Small grocery chains squeezed out by a crowded field
By J.D. Harrison,
An increasingly crowded field of big-box supermarkets is squeezing out many of the smaller do-it-all grocers that tried to compete directly with the national chains.
The latest small player to be elbowed out is Magruder’s, a Rockville-based, family-owned chain that has roots dating back to 1875. On Wednesday, its owners announced that they had sold one location and are in the process of selling their remaining four. “Now is the right time for our family to move on,” Gary Bortnick, the company’s vice president, said in a statement. He did not specify the reasons for the sale.
Some suspect that it’s simply becoming too difficult for small, sell-everything stores to stay afloat when surrounded by enormous chains that can purchase much larger inventories at much lower rates.
“There is just too much competition to try to take on the big-box stores, because they can kill you on prices and variety,” said Geoff Brown, principal at Bond Beebe, an accounting firm in Bethesda specializing in small, medium and family-run businesses. “Unless you happen to be in a very unique location, in order to survive I think these small stores are going to have to be specialized.”
That’s a change from the past couple of decades, when locally owned, full-service grocery stores managed to compete with large chains including Safeway and Giant. But the competition has progressively gotten tougher as Harris Teeter, Wegmans, Trader Joe’s and Whole Foods entered the market and the likes of Target and Wal-Mart began to stock groceries.
In its prime, Magruder’s had 10 stores selling everything from produce to poultry, offering the same one-stop service as its big-name counterparts. But trying to compete simply as a smaller version of those stores has proven “really, really hard,” Brown said, as it has in most retail sectors over the past few decades.
“This goes well beyond the grocery and supermarket industries — everywhere you go, you see the same stores, the same restaurants, and places like Magruder’s are just having a difficult time surviving,” Brown said. “On the other hand, the organic stores certainly have their niche, and the Hispanic and Italian markets — I think those will continue to exist.”
Scott Nash, founder of Mom’s Organic Market, a chain of 10 organic food stores in the area, said his company has continued to grow in recent years thanks in part to its niche business model, as well as evolving consumer behaviors.
“People seem to be making many more shopping visits, going one place for their favorite butcher, picking up bread at their favorite bake shop, then going somewhere else because they have the best produce,” Nash said, adding that he is surprised that the Wegmans model of offering “everything you could ever need” is still working. “People want to think they are getting the absolutely best in every purchase.”
Mom’s is planning to keep adding new stores in the region, and Nash said he believes that the specialty products will continue to draw customers as long as they don’t try to compete head-to-head with their larger rivals.
“We have our stores in [a region] with probably more Whole Foods than any other area in the country, and we’re able to compete because we aren’t trying to go head-to-head with Whole Foods,” he said. “Why would we? That’s the dumbest thing we could do. We do our own thing, and we do it best, and our goal has never been to get Whole Foods’s customers.”
But small merchants like Magruder’s, which offers a broad array of products, must try to steal some market share from large competitors that do the same.
Barry Scher, a former spokesman for Giant who is now a principal at the local government relations consultancy Policy Solutions, said there are now too many big-name chains with more modern stores, wider varieties of products and lower prices for the Magruder’s of the world to retain their customers.
“It’s just an outdated model, and it’s time has come and gone,” he said.