Written by Roger Jackson,
October 11th, 2017 | Views

The forces that gave rise to the supermarket will be the same ones that destroy it

In the 1950s your and my grandmothers (not often grandfathers I suggest) would set off on foot or by bus with kids in the pram and walk up and down the local shopping street in the rain going from shop to shop to buy (a few) provisions for the next day or two. Like so many household tasks its was time-consuming and hard work! Prices were high because shops were small and inefficient with high labour costs. There was no “self-service”. Food was a high % of a typical household budget.

Increasing affluence led to the rise of car ownership and the development of the supermarket and then the “out of town” hypermarket. Scale and the self-service concept brought down prices and made the shop quicker and easier, and cheaper. Supermarkets had better negotiation power with manufacturers and drove down prices competing with each other to be the cheapest. These forces of competition drove consolidation; bigger is cheaper. Food is now a small % of the average household budget.

So, Supermarkets were born of the desire to save time and money and people having more money available to spend on saving time. That desire hasn’t gone away. It’s fundamental to the market economy. I as a shopper want to spend more time and money enjoying myself and less time and money on “chores”.

The internet is today’s “motor car” bringing a new mechanism of convenience to the shopper. Supermarket shopping is being redefined from being the “fun solution” compared to the old model, to being the “chore” compared to online shopping.

The small shops in local shopping streets. What happened to them? Almost entirely wiped out by the change. A few survived by going very specialist and upmarket. But most disappeared. And we’re not greatly mourned by those who had to use them near daily (ask your Gran!)

What does this mean for the future of the supermarket shop? Extrapolating from history, I predict three main dynamics

  • Shops will only survive if they entertain in a way that online can’t (by entertain I include inspire and inform). People will go if there is more to it than just the household shop.
  • The chore of the routine list will be completely replaced by “Zero touch” shopping with the least amount of hassle for the shopper possible.
  • Online there is no room for a price premium. No one will pay a penny more for their shop than they have to, so the most efficient supply chain concept will “win”.

Visit your Wholefoods store and pick up the Amazon order at the exit of the car park, anyone??