Supermarket Marketing Theory Question
May 2, 2011 8:16 AM Subscribe
Why aren't supermarkets as uniformly branded as drugstores?
It seems to me that the most common chain drugstores are the same all around the country (CVS, Rite-Aid, etc.) but that grocery stores are much more localized in their names and branding.
For example, this weekend I went to a city only 2 hours away from my (also city) home. I saw plenty of CVS drugstores, but not one branch of the supermarkets that exist in my city.
I know that many grocery stores with different names are owned by the same company (e.g. Safeway/Vons), but even after corporate consolidation, the stores seem to keep their name and branding by community/region.
What's the thought/strategy/business case behind that? If it's a question of keeping grocery customer loyalty because "people are more likely to trust a local name" then why the drugstore uniformity?
Or maybe I am wrongly pluralizing anecdote into data here ... somebody tell me if you think I'm wrong ...
It seems to me that the most common chain drugstores are the same all around the country (CVS, Rite-Aid, etc.) but that grocery stores are much more localized in their names and branding.
For example, this weekend I went to a city only 2 hours away from my (also city) home. I saw plenty of CVS drugstores, but not one branch of the supermarkets that exist in my city.
I know that many grocery stores with different names are owned by the same company (e.g. Safeway/Vons), but even after corporate consolidation, the stores seem to keep their name and branding by community/region.
What's the thought/strategy/business case behind that? If it's a question of keeping grocery customer loyalty because "people are more likely to trust a local name" then why the drugstore uniformity?
Or maybe I am wrongly pluralizing anecdote into data here ... somebody tell me if you think I'm wrong ...
Best answer: Previously. Here's the best answer -- from a commenter with a degree in "food marketing."
posted by John Cohen at 8:39 AM on May 2, 2011
posted by John Cohen at 8:39 AM on May 2, 2011
Grocery stores were for a long time a very local business, and stores built a loyal customer base (whether by great service or simple inertia). As transport, sourcing, and logistics became more efficient, national chains grew from eating up regional ones. But the goodwill/brand value at the swallowed up stores was too much to risk for some nominal savings on brand consolidation.
An example is Chicago: our two longstanding brands are Dominicks and Jewel. Really they are Safeway and Supervalu/Albertson's. But shoppers old and young grew up shopping at Dominicks and Jewel and that's how they prefer it.
By contrast, Walgreens and CVS grew by setting up new stores in new cities. So there was no need to consider branding.
posted by AgentRocket at 8:42 AM on May 2, 2011 [1 favorite]
An example is Chicago: our two longstanding brands are Dominicks and Jewel. Really they are Safeway and Supervalu/Albertson's. But shoppers old and young grew up shopping at Dominicks and Jewel and that's how they prefer it.
By contrast, Walgreens and CVS grew by setting up new stores in new cities. So there was no need to consider branding.
posted by AgentRocket at 8:42 AM on May 2, 2011 [1 favorite]
Because Royal Ahold is just not a name that sells in the US. Seriously.
posted by The 10th Regiment of Foot at 9:12 AM on May 2, 2011
posted by The 10th Regiment of Foot at 9:12 AM on May 2, 2011
I think it's also worth noting that the consolidation into just a few national pharmacy chains is something that only happened over the last 20 years or so, and may have been a lesson to other brands looking to expand in similar ways.
In the early 90's, RiteAid rather infamously acquired and dismantled New Orleans' K&B pharmacy chain - I'm not sure how it affected sales figures, but I knew a lot of people who were sort of bitter about it and refused to shop at RiteAid for a couple years.
Now you're seeing more of what AgentRocket mentions; regional brands being acquired and kept in place because they are a part of local identity. Walgreens bought the NYC pharmacy chain Duane Reade last year, with plans to keep the Duane Reade brand alive.
(For what it's worth, while there's a Duane Reade in walking distance from my place, and the national chains are definitely growing here in New York, most of the pharmacies in my neighborhood are completely local.)
posted by Sara C. at 9:19 AM on May 2, 2011
In the early 90's, RiteAid rather infamously acquired and dismantled New Orleans' K&B pharmacy chain - I'm not sure how it affected sales figures, but I knew a lot of people who were sort of bitter about it and refused to shop at RiteAid for a couple years.
Now you're seeing more of what AgentRocket mentions; regional brands being acquired and kept in place because they are a part of local identity. Walgreens bought the NYC pharmacy chain Duane Reade last year, with plans to keep the Duane Reade brand alive.
(For what it's worth, while there's a Duane Reade in walking distance from my place, and the national chains are definitely growing here in New York, most of the pharmacies in my neighborhood are completely local.)
posted by Sara C. at 9:19 AM on May 2, 2011
I don't think you are wrong. A couple of years ago Food Lion divided itself into 3 chains, Bloom, the high end store with an organic section, sushi bar, etc., Bottom Dollar, the low end store where they charge you extra for grocery bags, and Food Lion, and I'm not really sure how it fits into their marketing plan. It all depends on the demographics of the neighborhood the store is in, and the local competitive landscape.
posted by COD at 10:10 AM on May 2, 2011
posted by COD at 10:10 AM on May 2, 2011
My father in law is an exec at a Grocery chain but he runs their Pharmacy depts, so he has perspective on both sides of the coin. But basically what he says is it all comes down to demographics. Pharmacies sell lowest common denominator stuff everywhere, and Grocery stores try to cater to the demographics of where they are located.
posted by jeffamaphone at 11:48 AM on May 2, 2011
posted by jeffamaphone at 11:48 AM on May 2, 2011
Also, there are (were) upscale pharmacies: Pharmica and Elephant Pharm being the two I know of. You'd typically find them near Whole Foods.
posted by jeffamaphone at 11:50 AM on May 2, 2011
posted by jeffamaphone at 11:50 AM on May 2, 2011
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posted by litnerd at 8:25 AM on May 2, 2011