The document analyzes specialty grocery stores and their current trends such as online shopping, digital technology, locally produced and organic foods, and increased competition. It specifically examines The Fresh Market, a specialty grocery chain with 168 stores in 27 states known for its European style markets, high quality products, and support of local growers. While The Fresh Market has strengths like in-store activities and customer service, it also has weaknesses such as low awareness, lack of advertising, and high prices. It faces competition from stores like Whole Foods, Kroger, Walmart and Costco, and will need to leverage its competitive advantages like quality perishables and customer service to differentiate itself in the market.
2. Specialty Grocery Stores
• Focus on a single food category (e.g. meats, produce, or bakery) or engage in
selling special types of food products (e.g. natural/organic, gourmet and
ethnic)1
• Current trends in the specialty grocery store industry:
• Online shopping/delivery
• Digital technology
• Locally produced food
• Organic food
• Increased competition
9. The Fresh Market
• Greensboro, North Carolina
• 1982
• 168 stores in 27 states
• Specialty grocery store
• European style markets
• Corporate responsibility
• Middle and upper class
• $$$
10. Strengths vs. Weaknesses
Focuses on in-store activities Low awareness
Online purchase services Lacks advertising strategies
High quality products High prices
Supporter of local growers Low market shares
Corporate responsible Majority of products perishable
Customer service Outsource logistics
Strengths Weaknesses
Patricia Huddleston Judith Whipple Rachel Nye Mattick So Jung Lee, (2009),"Customer satisfaction in food retailing: comparing specialty and conventional grocery stores", International Journal of Retail & Distribution Management, Vol. 37 Iss 1 pp. 63 - 80
In general, online grocery ordering is on the rise even though the category lags behind others due to some barriers such as consumers’ concerns about the freshness of perishables.2
Curbside services for orders purchased online are rapidly being tested by both retailers and consumers alike.
Some of the retailers testing out online shopping/delivery are specialty grocery stores.
For example, Whole Foods is partnering with Instacart in order to provide online shopping and delivery to their customers.
Instacart is a grocery delivery service where customers fill their shopping cart, pick the hour they want delivery to occur in, and then the groceries are handed to them at their doorstep.1
According to Whole Foods co-CEO Walter Rob, many of its stores are seeing instacart sales as a percentage of total store in the mid-to-high single digits.3
Thus, online shopping and delivery is a good investment for specialty grocery stores, especially if they want to compete with supermarkets that are doing the same.
Another good investment would be in digital technology.
Ray, J. (2016, February 23). Whole Foods to Invest in Instacart, Signs New Multi-Year Delivery Deal. Retrieved March 03, 2016, from http://recode.net/2016/02/23/whole-foods-to-invest-in-instacart-signs-new-multi-year-delivery-deal/
http://nuzzel.com/search?q=instacart
Smith, D. (n.d.). Grocery Retailing: US - November 2015. Retrieved March 03, 2016, from http://academic.mintel.com.ezproxy.tcu.edu/
Stanley, J. (2016, February 17). Data Science at Instacart. Retrieved March 03, 2016, from http://tech.instacart.com/data-science-at-instacart/
http://nuzzel.com/search?q=instacart
As with the rest of the world, digital technology has found its way into the grocery aisles.2
Consumers, especially younger generations, are increasingly turning to their mobile devices to compare prices, download coupons, obtain product information, and even pay.2
Specialty grocery stores are one of the retailers that are testing new technology to increase customer satisfaction and gain a competitive advantage.
For example, Whole Foods, a specialty grocery store, just modified their app to enable customers to download digital coupons via their phones.1
This is one of the desired enhancements listed above in the graph
The newly announced update to the Whole Foods app dominated the company’s earnings call on Wednesday after the company announced record sales for the last quarter.1
Thus, this new technology pleased customers and increased sales.
Whole Foods suppliers can also use the app to get coupons for its products to the users.1
Furthermore, by adding this new improvement, Whole Foods can track customers buying habits and use it to improve sales and monitor which products are selling better such as locally produced food.
