Charlotte Magazine / June 2012 / Grocery Wars

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Grocery Wars

The addition of Whole Foods Market heats up supermarket competition in SouthPark. So what does it mean to you, the customer? (Hint: not lower prices)

Driving down Fairview Road, it’s impossible not to notice the construction fencing surrounding Dean & DeLuca and the scaffolding creeping up exterior walls. Meanwhile, other upscale supermarkets in the SouthPark neighborhood—namely Earth Fare and the Harris Teeter flagship store, nicknamed the Taj Ma-Teeter—have similar plans. Add to this the impending arrival of Whole Foods Market, and it’s obvious that grocery wars are brewing in SouthPark.

When retailers battle it out, the customer almost always wins. So who will lose?

“These retailers have shown that customers are willing to pay for a great [shopping] experience,” says Phil Lempert, food industry analyst and editor of SupermarketGuru.com. “The upgrades have nothing to do with price wars; the focus here is on service wars.”

Despite a still-sluggish economy, Lempert isn’t surprised that grocers are investing in upgrades. A recent study by Bank of America Merrill Lynch found that supermarket food prices have risen about 2.5 times as fast as the cost of restaurant meals since 2009, making the cost of dining out more in line with eating at home. Increased competition for local food dollars has grocers struggling to retain market share.

Unlike shoppers who get their groceries at big-box or discount stores and are focused on finding the lowest prices, shoppers at high-end grocers are more concerned about the shopping experience—and are willing to pay more for specialty products, organic and natural foods, and an upscale shopping environment.

“They want to talk to the butcher, go to a wine tasting, take a class ... they never want to leave,” says Lempert. “[These grocers have] proven that you can be more expensive and still be very successful.”