Besides limited market growth and increased sales capacity, another trend challenging large traditional retailers is the convergence of their value propositions. Large retailers are steadily looking more and more alike, which is making differentiation and pricing power harder to maintain. For example, discount chains are improving their offerings by adding elements like fresh, in-store bakeries. All grocery chains, not just discounters, are working hard on their price images, offering “everyday low prices.” Most grocery store chains have two to four private-label brands, and loyalty cards are omnipresent.
At the same time, smaller competitors and new entrants are defining distinct value propositions — or ways to play — to grab market share from the traditional retailers. Specifically, five distinct ways to play are emerging in the industry: the food experience play, the proximity play, the branded value play, the low-cost play, and the one-stop-shop convenience play.