Watch for the full version of this editorial in this month’s Food Trade News and Food World.
What happens when no new grocery stores are born? What happens when our industry’s nurseries of innovation stop producing the next generation of retailers?
What happens when no new grocery stores are born? What happens when our industry’s nurseries of innovation stop producing the next generation of retailers?
The American supermarket is a modern marvel. In 1989, Boris Yeltsin’s unannounced visit to a Randall’s supermarket in Houston reportedly helped deepen his disillusionment with the Soviet system. The abundance and variety available to ordinary Americans stood in stark contrast to the shortages and limited consumer choices in the Soviet Union.
Grocery retailing is also an exceptionally mature industry. Kroger dates to 1883, while the modern supermarket emerged in the 1930s, when entrepreneurs such as King Kullen’s Michael Cullen challenged the traditional neighborhood grocery model. In 1935, the United States had just 386 supermarkets. By 1972, that number had grown to nearly 65,000, transforming how Americans bought food.
Since then, retailers have continued refining the model through technology, new formats, and operational efficiencies. Consolidation has reshaped the competitive landscape, creating larger entities better positioned to compete. Today, FMI reports the number of American supermarkets is approximately 45,575.
Growth in store locations increasingly comes from established retailers expanding their footprints. Even Aldi U.S., one of the country’s fastest-growing grocery retailers, traces its American origins to 1976. Building a new grocery chain today, however, is a very different proposition from expanding an established one.
The Cost of Standing Still
The barriers to entry have risen. Opening a grocery store is one thing; building a chain that can compete with established operators is another. Incumbents benefit from supplier relationships, purchasing power, distribution networks, loyalty programs, real estate portfolios, and increasingly sophisticated data capabilities.
Those advantages compound with scale, making it difficult for a new entrant to match prices, absorb costs, and build customer loyalty across multiple locations. We’re watching this play out in real time in New York with the “Mamdani marts.” Creating these public grocery stores from scratch will cost hundreds of millions of dollars – with no assurance it will work.
The basic supermarket model is mature. Consumers already expect broad assortments, fresh departments, competitive pricing, and convenient shopping in one location. The fundamentals are well established, leaving new entrants with fewer opportunities to reinvent the format outright. Success increasingly requires a distinct proposition, whether through lower prices, specialized assortments, better service, or a more convenient customer experience.
Innovation continues, but it often takes the form of refining the existing model rather than creating an entirely new one. There are exceptions to this. Los Angeles’ Erewhon is a shining star in the grocery world, but how practical is it for average consumer markets? Answer: not very.
Ownership changes are a company formation substitute. For entrepreneurs looking to enter grocery retailing, acquiring an existing business can be more practical than starting from scratch. Buying a retiring independent grocer’s stores, expanding through a wholesale-supported network, or assembling a regional chain through acquisitions offers a path into the market with infrastructure and customers already in place.
The result may be new leadership, new investment, and a different strategic direction, but not necessarily a new grocery company. The industry can change hands without replenishing its pipeline of founders.
Fiercely Independent
I like the idea that grocery stores should be fiercely independent – in ownership or spirit. Regional and national chains can be just as distinctive and forward-thinking as an independent single-store. Scale brings power and influence, but it can also dilute the very characteristics that made a store great. Growth shouldn’t require a grocery concept to lose its identity.
One of my favorite quotes is that “the Whole Foods of tomorrow will come from the independents of today.” If that’s true, who is building it? Independents and smaller operators face real disadvantages in purchasing power, technology, and investment. The right wholesale and industry partnerships can help bridge that gap. Yet these businesses remain important places to watch for emerging concepts and ideas.
Our regional and national chains have a different advantage: the resources to experiment at scale. I’d like to see more of them establish store-concept incubators, testing new formats, assortments, and experiences tailored to the communities they serve. A grocery store in central Pennsylvania shouldn’t look exactly like one in Arizona.
Think about modern international-style architecture: sleek facades, geometric forms, and carefully curated materials. It can look impressive, but it can also look like nowhere. Too many new downtowns and apartment developments share that same interchangeable aesthetic, sacrificing local character for a standardized formula. And it leaves them empty.
Grocery retailing faces the same risk. When every store looks and feels the same, something valuable gets lost. Scale should give retailers the freedom to experiment, not the incentive to make every market interchangeable.