The Endangered Specialty Food Retailer

Supermarkets are selling more specialty foods than ever before. Supermarkets - especially up-market stores - are encroaching on the traditional turf of the small, independent specialty foods retailer.

Of course there are flourishing specialty retailers, but the general trend for the industry is to sell more through supermarkets over time. Even in perishables like fine cheese - up-market supermarkets are coming on strong. Coffees, teas, spices, preserves, pasta, cheeses - you name it. Connoisseurs may be less than completely satisfied when shopping there - but still, more of our specialty food dollars are siphoned off in the supermarket over time. You're there, you need it, you buy it.

Convenience is extremely important to shoppers today, so specialty retailers must offer something compelling to draw customers. They are under great and constant pressure to stock unique offerings people want to maintain their differentiation. But inevitably if people want these products they will find their way into the supermarket sooner or later. And increasingly it's sooner.

Certainly the supermarket cannot compete where personal touch and "neighborhood feel" are concerned, but will that be enough? Ask the butcher, the baker, the produce man and fruiterer. Where have they gone? Outside the city - they have mostly gone the way of the dodo. And this, despite the fact that where meat, baked goods, produce and fruit are concerned - the categories involved were daily necessities and the quality and variety advantages of specialists were dramatic.

So, what's to become of specialty retail outside of urban centers? If it's true that their appeal requires an ongoing supply of distinctive (and non-trivial) products - how are they to sustain that advantage? After all, if you were a manufacturer of some wonderful new product, while you would no doubt be delighted to sell to specialty retailers, I doubt you'd be inclined to turn down a deal to sell, for example, to Whole Foods. That one deal with Whole Foods could (likely would) mean more business to you than any specialty store you serve - and perhaps more than all your other customers put together. It would be unnatural to pass on the supermarket deal.

So, there goes one more product the specialty store can't call unique in his trading zone. And so it goes. Breaking into Whole Foods - or into brokers who merchandise specialty departments in many supermarkets - has practically become synonymous with success for new specialty product companies.

Now, to be fair, the market on the whole may, in some important respects, be better served as more diverse and interesting products gain improved distribution and exposure to wider audiences through supermarkets. The old pattern in which supermarkets didn't have any of these products, and specialty retailers enjoyed a relatively safe niche, was by no means ideal. The world is better now that buying a piece of Parmesan to grate over your pasta doesn't absolutely require a special trip. And not every specialty retailer should survive. I have no problem waving goodbye to poseurs who have never provided great service to their customers or great leadership by seeking out and evangelizing wonderful new products.

But what of the good-guys (and gals) - People who really contribute to the market, their communities, and to our quality of life. How can they survive? What can we do to preserve them? I so miss the butcher, the baker, the fruit man. I am noshstalgic.