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Thu, 24 Feb 2005

Big grocers under stress

A fine analysis of the demise of the American Way of Dinner... we're cheaping ourselves to death, but it's stores like Winn-Dixie that started the trend. Those who live by the price cut, apparently, shall also die by it. How does Wal-Mart do it?

Here's a hint: the thirty two cent avocados mentioned in the article don't come from California. And check the COO (country of origin) on shrimp and seafood ... we're talking Mexico and Thailand or Vietnam here - now, granted, the product may leave something to be desired quality wise, but it's the lowest cost! We're cheaper!

And when Winn-Dixie (or Kroger, or Safeway, etc.) tries to pull the same trick and import the same merchandise, they rapidly discover the logistical advantage Wal-Mart enjoys. In the race to the bottom of the price barrel, the best warehousing and distribution system wins.

I've learned that I cannot compete on price: my eggs sell for $2/doz., roughly twice what the local LoBill charges for white eggs, and about 25% higher than their price on brown eggs. My chickens go for $2.50 a pound - that's 2.5 times higher than the best price in the local supermarkets.

And I'm sold out of chickens and about at capacity on eggs.

Unless and until the major supermarkets realize that people are willing to pay a premium for real quality, they will keep wondering why their shoppers figure a thirty two cent shitty avocado from Wally World is better than a fifty nine cent shitty avocado from them... to the Winn-Dixies of this world I say "Go for it, guys, sell me a dollar avocado that's actually good to eat, and not something for a quarter that resembles a cow pie in a jalapeno shell. You can still beat Wal-mart, just not on price."

That the South's giant Winn-Dixie chain has filed for bankruptcy shows the profound changes in the economics of supermarkets.

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Ranten N. Raven wrote

Makes good sense to me! I posted a pointer to this on my blog -- hope it sends you some traffic!

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