Archive for 'Supermarkets- the other stuff'

I have grown up with a few motherhood statements and I am sure I am not alone with that. Here are three I remember from my early childhood; I was probably three years old…

1. Do not cut potatoes with a knife. (very German piece of useless etiquette)

2. Vegetables are good for you. (Debatable from a child’s perspective)

3. Money buys sweets, toys & icecream. (Later supplemented with beer, wine & cigars)

Money at the time was defined as folding stuff and round metal disks of various sizes which made a racket in one’s pocket – or fell out if one ‘s mother had not done her job properly.

In latter years, cheque books, credit cards, debit cards, chip cards and electronic transfers made it into my arsenal. Nothing, however, prepared me for this Dutch store that rejected my cash.

It looks like society is heading for a major paradigm shift in the not so distance future.

I am in Germany right now and old habits die hard.  Which is why I am wandering through supermarket outlets observing, learning (hopefully) and thinking aloud, convincing the locals I am a lunatic causing some interesting reactions as I go.  ALDI Sued is celebrating its one hundredth birthday this month and the promotional brochure they issued for the occasion makes for some fascinating reading.

The “100″ is a bit far-fetched as it was obviously not a supermarket journeyman baker Karl Albrecht opened in 1913 but a bakery!  The first grocer’s store was opened by his wife Anna Albrecht in 1916.  Still a far cry from being a supermarket.

Brothers Theo and Karl Albrecht took over the family store in Essen in 1945 and started the expansion process.  By 1948 four stores were in business and the first shop outside of Essen opened in 1954.

The brochure is full of interesting facts.  The chain separated into ALDI Nord und ALDI Sued in 1961 , each brother wandering off with a chunk of the family business.  ALDI, by the way, is the abbreviation for ALbrecht DIskont…Albrecht Discount.  The first of those discount branches were opened in 1962.  Based on the success of the original two discount two stores, the balance of the branch network across ALDI Nord & Sued were gutted refurbished accordingly in 1962/63.

Those early ALDI stores were pretty basic affairs… No shop fittings other than a till, no shelving, but all product arranged on pallets on the floor. No mor than 600 SKUs per store and certainly no deep assortments of any kind. This model, of course, opened up tremendous cost saving opportunities – and as ALDI insists – quality was never compromised from day 1.

In 1976 ALDI started selling General Merchandise specials to bring more foot traffic into their stores. 1983 saw the introduction of refrigerated cabinets for dairy products. Fresh produce joined the assortment in the mid eighties as well and in 1997 ALDI Sued started to sell frozen goods. German ALDI stores now stock circa 1000 SKUs. Scanning groceries at checkouts was not introduced until 2002, the year the Euro became a reality. Until then, checkout operators were required to memorise all prices!

In 2003 Germany introduced a new system related to refunds for empty bottles which saw ALDI Sued introduce automated receiving machines in their branches. Fresh meat became part of the range in 1986. and in 2007/2008, ALDI Sued and Nord joint forces to offer online services for flowers, photographs and travel.

In 2009 fully automated baking stations were introduced to the branch network and in 2010 returnable plastic crates made their debut in the produce departments.  In 2010 ALDI Sued published new business relationship policies which addressed the needs of customers, staff and suppliers. And by 2013, ALDI Sued has an 1800 store network across its designated area of Germany

Herewith endeth the party political ALDI broadcast….

ALDI SUED, by the way, is operating its stores as far away as Australia and for some years now the rumors are rife that an entry into the New Zealand market is due to happen.  Who knows.  If ALDI does come, the New Zealand supermarket landscape will change quite drastically.

In April 1970, thirty-three years ago, Foodtown was heading for its 12th store in Auckland, Birkenhead.  Once again, the supermarket chain suggested to Turners & Growers that there might be merit in working together to achieve direct fruit and vegetable deliveries from growers to a Foodtown warehouse for distribution to individual stores.  Jack Turner, who by then had succeeded Sir Harvey Turner as Managing Director felt that “any agreement to arrange direct supplies from growers would be against the wishes of growers…” (Stead, K. One Hundred I’m bid. A Centennial History of Turners & Growers, 1997. ISBN 0473 04169 3. Kestrel Publishing)

The T& G board advised Foodtown that “it was not prepared to agree to its proposal as the board was convinced it would be contrary to the interests of growers, consumers, retailers in general and the company”. (Ibid).

