COVER STORY shopping pleasure , etc . Mom-and- Pop stores focus on convenience , service , relationships , etc .
In America , store loyalty is not restricted to only one store . Customers are loyal to one store in each of the many retail formats . For example , they will buy the main grocery from Walmart , accessories and party items from Dollar General , tissue / oil and other items required in bulk from Costco , medicine from Walgreen , garments in Macy ’ s , branded products at a great discount from Marshalls , etc .
Mom and Pop Stores : In America , small stand-alone stores or Momand-Pop stores , as they are called , are like small warehouses in thickly populated areas . They compete in different spaces , with different ecosystems and hardly crossroads with chain stores . In the management words , they are in different strategic groups than chain stores .
Mom-and-Pop Stores are frequented by customers for specific reasons like : whenever a family needs something on emergency ; items on which there ’ s no or marginal discount in the chain stores ; a top-up of staples with small quantities in case of paucity of time to go to a supermarket ; children , senior citizens who can ’ t drive or walk to chain stores ; to buy certain local or regional items and festival specific things ; readyto-eat fresh items or ready-to-cook items particularly at odd hours ; and socializing in the local community .
American Mom-and-Pop stores do not compete directly with chain stores because they operate in different business environments , with different purposes that focus on different needs of the customers . They focus on different SKUs and customer demographics . Mom and Pop stores sell smaller packages because they serve the top-up requirement of the customers rather than acting as the primary store .
These stores operate with unique business strategies . Mom-and-Pop stores certainly have advantages like - better location in the catchment area , they are situated in the neighborhood . They stay closer to the customers hence have better customer knowledge and engagement opportunities . They don ’ t offer discounts , sell at the maximum recommended price because of various reasons : they have a limited assortment due to constraints on space and scale . They have limitations on volume sales because of smaller catchment areas , smaller and fixed customer base . Their customer buys mostly the top-ups and they aren ’ t the primary grocery buying stores .
These constraints limit their negotiating power with suppliers hence they get lower discounts , tighter payment terms , moderate trade support . But they have to provide higher service , door delivery at no extra cost and remain open for longer duration with lesser holidays .
Chain Stores : American retail warfare provides an advantage to the chain stores . Most of these advantages are associated with their mega scale . Scale gives them superior visibility that helps in advertising and promotions . Their store boards act like advertising hoardings . The delivery vans are hoardings on the move . The best sales promotion is the word of mouth of the satisfied customers in the catchment area . They spread the positive word and help pull other customers .
The higher the number of stores , the higher the customer base and the stronger the tone and volume of the word-of-mouth . The higher scale provides stronger negotiating muscle with suppliers to get higher discounts and better payment terms . They have better scope to use higher technology since the investments get divided on higher sales volume reducing the fixed costs . Helps to design and maintaining a stronger supply chain and logistics system . It provides a better cushion against non or poorperforming stores and provides time to relocate or close them .
These advantages make them stand out and provide strong competitive advantages against unorganized , small Mom-and-Pop stores . These advantages create a conducive business environment and they thrive in such a supportive business environment . In a nutshell , ‘ American store war ’ is not about the squabble between Mom-and- Pop stores and Chain stores .
The American store war is always played battle by battle . Unlike most of the other industries , it is not restricted only to the competitors in the same strategic groups . It is played store by store . The world of every store is its catchment area , a circle around every store that draws most of the customers . Every store has to define competition well . The supermarket doesn ’ t compete only with other supermarkets in the catchment area . It also competes with other grocers like a superstore , warehouse store , convenience store , etc . It also competes with other retail formats for different merchandise . It even competes with the HoReCa segment for ready to eat food sales .
Defining The Competition - Identifying The Enemy
The American store war is complex because there is no clear-cut single enemy . It is played on different fronts and it integrates different battles . For example , an Apparel battle is contested by department stores , supercentres , off-price retailers , warehouse stores , and also the ‘ factory outlet mall ’. But superstores are also engaged in grocery war with other formats . It fights the pharmacy war too mainly with pharmacy chains . Pharmacy war goes beyond pharma retailers to include supermarkets , superstores , etc . The attack from the online players is also a separate aspect of all this warfare .
Below is an excerpt taken from Dollar General ’ s Annual Report for year 2020 . See how the number one discounter of America looks at the competition :
Our Competition : We operate in the basic discount goods market , which is highly competitive with respect to price , customers , store location , merchandise quality , assortment and presentation , service offerings , in-stock consistency , customer service , promotional activity , employees , and market share . We compete with discount stores and many other retailers , including mass merchandise , warehouse club , grocery , drug , convenience , variety , online , and certain specialty stores . These other retail companies operate stores in many of the areas where we operate , and many of them engage in extensive advertising and marketing efforts . Our direct competitors include Family Dollar , Dollar Tree , Big Lots , 99 Cents Only and various local independent operators , as well as Walmart , Target , Kroger , Aldi , Walgreens , CVS , and Rite Aid , among others . Certain of our competitors have greater financial , distribution , marketing and other resources than we do and may be able to secure better arrangements from suppliers .
Dollar General , 2020 .
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