Surviving in the Wal*Mart era

Every supermarket in America lives in fear of Wal*Mart. With its lowest cost structure and low price strategy it can quickly sap market share from regional chains, saddled with high labor contracts and supply chains that are often less efficient. An excellent example of how to compete with Wal*Mart is Fresh Market. For those of you not familiar with this chain, it is a North Carolina based company. Its stores are smaller than your average supermarket, and it concentrates on providing outstanding perimeter departments (produce, bakery, meats, dairy, wine), with a very limited presence of center of the store aisles (i.e. your basic dry grocery). It offers both organic and non organic produce, differentiating it from Whole Foods, and very select and excellent brands in the center of the store. You get a neighborhood feel from the free coffee samples available daily, and the occasional bakery cookie sample for the kid sitting in mom's supermarket cart. I had a suggestion for the store, so I filled a card and to my surprise received a personal response with lots of details (no boiler plate response here). The lesson is clear: to compete in the crowded supermarket industry this chain chose to differentiate by providing the highest quality perimeter selection, combined with a high touch environment. It did not attempt to compete with Wal*Mart. It is in fact diametrically opposed in its positioning and execution, and it succeeds in creating brand loyalty through the experience, not its prices. An interesting lesson for anyone facing a lowest cost provider.