Dive Brief:

• Independent grocers in New York state say they're having trouble keeping up with chain competitors such as Wegmans and Topps, according to the Rochester Democrat & Chronicle.
• Building and maintaining customer loyalty is the biggest challenge, many small grocers say, particularly because they can't match chains like Walmart and Wegmans on price and selection.
• Sources say it's imperative small grocers find a way to differentiate themselves from larger competitors.

Dive Insight:

One of the grocers profiled by the Democrat & Chronicle — the Railway Café and Market — has seen such poor sales recently that the owner put out a plea on social media telling shoppers they needed to patronize the store or it would close. The owner told the paper she experienced a surge in business to keep the store open in the short term, but said she would have to hold on to the new customers in order to stay afloat.

Needless to say, this does not constitute a sustainable business model for a store struggling to compete against top chain like Wegmans and Walmart. Across the country, independent grocer including Railway are finding that hometown loyalty and support for the little guy only goes so far against the low prices, quality services and wide selection found at deep-pocketed grocers.

As competition among chain grocers heats up, small players are having a particularly tough time keeping pace with the flashy remodels, surging private label introductions and other measures companies are undertaking. Without the investment capital to update their stores and selection, many independents risk becoming obsolete.

There is hope for these operators in the grocery world, however. Although they aren't often able to match chain grocers on price and selection, small retailers can offer points of distinction that are attractive and many times can't be matched by the bigger chains. A co-op grocer interviewed by the paper notes that its high product standards and membership model are advantages over the likes of Topps and Walmart, and that customers come to them for that reason. Another grocer told the Democrat & Chronicle that working closely with local suppliers gives his store a crucial point of distinction, and said he offers many nice products that large grocers can't offer due to their scale.

Natural grocers have a particular advantage over large chains — even big natural and organic stores like Whole Foods and The Fresh Market — through to their local sourcing abilities and stringent standards. According to the most recent Natural Foods Merchandiser Market Overview survey, 69% of natural grocers say they saw their sales increase last year compared to the previous year.

Traditional grocers can carve out advantages as well. Many successful independent stores offer signature products and services that are high quality and winningly homespun. Dave's Supermarket in Fairfield, Illinois draws in droves of breakfast customers with its “old world” donuts and free drip coffee, while Jungle Jim’s International Market in southern Ohio offers a wide selection of specialty products.

And despite the growing emphasis on price with consumers and retailers, good service and friendly employees are still in high demand. Although it's a chain with more than a thousand stores, Publix has for years won over customers with the sort of high quality service typically associated with small hometown grocers. According to a recent study by tech firm Interactions, 62% percent of shoppers polled said they value a friendly greeting when they enter the supermarket.