Foodtown responded “that it would continue to try to get whatever fruit and vegetables it could directly from growers themselves.” (Ibid)

And so the battle lines were drawn.

On one hand, the traditional produce wholesale company which had by then successfully been in business for half a century.  In the opposite corner, a business which had barely started a dozen years earlier and already threatened to disturb the industry fabric. Judged from a given point in time in, say 1970, one can understand the Turners & Growers perspective.  The system was working.  It was not broken.  Therefore no need to fix it.

From the supermarket’s point of view though, the system was already beginning to fray at the edges.  Getting produce to twelve stores every morning came with its challenges and being able to take possession of that produce the night before would have been a lot easier as the auction process itself was not very efficient.  Here is a description from the Auckland Fruiterers Association site.

Foodtown therefore quietly continued to build a core group of growers prepared to deliver some produce direct whilst maintaining a daily presence at the auction markets.

…to be continued

We might be a fairly sophisticated lot, us humans,  but there  are some basics facts in play, which apply regardless of where we live, of our gender, our age or our occupation.  I want to focus on just one of those facts for now; namely, the fact we need to eat.  And as we , at least in the OECD countries, lead relatively charmed lives these days.  We do not even need to make time for hunting and gathering in the traditional sense in our busy schedules… we are able to just go shopping.

The places where we tend to shop for food are typically single category stores such as bakeries, butcheries, delicatessen stores, open air markets and supermarkets.  Nobody makes us favour one over the other, nobody stops us from mixing and mingling, nobody says we need to shop daily, nobody stops from just shopping fortnightly and, most certainly, nobody prevents us from placing whatever we fancy into those shopping trolleys. Naturally, there are constraints, such as the depth of our wallet, our dietary needs, distance between store and home, our mode of transport; but those factors not withstanding, life is pretty easy.  Our mind articulates a need and hey presto, we are down at the store, meeting our mind’s request.  Wouldn’t you agree that there is a far higher degree of certainty to that model than there is to the traditional style hunting & gathering lark?

So, if we are in agreement of that, why is it that not one week goes by where one or other consumer group gripes about the price we have to pay for our food?  Not shopping is not compatible with the structure of the post-industrial age we live in. Period.  The provision of shops where we can hunt & gather in a style more appropriate to today’s society is therefore a value add offer in its own right, regardless of what type of shopping experience we choose and prefer.

I would like you to think about that last sentence a bit before you read on….

Food shopping outlet price comparisons are a dime a dozen.  Everywhere.  And they all follow the same model… Supermarkets get the bash for being too expensive, green grocers tend to be cheaper but possibly lack range and discount stores sit somewhere in between.  Right?

Well, wrong.

Channel 4 in the UK published a price survey,  at the end of January 2013.  It makes for entertaining reading.

Firstly, their survey was based on three items only; “everyday fruit & vegetable items” they called them.  I can accept that description for Broccoli.  Pears are not really an everyday item and Coriander most certainly is not.

Secondly, the survey was conducted in “32 locations across the country”.  Hm, given the population density of the UK, this is certainly not representative by a long shot.

Thirdly, and here is a new aspect for us here down under, the three categories sampled were a

• large supermarket,
• an independent trader (greengrocer)/ local market,
• a convenience store version of the large supermarket.

Well, this is one for the books.  The penetration rate of these shoebox supermarket mini versions is now such that they come under the spotlight of the price nazis consumer rights media.

I shall leave you to read the survey results in your own good time but, for me, the issue boils down to this:  what price is reasonable for convenience?   We will pick that theme up again in a little while.

England has always been the place to go.  Whether it is for a Kiwi’s OE, whether it is to get a sense of empire (yeah right) or whether its for thereal ale…. The global supermarket industry always had a fourth reason to go to England…that’s where the new trends emerge. Tesco, Sainsbury, Marks & Spencer and Waitrose are the acknowledged trendsetters in that industry.

Yes, Walmart is a big beast and the Yanks have invented scale and upsizing…but they are not so shit hot lag behind a bit when it comes to developing new trends. The latest trend coming out of the UK is that big is no longer necessarily beautiful.  The Observer recently carried a very intelligent piece on the future of brick and mortar supermarketing.  Well worth a read. Our English cousins haven’t quite reached Fritz Schumacher’s 1973 economic masterpiece,  ”Small is Beautiful- a study of economics as if people mattered” yet; but hey, an acknowledgement that the whole supermarket model might need rethinking should not be sneezed at either.