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A Green Dream
The Internet Could Put Supermarkets Out of Business

Online retail may soon threaten the economic future of large supermarket chains, according to British investor and chairman of LondonMetric Patrick Vaughn. Vaughn’s company has been altering its investment patterns based on the assumption that many physical retail locations will soon be economically unsustainable. Halifax Market Watch has more:

Vaughan said: “The retail occupier market continues to go through seismic changes as consumers modify their shopping patterns. This is having a profound impact on the number and size of stores that retailers want and is prompting more and more retailers to actively ‘rightsize’ their existing store portfolios.

“This is particularly prominent in the food sector where the growth in convenience and online shopping is having a significant impact on the larger superstores. It is only a matter of time before this has a negative impact on the value of those large stores that occupiers no longer consider economically fit for purpose.”

As the FT points out in its piece on Vaughan’s remarks, “brick and motor” grocery stores that consumers have to drive to are already showing signs of contraction. This month British grocery stores experienced their first drop in sales in twenty years, and various supermarket chains have reversed plans to expand to new locations. It is possible to envision a future when abandoned former supermarkets become as numerous as abandoned former shopping malls already are. Online shopping services that deliver groceries to your door will flourish—which will be a major green gain. When people drive to the store less often, they will be responsible for releasing fewer emissions into the atmosphere, leading to a healthier planet.

As in England, so in America. The landscape of buying and shopping is changing dramatically right before our eyes, and, so far at least, it looks to be all to the good.

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  • Andrew Allison

    No way. Mr. Vaughn et al., are overlooking a crucial factor: Quite apart from the fact that consumers pay a pretty high price for delivery of groceries, there’s no chance in heck that most consumers will accept the force-feeding of online ordering. Many family supermarket shoppers (of which I am one) browse the weekly ads to decide which store has bought, er, earned their business.
    Allow me put this in concrete terms: today I needed a gallon of milk. While in the store I purchased $25-worth of perfectly fine clearance bin meat (which the store would have been forced to discard after midnight) at 50% off. There’s absolutely no way that an online store can do that. Simply put, Mr. Vaughn’s dream cannot possibly come true.

  • Jacksonian_Libertarian

    I do think food shopping is different than other products, many people will always want to pick out their own meat and produce. Also if you are going to spend the gas to go to the supermarket anyway, you will want to buy as much of the other stuff you need as possible. While there is considerable competitive pressure being placed on the bricks and mortar business model, I think it will result in improved Quality, Service, and Price as the “Feedback of Competition” always does.

    • Corlyss

      I suspect the budding industry may be overtaken by the “locally grown” movement where people want to look the producer in the eye and find out what kind of tomatoes those are to make sure they aren’t the square, thick-fleshed tomatoes bred especially for boxing and shipping long distances.

  • mdmusterstone

    And once all the markets are put out of business what will the cost of “delivered food” be then? Competition as now??? So they’ll be ten different truck delivering to the neighborhood and if they get your order wrong for the dinner party. No thanks.

  • Fat_Man

    At 10:30 pm my daughter, who is ill, asked me to get her some pudding. I got in my car drove a mile to the Kroger and brought her back pudding., before 11:00.

    Online can’t do that.

    • FriendlyGoat

      I like your comment for its contribution to this subject and for the story you told.

  • CaliforniaStark

    So, I can order my groceries online; however, since I cannot download them online there has to be a physical delivery. When? Like with package delivery and telephone/internet technicans, your likely going to be provided a time block the groceries will arrive –say between noon and 4:00 p.m. Are you suppose to take an afternoon off work so you can receive your groceries? Since some of the groceries are likely perishable; they cannot be returned to the store and resold should the delivery fail — Is the customer or grocery store responsible for that cost? Will there be an overall delivery surcharge?

    Also, a substantial amount of people want to see the condition of fruits, produce and fish before they buy them; for the elderly and health impaired, this is a serious issue.

    I question the emission benefits; there may be fewer automobile trips on the road, but that may be off-set by the increase in trucks on the road.

    Finally, has anyone figured out the economics of the proposal for the grocery business? Your talking more employees (drivers), a large truck fleet, and added gas and insurance costs.

  • DiogenesDespairs

    Routine delivery of groceries: good for shut-ins, very elderly, and handicapped in general, and hermits who never want to leave their houses and can specify the deliveryman leave the goods at the door and go away. For everyone else, for the many reasons listed by other posters here, a nonstarter.

  • Ann in L.A.

    In the beginning, lots of stores hired kids to run goods to people’s homes. Some kids, I’m sure, just worked for tips, others for a nominal wage. Then, we banned child labor, sent the kids off to school, and people had to carry their own goods home or load them in the car. Now, we are finally circling back to the delivery system. It’s not new; it just took us a long time to figure out a cost-effective alternative to child runners.

  • FriendlyGoat

    I remember a company called Guaranteed Foods (I think) which sold delivered groceries 45 years ago and heavily advertised the service on an “elevator music” radio station (FM, back in the day) catering to wealthier suburbanites. Now that we have the online tools and a segment of people with more money than ever, this whole thing ought to work better——for some. Uber/Lyft will drive some to and from airports so they can avoid regular cabs, and online groceries can allow some people to avoid mixing with the masses at stores too. I would predict it as a growth industry. I would also predict that Uber/Lyft will leave behind a deteriorating traditional cab service everywhere they go, and online food will do the same to brick and motor stores. OF COURSE food stores are not “going away”. But we may not like them as well if some of their higher-end customers find ways to stop going to them.

    • dwick_OR

      Well, with the advent of Trader Joe’s, Whole Foods, and other sort of boutique food markets generally catering to more well-heeled clientele (vs Walmart, Safeway, Food Warehouse, etc for us commoners), some of this ‘divide’ has already happened.

      You don’t think ‘higher-end’ customers haven’t already found ways to stop going to food stores? (Note just because they may not be going in person doesn’t mean their money isn’t being spent there…) Really ‘high-end’ clientele have people doing their shopping and cooking for them anyway. ‘Personal shopping’ services have been growing in popularity for a number of years now. I read about a relatively new service called ‘Blue Apron’ the other day that delivers all the ingredients for meals ready for cooking right to your door.

      • FriendlyGoat

        Yes, all those things have been happening too.

  • Corlyss

    I think I heard something like that about 20 years ago. All those services are gone now. I’ll believe it if I see it.

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