Compete Is a Verb: A Rallying Cry for 2007
Compete is a verb.
I’ve written and said this so much over the past few years that I’ve been getting sick of it. Every once in a while, I think to myself that I’m just restating the obvious, that everybody understands that active, aggressive, competitive instincts are absolutely necessary just to survive in the current retailing environment. And then I see something that makes me think that not everybody gets it. So, since it is a new year, I think it is time to say it again: Compete is a verb.
My frustration over the supermarket industry’s seeming inability to comprehend this reality bubbled up a few weeks ago when Safeway announced that through its Blackhawk gift-card division, it would begin selling McDonald’s “Arch Cards” at all of its supermarket locations in denominations of $5, $10, $25 and $50. Now, there’s no question that Safeway will drive some money to its bottom line by selling these cards. But my question is this: Why would it want to?
Would Safeway sell gift cards redeemable at a supermarket across the street or around the corner from one of its stores? Of course not. Because it would say, quite legitimately, that another supermarket is the competition, and it wouldn’t want to do anything to drive people to the enemy.
The problem, it seems to me, is that Safeway and a lot of other companies in the supermarket business apparently don’t see a fast-food chain such as McDonald’s as the competition. Or, if they do, they see it as competition once-removed, essentially in a different business and catering to a different customer with different needs.
It sort of reminds me of the line from “The Big Chill,” when Jeff Goldblum’s character says, “I don’t know anyone who could get through the day without two or three juicy rationalizations. Ever gone a week without a rationalization?”
Safeway and a number of other supermarket chains, in essence, have rationalized their inability to compete with fast-food and quick-service restaurant chains because they are unwilling to do what is necessary to compete with them on every front. So they sell tickets to the other guy’s parade, hoping to make a few pennies in commission and giving away the bigger sale and the larger possibilities.
I would say, yet again, with emphasis: Compete is a verb.
Supermarkets are competing with anyone who sells food, a list that seemingly gets longer every day. And I believe they should be doing everything possible to offer options and alternatives to customers, rather than selling them gift cards that allow them to buy their meals at McDonald’s or Bennigan’s or Chili’s or any of the other foodservice companies for which gift cards often are sold by supermarkets.
Let me put it another way. Every lobster bought and consumed at Red Lobster and every pizza bought at Pizza Hut is a lobster or a pizza not bought at a supermarket. Supermarkets should look at it in precisely that way. To do otherwise is to accept loser status.
This doesn’t mean that I’m against gift cards. I think that supermarkets certainly can sell them if they are for the Apple Store, or Barnes & Noble, or Nordstrom or Best Buy or any one of a number of retailers with which they do not compete in what should be a core competency.
Now, I have to admit that not everyone agrees with me on this one. (I actually worry when people start to agree with me…it means that I’m in danger of losing my edge.)
One counter argument goes like this: “The decision to visit a restaurant is driven by the circumstances of the meal. Invariably, convenience is the driver to choose a meal out rather than preparing it at home…I don’t see Safeway losing any revenue on it.”
I disagree. While it would be correct to say that many supermarkets are not seen by consumers as being a convenient alternative, if I were in the business I’d be working overtime to address that problem…not sending people into the arms of the competition.
One food retailer I know says that anyone who believes “that Safeway, or Wegmans, or Kroger, or even HEB Central Market has any prayer of taking significant business away from McDonald’s” should “get real,” that this battle has been fought and lost.
At some level, this probably is an accurate statement. But accepting it as being a fait accompli simply strikes me as complacency. Or worse, defeatism.
Let me take it from another, starker, more historical perspective.
For a long time, supermarkets didn’t view Wal-Mart as a threat. The Arkansas retailer was seen as being in a different kind of business, attracting a different kind of customer, selling a different kind of merchandise.
Until, of course, it wasn’t. Wal-Mart moved from a small selection of snacks to a big selection of snacks to a limited selection of grocery to a much larger selection of grocery to being in the full-blown supermarket business. It happened so fast and so seamlessly that many food retailers got blind-sided. They were blind all right…but it wasn’t like all the signs weren’t there. They just didn’t have the right competitive mind-set.
If I were in the supermarket business, I would be looking with suspicion and hostility at any retailer even flirting with the notion of selling food. That would include drug store chains such as Walgreen and CVS, which are moving into the grocery business as a way of growing traffic and sales. It would mean fighting off competitive threats from the convenience store industry, in which there are a number of players (Sheetz and Wawa come to mind, as well as Tesco with its planned c-stores in the United States) redefining the notion of convenience in a way that directly targets the mainstream supermarket industry.
And, it would mean doing pitched battle with the fast-food and quick-service industries. Because they’re trying to feed people, too, and people can only eat so much food.
Y’think that McDonald’s would sell gift cards to the local Safeway?
I like what Mia Hamm, the famed American soccer player, once said about the nature of competition: “You can’t just beat a team, you have to leave a lasting impression in their minds so they never want to see you again.”
Ahold U.S. to Accept Bids on Foodservice Unit
Columbia, Md., Royal Ahold is expected to start accepting bids on its U.S. foodservice division, which has been plagued by financial woes in recent years, in early 2007. Among the companies expected to show an interest in the division are Kohlberg Kravis Roberts & Co. and Clayton, Dubilier & Rice.
Nine West Opens International Flagships
New York, Nine West Group, a division of Jones Apparel Group, opened flagship locations this December in Tokyo, Moscow and Vietnam as part of a global expansion initiative that began in early 2006. The new stores marked the debut of the company’s updated store format, which is designed to strengthen the brand’s fashion presence in footwear, accessories and handbags.