Kasperkevic, J. (2016, February 10). Whole Foods introduces digital coupons to lure more shoppers. Retrieved March 03, 2016, from http://www.theguardian.com/business/2016/feb/10/whole-foods-introduces-digital-coupons-app-shoppering
http://www.netvibes.com/#Whole_Foods
Smith, D. (n.d.). Grocery Retailing: US - November 2015. Retrieved March 03, 2016, from http://academic.mintel.com.ezproxy.tcu.edu/
Locally produced foods are on the rise and the primary reasons for desiring locally grown food are because of a perception that it’s fresher and to support the local community.1
However, this trend has not always been around.
The growth can be attributed to many things from national-level programming from the USDA and state-led marketing efforts, to a new awareness on part of the biggest, most connected generation of our time, millennials.2
Representing a third of the population and $200 billion in annual spending power, these Internet-savvy, diverse, educated, community-minded folks are different from generations past in that they want transparency, connectivity and meaning in all exchanges, including food.2
Local foods provide this transparency while giving meaning to millennials by helping the local economy.
This trend is very important to specialty grocery stores because:
1) They operate in a fashion where they have a greater ability to work with local farmers on contracts of a smaller scale.3
So they have a lot of the local produce that these consumers want.
2) They tend to have higher prices than supermarkets.
So local food consumers will go to specialty stores instead of supermarkets with lower prices because they are willing to sacrifice cost savings to achieve the two primary benefits.
Regardless if the concept of local foods is a temporary “fad” or a lifestyle change that will modify the American diet, the popularity for locally produced foods has left food retailers wondering if this niche is worthy of investment.3
Bloom, B. (n.d.). The Locavore: Attitudes Towards Locally-Sourced Foods - US - February 2014. Retrieved March 03, 2016, from http://academic.mintel.com.ezproxy.tcu.edu/Mintel
Breaking Down Barriers for Local Food. (2016, March 02). Retrieved March 03, 2016, from http://www.triplepundit.com/2016/03/breaking-barriers-local-food/
http://whatthetrend.com/trend/local%20food
Wixson, S., Katchova, A., Woods, T., & Hu, W. (n.d.). The Role of Specialty Food Stores and Farmers’ Markets in the Procurement of Local Foods. Retrieved March 03, 2016, from http://ageconsearch.umn.edu/
Not only is there a trend for locally produced food but also for organic food.
Consumers’ interest in organic foods and products continues to be quite prevalent as these items are perceived to be:1
1) More healthful
2) Contain less unnecessary ingredients
3) Not made with pesticides
4) Less processed
Specialty grocery stores concentrate on organic food and thus have a variety of options appealing to consumers tastes.
While an increase in organic food sales can help specialty grocery stores it is also harming them.
Roberts, W. (n.d.). Organic Food and Beverage Shoppers - US - March 2015. Retrieved March 03, 2016, from http://academic.mintel.com.ezproxy.tcu.edu/
With mass merchandisers like Target and Walmart adding or expanding their organic food and beverage options, the potential exists for prices to lessen, particularly in Walmart stores. Walmart is promising to expand its selection of organic foods and to sell it at the same prices it sells nonorganic.1
A Walmart spokesperson notes that they are working to lower the price of the organic pantry staples to be at parity with national-brand nonorganic products.1
Whole Foods has responded by reducing prices and running its first national ad campaign.1
After recently eliminating more than 2,000 jobs to cut costs, the chain of high-end, higher-priced grocery stores announced its first quarter of declining sales since 2009.2
Whole Foods doesn’t expect things to improve until late 2016
In that time mainstream grocery stores and hypermarkets like Walmart will likely increase their selection of natural, organic, and other health-minded foods.2
Thus, while Whole Foods has thrived on selling unique brands and sustainably produced food, the competition is catching up.
The competition is affecting another specialty grocery store called The Fresh Market.
