Grocery market Earth Fare announced that it is closing all 50 stores. This announcement comes on the heels of Fairway Market and Lucky’s Market making similar statements.
Doomsayers will point to these closings as evidence of the ongoing “retailpocalypse.” And it’s true that more than 9,000 stores closed nationwide in 2019, a trend likely to continue.
But while stores are closing, retail isn’t declining – it’s going through the pain of much-needed change. The U.S. has been incredibly overstored for years; as ecommerce grows, the weaker players will succumb to the onslaught of online. Macy’s has just announced that it will be closing 125 stores, or about 20% of its store base.
The supermarket industry has always been challenging. Failed and defunct grocery banners are legion. When UK-based operator Tesco opened its California Fresh & Easy stores in 2007, the expectation was that the world was about to change drastically. After a bankruptcy and acquisition by Yucaipa, Fresh & Easy closed for good in 2015.
In the case of Earth Fare and its unfortunate peers, the cause of failure isn’t online. It’s a lack of differentiation and unique appeal to shoppers. No matter where you sell, if you don’t provide a clear benefit to your target customers, they will go elsewhere.
Grocery shopping is unlike any other kind of shopping; it’s really a buying trip, not a shopping trip. We know what we want, and our goal is to get in and out quickly, without any hassles or gaps in our list.
Where we go to shop is typically the result of habit. Research has shown time and again that once a customer learns a store’s layout, they will default to that store. If the store remodels or undergoes a major reset, there is significant risk that shoppers will defect to other stores. “Since I have to relearn where everything is, maybe I’ll try that new store.”
Shoppers want a compelling reason to come to your store. Earth Fare et al, didn’t provide that.
Earth Fare was focused on organic and natural foods. But any Kroger carries and large and growing selection of these. Walmart even has organic and gluten free options. What did Earth Fare provide that Kroger didn’t?
Keep in mind that even Whole Foods was struggling when Amazon came calling. What was once unique is now mainstream; the key to survival is to stay on the edge when the edge moves.
In its announcement, Earth Fare stated that “continued challenges in the grocery industry impeded the company’s progress as well as its ability to refinance its debt. As a result, Earth Fare is not in a financial position to continue to operate on a go-forward basis.”
Earth Fare’s investors had saddled the company with debt, which sucked up available funding for marketing efforts; Toys “R” Us had a similar problem. Private equity investors tend to pay themselves first, leaving little to invest in the growth of the business.
Those financial woes served to highlight the growing gap between consumer needs and Earth Fare’s offer. Natural and organic sounds great, but how was Earth Fare providing value that customers couldn’t get elsewhere, and often for less money?
We don’t know if that question was asked. We do know that it was never answered.