Retailers in the UK are under pressure and this trend seems to be spreading to the US. Though some targeted retailers like Aldi are experiencing growth, along with convenience stores, many undifferentiated groups are struggling. Tesco in the UK is one example. e-commerce has certainly eaten into their profits, along with the changing patterns of shoppers who are not willing to spend as much time shopping. Tesco has taken the tack of reducing their SKU’s, but I wouldn’t be surprised if we see more drastic cost cutting methods like closing stores being employed.
Is the US supermarket industry overbuilt? This is a big question and a tough conversation. Key players in the UK supermarket sector are already confronting it, and many markets in the US will soon follow if they are not already there. Figuring out how to respond requires systematic rethinking of the entire organization’s function, from the head office down to the number of SKUs stocked in any given category. To start the conversation, I reached out to Will Treasure, Director, Operations for The Javelin Group, a part of Accenture.