Earlier this summer, the owners of a longtime staple on the Wisconsin produce scene announced they will shut their doors for good at the end of September. Brennan’s Markets operated five stores around Wisconsin, including in Brookfield and Oconomowoc.
But does the closing of the 75-year old business mean that the specialized grocery store is going the way of the dodo bird? No, says grocery retail analyst David Livingston of DJL Research.
"That was probably more of a business operations issue. Brennan's was a small retailer compared to the large multi-billion dollars retailers that we have today," he explains.
With so many choices of stores - both commercial chains and specialty - how does the natural selection of markets sustain both? Livingston says there will always be room for a small operator such as Brennan's, but in today's "over-stored" market it needs to be debt-free, well operated, and truly offer something compelling and different to get customers in the door.
"I think we are getting away from the one-stop-shop supermarket trips. People are making multiple stops going to Trader Joe's, Fresh Thyme, Sendiks, Metro Market, Walmart, Aldi - there's not a lot of loyalty anymore in the grocery business," notes Livingston.
He says that consumer shopping patterns have also changed from a consumer typically completing 80% of their shopping at a conventional supermarket to multiple stops at specialized options. A multitude of stores compete to offer the lowest prices, quality and service, fresh produce, fresh perishables, and even restaurant experiences.
"And now we're getting into home delivery and online shopping," Livingston adds. Now that Amazon is with Whole Foods there are many unknown factors for supermarkets. "That in itself is going to create a lot of disruption in the market. Not so much what they do, but how they psychologically effect their competitors," Livingston explains.
Milwaukee in particular has seen a rise in specialty stores that serve a neighborhood or demographic rather than a food trend. Livingston points to retailers such as Pete's Produce, Cermak, and El Rey. "They know what they're doing," he says. "They know how to cater to the ethnic markets...It's not worth the time of the big chain stores to worry or to try and specialize or cater to specific neighborhoods."
Livingston suspects that in the next five years more specialty stores will close, "but overall, we're seeing a strong growth in the natural organic and fresh perishable stores." He notes that meal kits will continue to rise in popularity, in-store restaurants will become more common, and people will relay more on online shopping.
However, no matter the trends in the grocery market, Livingston says that it always has a way of balancing itself out.
"There's going to be a lot of musical chairs," he says. "In the end it all works out, sales per square foot eventually gets back to a normal level....It's all about the dollars, it's all about the costs."