The west coast grocery chain Smart and Final aims to raise $100 million in an IPO today. The company plans to expand a line of stores that combine elements of warehouse-club outlets and traditional grocery stores; something like Costco without appliances or membership fees. The company wants to grab a piece of a business that’s changing dramatically, and getting more competitive.
Once upon a time, we bought groceries in supermarkets. Then came Walmart, which is now the nation’s biggest grocer. And then came everybody else; Whole Foods and Trader Joe’s, for example.
“If you look at the past ten years, conventional supermarkets have lost almost 15 percent market share to all these other channels,” says Phil Lempert, editor of Supermarket Guru. “Whether it’s drug chains—and if you take a look at CVS and Walgreens, they’re building stores that are 50 percent food—we’ve got dollar stores, we’ve got warehouse clubs, we’ve got almost everybody who wants to sell food. Even folks like Bed Bath and Beyond.”
“That’s a really hard circle to square,” says William McKitterick, a retail analyst with Ibis World. “It seems like all the signs are pointing toward this being a terrible industry to enter.”
Even so, everyone wants in. And McKitterick won’t rule out the idea that there’s room for Smart & Final in a highly-fragmented sector.
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