Guest blog by Bobby Brannigan, Founder and CEO of Mercato

The other day I overheard a phone call between one of our sales representatives and an Independent Grocer. It went something like this:

Sales Rep: Hi, this is Nikki from Mercato. We are the only e-commerce and delivery platform designed exclusively for independent grocers. I was hoping to talk with you about getting your store online and growing your business.

Grocer: Oh, I’m not even thinking about that right now. There is a store across the street and they aren’t online, so I’m not sure it is important for me. Plus, I’m really busy.

The sad truth is that we hear conversations like this all the time. It’s almost 2020, and here is a merchant who isn’t even thinking about getting online. That isn’t even the worst part! The worst part is how far this is from what the big chains are actually thinking and doing. To them, e-commerce is yesterday. They are already there. They have already moved on to the next big things.

How is the independent grocer supposed to compete in a world where the resource gap between the “haves” (Kroger, Amazon, Albertsons, etc.) and the “have-nots” is this large?

The Independent Grocer’s Edge

My family is in the grocery business, and I grew up working in our family store. I’ve had the privilege of seeing what makes Independents so amazing, and why they really do have a gigantic advantage over the big chains. It boils down to a few key things:

Quality of the food – from prepared to fresh food, it doesn’t get any better!
Quality of the employees - nobody cares more about the customer experience.
Quality of the customer service - a constant drive to serve every customer as if they are family.

No matter how much money Amazon and the others spend, they will never be able to compete in these areas. These are the virtues that Independents can use to their advantage.

Growing up in my family’s Italian grocery store, I’ve also seen first hand the real disadvantage independent grocers have when it comes to technology, innovation and marketing. Even more troubling, the gap is widening as the big companies acquire smaller chains and increase their investment in the future. Despite these difficulties, and because Mercato loves to help independent grocers, we have prepared a strategic roadmap to success.

Competing With the ‘Big Guys’

Phase 1: E-commerce and Delivery

I’m sure you’ve heard the stats by now. According to a study by FMI, 20% of grocery sales are expected to occur online by 2025. That may seem like a long time from now, but many stores on the Mercato marketplace are already seeing 10-15% of their retail store sales happening online.

The percentage of U.S. consumers who purchased groceries online over the past year grew from about 23.1% to 36.8%, according to Coresight Research, an online marketplace for independent grocers.

Online grocery shopping is without a doubt here to stay. The Independent can win by embracing this change and getting online.

List all of your products online. The number one concern for online shoppers is freshness and quality. Prove to them that the Independents are the only ones who understand this by listing all of your prepared foods, amazing produce and high-quality dairy and meats.
Know your online customers. Drop them a nice note in their bags. Figure out how to create an experience for them that shows your dedication to their satisfaction in the same way you would the person in your physical location.
Packing is key. Make sure that every online order that leaves your store was packed by an employee who knows your customers and can pick the highest quality cuts, the freshest produce and ensure items aren’t missing.

Phase 2: Data

What makes Amazon so successful? What makes Kroger’s tick? What makes Albertsons profitable? Simply put, data. Without data, they have no idea what to stock on their shelves, no idea what the competition is charging for similar products, and no idea what hot new products are on the minds of their customers.

Independents are at a real disadvantage here. If they only have 1, 2 or even 10 stores, how can they capture the same amount of data as a company with 500 or 1000 locations? Even more challenging, they aren’t data analysts. If they had the data, many of them wouldn’t even have the time to crunch it all. So, what to do?

Find any source of data you can. Data is information, and information is power. Many big wholesale suppliers have sales trend data. Be sure to remember that this data can be influenced by the particular products the supplier is promoting or offering at that time. It’s not always the complete picture.
Embrace competitive data. What are stores in the local market charging for similar products? Where is the sweet spot between profitability and over-charging? Knowing this information can give stores a huge advantage.
Find help. If a merchant doesn’t have the time or skill to know what to do with the data, find someone who does. Hiring data analysts can be expensive and time-consuming. Think about contractors, consultants or other sources of not just data, but analysis. It will pay off in the long run!

Mercato is committed to helping in this area. With our network of merchants rivaling the sales of some of the larger chains, we have access to the data that Independents need to compete, including pricing recommendations based on your local market competition, product recommendations based on online data and aggregated sales trends, and insights and suggestions for overall product mix and promotional strategies to improve profitability.

Phase 3: Supply Management

Many Independents don’t spend a lot of their time negotiating pricing with their suppliers or researching alternatives to lower their costs. As a result, the 16oz package of Cheerios that an Independent sells for $4.79 is available at the local chain for $3.59 and at the nationwide player at $3.09.

Even with diligence around negotiations and keeping suppliers on their feet by getting competitive bids, the buying power of any Independent can’t match the superstore. How do we change this?

Start with your supplier. The average Independent is probably using the same supplier they have been for years. Bring in a competitive supplier from time to time, push for better pricing constantly, and challenge your suppliers by showing them that price matters to you.
Join a larger group or association. There is power in numbers and in aggregation. Always try to be negotiating as part of a larger group. This way you punch above your own store’s weight and can get access to bulk pricing.

Mercato is poised to be there for Independents in this area. With the aggregated buying power of the merchants on the Mercato online platform, we can deliver all sorts of benefits, including bulk pricing and access to hot new products that your suppliers might not even carry.

In the end, the winners in grocery will be the ones who innovate, create passion among their customers, and have the best economics. The best strategy for an Independent is to keep doing the things they are great at, and then to find partners who are great at the rest to fill in the gaps.

Mercato now has over 750 merchants on our platform. Some are multi-store chains. Some are huge public markets and some are small specialty stores. What they all share is the courage to compete and the desire to stand up for the things they worked so hard to build.

Bobby Brannigan, Founder and CEO of Mercato

Mercato is an online ordering and delivery platform built exclusively for independent grocery and specialty stores. We empower merchants with an e-commerce solution that encompasses an online ordering page, delivery management and customer service for those orders, as well as a robust marketing strategy to increase customer acquisition and drive order frequency. Join 750+ independent grocers who are growing their businesses online with Mercato!
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