Roberts, W. (n.d.). Organic Food and Beverage Shoppers - US - March 2015. Retrieved March 03, 2016, from http://academic.mintel.com.ezproxy.tcu.edu/
Wong, V. (2015, November 04). Sales At Whole Foods Are In Decline, For The First Time In Six Years. Retrieved March 03, 2016, from http://www.buzzfeed.com/venessawong/wtf-wfm#.tw21W33xA
Fresh Market said in October it had retained investment bank JP Morgan Chase & Co to assist in a review of strategic options, including the potential sale of the company.1
The Fresh Market is looking for a buyer because of its low cash flow.2
Lately, there has been a lot of chatter about Kroger, the largest supermarket chain in the United States, acquiring the Fresh Market.2
Kroger is in the second round of an auction process for Fresh Market.1
The Fresh Market would also fit in well with Kroger's substantial push into the natural, organic and gourmet foods segments.2
Organic and specialty stores such as Fresh Market, once insulated from the broader supermarket competition, have struggled as rivals such as Kroger have diversified into similar offerings.1
Hirsch, L., & Roumeliotis, G. (2016, February 11). Exclusive: Kroger in bid to acquire Fresh Market. Retrieved March 03, 2016, from http://www.reuters.com/article/us-freshmarket-m-a-kroger-idUSKCN0VK277
Jennings, D. (2016, February 28). Does Kroger Want The Fresh Market? Retrieved March 03, 2016, from http://seekingalpha.com/article/3937746-kroger-want-fresh-market
http://whatthetrend.com/trend/fresh%20market
Images:
http://stpeterealestateblog.com/blog1/wp-content/uploads/2010/10/Fresh-Market-1-of-1.jpg
http://www.bing.com/images/search?q=kroger&view
The Fresh Market is a nationwide grocery franchise founded in Greensboro, North Carolina in 1982.1
The Fresh Market is proactive about where and by what means they purchase their products.1
They are supporters of local growers around the individual areas in which they are located.
Fresh Market dedicates to deliver fresh, local produce, meat and groceries to consumers, including a wide range of services to provide their customers a unique and healthy experience.
The Fresh Market has expanded across 27 states growing to 180 stores.2
Including the Dallas/Fort Worth area
Most locations are smaller than the average grocery store and managed by employees that pride themselves on customer service.
Their style is inspired by European traditional markets.1
They wanted to have a rustic atmosphere with warm lights and music
One that is focused on the consumer and their individual shopping experience.
They promote corporate responsibility within the local community by supporting organizations such as:3
The American Red Cross and No Kid Hungry
The Fresh Market focuses on building community relations as a vital tool of their business.
The Fresh Market considers their business to be targeted towards middle and upper class:2
They are willing to pay for expensive but high quality and healthier/organic products.
With the majority of products offered at fresh market being organic and preservative free.
History. (2016). Retrieved February 29, 2016, from http://www.thefreshmarket.com/history
Bells, S. (2016, February 11). Food for Thought: An Overview of The Fresh Market. Retrieved March 02, 2016, from http://marketrealist.com/2016/02/food-thought-overview-fresh-market/
Community Involvement. (2016). Retrieved February 26, 2016, from http://www.thefreshmarket.com/community
Image:
http://marketrealist.com/2016/02/food-thought-overview-fresh-market
Strengths:
The Fresh Market provides its customers with in store activities that enhance and immerse them into the company’s culture.1
It offers cooking classes and demonstrations, taste sampling, and tours.
The grocery chain also offers an online shopping cart that allows customers to place online orders of their groceries for faster service.
Then they only have to stop by the store to pick up their groceries.
The Fresh Market is known for providing only premium products to their customers.
Today, the millennial generation is more aware and responsible with their eating habits
Thus they are more inclined to purchase organic and preservative free products.
The Fresh Market distributes a wide range of these.
The philosophy behind “fresh” acts as a description of their food quality as well as an insight to the company culture.
They are big supporters of local growers in each location, in order to deliver a high quality product.
