"The most dangerous competitor is the one you don’t know about.”

Competition for retail dollars could be a click away

Tom Karst
National Editor

There is pithy truth in that. It is the unexpected threat that catches one unaware. One minute you are at the waterhole quenching your thirst and the next moment a lion has you by the neck.

Who is that “most dangerous” competitor for supermarkets? The flippant answer is that we don’t know since he must by definition be unseen to be most dangerous.

Well, perhaps close to unseen.

I talked with Bill Bishop, chairman of Willard Bishop LLC, Barrington, Ill., recently about the path ahead for retailers.

He was insightful on several topics.

Inflation at retail, whether caused by weather or the rising cost of transportation, is a potentially volatile concern, Bishop said.

There are two effects in a period of inflation, Bishop said.

“One is that people tend to buy less, and the other is that it contributes to (consumer) skepticism,” he said. “I don’t think the average person has any idea how much food prices can vary, so they are not satisfied with the argument that ‘the market did it.’”

Consumer skepticism should be countered with greater transparency by retailers, Bishop said.

“If you raise prices, have something to say about it.”

Looking ahead — and this is reference to “the most dangerous competitor” — Bishop said that online sales of fresh produce is a trend that should be closely watched.

If there is one blind spot for retailers, he said it may be their lack of concern for online competition.

I can see how some could believe that online shopping pales in comparison to the real thing. First of all, online produce sales are a pittance compared with conventional supermarkets, of course.

What’s more, retailers think, don’t consumers love shopping at supermarkets, perhaps finding love in the aisles along with a bag of salad? Don’t they love waiting in checkout lines? Don’t they love piling groceries in the minivan?

Watch out, Bishop says.

“The blind spot that says that what happens online isn’t important because Webvan failed, or that what happens online isn’t important because they can’t handle perishables,” he said.

Bishop said there are firms that are having some success in some regions with online produce sales.

Fresh Direct is handling fresh produce in New York City.

“Just because you don’t have Fresh Direct (in your market) doesn’t mean that there isn’t some vulnerability,” Bishop said.

Amazon wants in the food business. Peapod is in the fresh food business. Fresh Direct and RelayFoods in North Carolina also handles fresh produce.

Need we go on?

Along the same line, Bishop said consumers are increasingly turning to the Web for “pre-shopping” activities — searching for deals, recipes and more. If food marketers are not there during times consumers are pre-shopping, well, it won’t turn out well for them.

As online momentum builds, perhaps pre-shopping becomes shopping. Bishop said that MyWebGrocer recently signed an agreement to power digital services for Kroger.

A news release about the development says through “MyWebGrocer’s technology, Kroger and their family of 17 banners are now able to provide their consumers faster access to online planning tools, which includes online circulars, personalized shopping lists and recipes.”

One day it is online recipes. The next day it is pointing and clicking through the virtual produce department.

Bishop said that an analysis done a few years ago looking at what online food shoppers purchased showed that bananas were the first or second item in every case.

“Once there is that trust level, the traditional thought that you have to go to the store to squeeze melons and investigate the apples for bruises becomes a little less important,” he said.

Again, Bishop reminds us that the most dangerous competitor is the competitor you don’t know (much) about.

E-mail tkarst@thepacker.com

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