Saturday Six Pack: John Dumais
John Dumais is president & CEO of the NH Grocers Association. I asked him to shed some light on the state of the grocery industry in New Hampshire after the Shaw's and Stop & Shop closings. A lot of people worried about the broader meaning of the closings will be encouraged by his answers (though probably not the hundreds who lost their jobs).
1. A lot of people are still asking why Stop & Shop pulled out of New Hampshire and Shaw's closed so many stores. How do you answer that question?
The retail food industry is a dynamic, high-volume, low-profit industry that is always seeking to satisfy the consumers changing shopping patterns. To remain competitive, all businesses need to be constantly evaluating the operations and make adjustments as needed. In the case of these two companies, certain under-performing stores needed to be shuttered. This is usually caused by increased competition. Many of the recent closings have occurred due to too many stores in the same area.
2. What do those closings mean for the state?
With food stores, these operating adjustments indicate the customer will always benefit. For now it demonstrates that the remaining stores in an area are providing the value, selection and service the customers want. In the long run, it means the now vacated storefronts will eventually open with new competitors and new products or services, providing even more opportunities for the consumer. This continual evaluation and adjustment process means that consumers and the state will benefit financially from this activity.
3. What are the biggest challenges for grocers in New Hampshire?
Knowing exactly what the consumer wants. An average supermarket has over 30,000 different products on it shelves. Each year, more than 50,000 products are introduced by manufacturers. Consumers are influenced by their dietary needs, advertisements and trends. As consumer buying habits change, grocers need to continually adjust what they offer for sale.
4. Nashua and Portsmouth now have Trader Joe's stores, and Bedford has a Fresh Market. What sort of expectations should NH consumers have regarding the prospects of other gourmet grocery stores opening in the near future?
Most likely, consumers will see more changes in what is offered and what services are provided. Organics, healthy foods, exotic produce and meat variations are hot right now. At the same time, prepared meals cooked by chefs in the store are growing, as well as small cafes within the store for meals or snacks. Even home delivery is making somewhat of a comeback. Some of these changes will be seen in new companies as well as existing, traditional grocery stores.
5. How does the future look for small, neighborhood grocers like Sully's in Goffstown?
There will always be a place for the smaller neighborhood store. With their smaller size, they are better at knowing their individual customers and have the ability to respond more quickly to changing needs and request. That means convenience and service!
6. Politically, what would be the biggest nightmare scenario for New Hampshire grocers in the next two years?
Having increased taxes on what we sell. With such small profit margins (one half of one percent), any tax increase is automatically passed on to the consumer. It is well known that 40% of all New Hampshire food sales are purchased by out-of-state-consumers. Most of these customers live in surrounding states, but do their shopping in New Hampshire mainly because we have a huge price advantage on what we sell.
Every state has the same mix of stores which have the same departments and products for sale. Consumers drive here to make their purchases because they can save money. Our elected officials understand that lower taxes and fees (like no sales tax, low taxes on gasoline, alcoholic beverages and tobacco products) are a huge draw.
In addition, while these cross-border consumers are drawn here by lower food prices, they also take time to spend their money at shopping centers, restaurants, entertainment venues and many of our beautiful recreational areas. Combined, this is a huge advantage in total revenue for our state, initiated many times by the regular offering of extra value in the food store.