Something else recognized in this franchise is their customer service and one to one relationship with customers.
Taste sampling and free tryouts enhance the satisfaction of consumers providing them a more interactive experience.
Weaknesses
Many people do not know about The Fresh Market due to their lack of advertisements; they mainly rely on word-of-mouth from their customers.1
Fresh Market is known for having higher prices in comparison to its competitors (Kroger, Costco, Walmart).3
Individuals prefer to buy in the other stores because they will save some money
Thus The Fresh Market’s market share is low because customers are spending elsewhere.
The majority of products are perishable while their competition offers non perishable goods as well.
Currently The Fresh Market outsources all of its logistics to third party distributors because they don’t have any warehouses.3
The Fresh Market Inc. Retrieved March 03, 2016, from http://www.vault.com/company-profiles/retail/the-fresh-market,-inc/company-overview.aspx
Eaton, Samuel. Personal interview. 16 February 2016.
Bells, S. (2016, February 11). Food for Thought: An Overview of The Fresh Market. Retrieved March 02, 2016, from http://marketrealist.com/2016/02/food-thought-overview-fresh-market/
The Fresh Market’s direct niche competition is mainly Central Market and Whole foods.1
They resemble The Fresh Market with price and quality.
However, The Fresh Market is known to be more expensive than these competitors.
Indirect supermarket competition from Kroger, Walmart and Costco are becoming a threat, as they are seeking to healthier grocery chains.1
Supermarkets want to target the new healthy eating trend that millennials are now involved in.
Thus, they are now supplying and incorporating healthier options into their stores.
Bells, S. (2016, February 11). Food for Thought: An Overview of The Fresh Market. Retrieved March 02, 2016, from http://marketrealist.com/2016/02/food-thought-overview-fresh-market
Image:
http://marketrealist.com/2016/02/food-thought-overview-fresh-market
This image provides us with an insight on how The Fresh Market and its competitors are positioned.
Wal-Mart, Kroger and Costco all fall under the cheaper but mass produced side.
Trader Joe’s provides customers with more handcrafted products that are also inexpensive.
Whole Foods, Central Market, and the Fresh Market fall under the handcrafted and expensive spectrum.
Whole foods and Central Market compete with the same prices but Fresh market is more expensive.
The Fresh Market’s main competitive advantage is the shopping experience that they provide for their customers.
Heavily focus on personal service by providing:2
Great customer service
Samplings of any product
In-store chef led demonstrations
The Fresh Market also focuses on selling:2
Fresh and healthy products
They are able to do this by buying from local distributors.
Which Increases the quality of the products
The store includes a refrigerated glass of fresh meats and seafood that allows customers to select their fresh cuts.
The shopping environment is also very welcoming, it appeals to all senses:1
The smell of freshly brewed coffee and bread right out of the oven
The sound of classical music
The soft lighting with antique décor in an intimate setting
The taste of fresh, high-quality products
all of things work together to create surroundings where customers are comfortable and satisfied.
Turano, A. (2011, August 29). Why The Fresh Market is more fresh than Whole Foods. Retrieved March 02, 2016, from http://www.retailcustomerexperience.com/blogs/why-the-fresh-market-is-more-fresh-than-whole-foods/
Ryan, T. (2012, September 26). Fresh Market CEO Sees Room for Specialty Grocery Growth. Retrieved March 01, 2016, from http://www.retailwire.com/discussion/16297/fresh-market-ceo-sees-room-for-specialty-grocery-growth
The Fresh Market website reiterates their excellent customer service.
It provides background information on their company and focuses on providing customers with ideas on how to use their products through:
Recipes, tips and demonstration videos.
Other features include an event calendar and a section on promotion.
At the very bottom of their website they have links to all of their social media tools including:
Twitter
Facebook
Instagram
Pinterest
Gourmet Grocery Store. (n.d.). Retrieved March 03, 2016, from http://www.thefreshmarket.com/
Image:
http://www.thefreshmarket.com/
The Fresh Market relies mainly on word of mouth for increasing responsiveness towards their stores.
