Trotwood and Tipp City will close. Other area mom-and-pop-type grocers have closed in recent years, including Lofino’s Market Place in Beavercreek and the Springboro IGA.
In 2015, Ladd estimated that 10 to 15 percent of small grocery stores would go out of business by 2022, a prediction he still stands by. In 2018, there were 38,307 grocery stores in the United States, down from 38,571 the year before, according to the market research website Statista.
The headwinds facing small grocers have only increased, Ladd said. The successful ones find a niche as the only place shoppers can find specific baked goods, luxury cheeses or special meats. Others who can’t adapt suffer.
“We can’t buy as competitively as (big grocers) do. The national brands don’t give us the same pricing,” Davis said. “I just don’t think they like independents anymore. They’d rather deal with the Walmarts and the Krogers.”
»RELATED: Clothing store Forever 21 weighs bankruptcy filing
That perceived price is one of the biggest issues customers have with small grocers, Urlage said. The independents often run specials and ads just as good as major players, he said. But economy of scale, with fewer stores and customers, does get in the way.
Food inflation stayed low at a 0.3 and 0.9 percent growth during 2016 and 2017, respectively. But it picked up to 1.4 percent as trade relations impacted food prices in 2018 and this year’s average for the first seven months is closer to 1.9 percent, according to U.S. Bureau of Labor Statistics data.
Food inflation has been especially bad for grocery stores this year, Ladd said, but as the grocery wars heat up, big players like Walmart and Kroger worked hard to keep prices the same, eating the costs of the food increases rather than passing them to customers — a luxury small business can’t afford.
And customers with changing habits place more value on that price, choosing discounts often over the loyalty their grandparents may have had toward local grocers. While some consumers do most of their shopping at small stores, the majority of the Arcanum Sutton’s customers go into the store for just a couple quick items.
The modern grocery shopper also wants private labels and health foods — all things independent grocery stores oftentimes struggle to deliver.
»RELATED: Dorothy Lane Market to launch Love Cakes storefront
“All those types of foods, they’re important and we know they’re important,” Urlage said. “It’s difficult for small stores to keep up on those because we have to buy in case quantities. So it’s really hard for us to buy a whole case of organic lettuce, for example, because it goes bad quickly…we don’t have the big customer counts that the big stores do.”
The big grocers who invest in technology are also able to add a personal layer by marketing coupons toward customers who have already bought those items or giving them a chance to digitally refill their orders. Smaller companies don’t have the budget to invest in those technologies.
But local, independent grocers will always have one thing over major retailers, Urlage said.
“The most important thing to remember with any small business…is the amount of money that is put back into the communities,” Urlage said. “The large corporations, they don’t always sponsor the baseball teams. They don’t always volunteer for the Old Fashioned Days festival. They don’t contribute back to the community.”
FIVE FAST READS
•The steps Connor Betts took to commit Ohio's largest mass shooting
• Kettering book store to go out of business
• Local Victoria’s Secret, Bath & Body call center hiring 2K seasonal workers
•PHOTOS: More than 2K UD freshmen move in
• Three more local stores set to close after national retailer liquidates
About the Author