Walmart Is Falling Apart Before Our Eyes

[haele]

91. National "Neighborhood supermarkets" chains are far more difficult to manage than the box stores.

What happened to Tesco US/Fresh and Easy is a good example of what not to do; while it seemed that it would be profitable to put a mid-sized grocery/supermarket that had reasonably healthy food at a price a household making $35K a year could afford in areas where the primary competition are a couple corner bodegas/liquor stores and maybe one sad IGA, the problem was that the stores were too expensive to maintain.

Most neighborhoods that would benefit from a Fresh and Easy with its national grocery supply chain could not support a store that was high-end grocery products at the minimum price-point Fresh and Easy needed to charge to break even. Their primary competition in selection and quality is Trader Joe's or a boutique grocer, not "Save-A-Lot" or Family Dollar/99 cent Stores. When at least a quarter of the residents in those neighborhoods are on low fixed incomes and another quarter are on government subsidies, neither group can afford what might seem like reasonable/low prices for fresh produce and meats. These are neighborhoods where the only places most residents can afford to shop at are the clearance stores that sell seconds, left-overs, and end of shelf-life products from the local or regional major groceries and produce providers at just enough mark-up to break even with minimal distribution costs.

We had about ten, maybe twelve open in San Diego County in "food desert" locations about 5 years ago. Only four remain open today, because those stores were located in neighborhoods that had 50% + employment and had other higher -end grocery stores/supermarkets in the area that Fresh and Easy could compete with.

The same will happen to Walmart "local groceries". Unless they franchise the operations where the franchisee manages (or eats) the local costs, very few local communities will agree to subsidize a national chain the same way they do the big box anchor stores, and the costs to operate will eat up pretty much most of the revenue that smaller store can provide the national company.

Haele