Twitter is one of their main social networks to connect with millennials and what is being said about their brand.
As customers tweet and retweet, the underlying motives and behaviors of the customers are being measured.
Through Twitter customers tend to focus on and comment about their positive or negative experiences at the store, and how they perceive The Fresh Market’s overall brand.
By looking at the activity by week graph, we are able to analyze and see a trend that consists of customers engaging in more tweets during afternoon hours and weekdays in comparison to weekends.
Furthermore, the share of voice graph demonstrates that Whole Foods is the most involved and has more activity on Twitter than The Fresh Market.
While Fresh Market has a slightly higher share of voice than Central Market.
Images:
https://web.mention.com/#alert/1193731
Instagram is one of Fresh Market’s least involved social media tools.
Fresh Market has about 8,682 followers, which falls short among their competitors.1
However, useful insight can be developed from the posts by hour and time of Fresh Market users on Instagram.1
The posts per hour and time are highest between lunch time and the afternoon on.
These posts occur the most during that time period because people who work and students are able to take a lunch break.
Through Instagram Fresh Market targets the younger generations, such as these school students, by using hashtags such as “#FreshFinds”and “#TheFreshMarket”
Fresh Market has focused more on posting about their new products or trends instead of social events and activities like their Facebook age.1
The Fresh Market. (n.d.). Retrieved March 03, 2016, from https://www.Instagram.com/thefreshmarket/?hl=en
Images:
https;//app.quintly.com/dashboard/Instagram-overview
The Fresh Market uses Facebook as its greatest social media platform to connect with a wide range of customers.
The Fresh Market page on Facebook has about 220k followers.1
There is an average of two posts per day, and a very fast response rate by usually addressing customer’s questions within 24 hours.1
Many people use Facebook not to just comment about their experiences, but to:
Be proactive in a huge community interaction by adding and sharing pictures, videos, and events.
The interaction distribution graph demonstrates that customers are liking posts on about The Fresh Market on Facebook the most
They are not commenting on these posts, thus customers are most likely satisfied with the posts.
The interaction rate by hour graph shows that there is more interaction on Facebook between customers during afternoon and lunch hours.
This could mean that customers eat at Fresh Market during the day and thus are positing photos of food to their Facebook.
Thus during these hours, The Fresh Market could give out promotions to encourage lunch posts.
Through Facebook, The Fresh Market reaches a wider range of customers from all ages, compared to Twitter and Instagram.
The Fresh Market. (n.d.). Retrieved March 03, 2016, from https://www.facebook.com/TheFreshMarket/
Images:
https://app.quintly.com/dashboard/facebook-overview
Through Pinterest, The Fresh Market is able to track about 3.7k followers.1
It is able to see what people are loving most today and what are their target market is interested in.
They can track what their follower’s pins and saved images, which helps them discover new ideas and ways to approach their customers.
Through Pinterest the Fresh Market has created various folders that divide among consumer’s interests, such as “Holiday recipes,” “Healthy recipes,” “Gluten free,” among others.
This brings them more visits and views to their page, and provides a creative way to interact with more followers.
The Fresh Market. (n.d.). Retrieved March 03, 2016, from https://www.pinterest.com/thefreshmarket/
Through the use of social media, The Fresh Market has been able to reach more individuals by sharing pictures and comments about their healthy products.
Social media is basically in everyone’s lives one way or another.
Recently, for millennials, social media has become a food paradise where they can share pictures and recipes about healthy and delicious foods.
According to Univision Communications about 44% of millennials from the ages of 21-24 have posted an image of food they or a friend was having.1
By using different platforms, The Fresh Market has been able to reach a larger group of people and increased their brand awareness.
The Millennial "Foodie" Frenzy. (2015, October 20). Retrieved March 02, 2016, from http://thegbrief.com/articles/the-millennial-foodie-frenzy-508