There is no such thing as a free lunch. Especially if it’s an online order that comes with speedy delivery from Amazon.
Just ask the independent operator of the West Philadelphia ShopRite that will be closing in a few months. The longtime supermarket is just a mile away from an Aldi store, a discount grocer on the Montgomery County border that has been eating competitors' profits with the bargain-basement prices that Americans are demanding.
Or ask the contract workers lugging bags of online-ordered groceries from the Whole Foods in Wynnewood to their cars Tuesday afternoon, rushing to deliver them to online customers. One told me he is a recently laid-off accountant. He pockets $24 an hour if he gets the goods out of the once-super-ritzy chain fast enough to satisfy the store’s online-behemoth overlord, Amazon. Internet orders have been surging, I heard from someone else, since the rapid-delivery service Amazon Prime Now launched there in recent weeks.
For many of us, long gone are the days when we bought most of our food from a traditional supermarket. We are intoxicated by newer, cheaper, and faster alternatives. But we may not be getting the great deal we think. Because this could lead to the end of some of the neighborhood supermarkets we adore having as anchors of property values and livability in our communities.
Conventional supermarkets are losing business to the Walmarts, the Amazons, the Trader Joe’s, and even the drug stores. Because profit margins in the food business can be as thin as a slice of American cheese, this spells danger for the standbys we love to have around even while we cheat on them daily by sending our business to the competition.
The Haverford Avenue ShopRite, meanwhile, run by super-operator Jeff Brown, is shuttering after decades in one of Philly’s working-class enclaves. And Brown is no corporate slouch.
He was invited to President Barack Obama’s first State of the Union address as praise for having found a way, of opening supermarkets across Philadelphia in lower-income neighborhoods that other operators had abandoned. Now, his Overbrook location is going dark. Brown is blaming the city’s costly new soda tax.
I can understand why. Losing that soda revenue in the food business, while you’re also facing unprecedented competitive pressure, can be a final straw.
The Aldi that opened in the past few years is a mile away on the line between Philly and far more affluent Montgomery County. It is a killer.
In its crowded parking lot Tuesday, I saw a Lexus, a Kia, a Honda. Inside, a man in spotless penny loafers browsed the produce, a mom with two toddlers grabbed cupcakes, and elderly shoppers, Spanish speakers — a full demographic rainbow — filled their carts in the very small store.
One customer told me she used to shop at Brown’s ShopRite until Aldi opened. She’s worried about a friend who’ll be losing a job at Brown’s supermarket. I asked if she knew that Aldi, unlike ShopRite, is a nonunion shop. Same with Walmart, Giant, Whole Foods. She shrugged. The lines are shorter, she said, and the food is cheaper.
We can thank the Great Recession for some of this. When it clobbered us a decade ago, it took a huge (and in many ways permanent) bite out of middle-class spending power. Americans are now drawn to discount groceries like vultures to roadkill. Wages for even middle-class people have been largely stagnant.
At Aldi, you pay a quarter just to borrow a locked shopping cart, but walk out of the place expecting someone to handcuff you, the assortment is so cheap and yet so fresh.
Even Walmart, the once-reviled discount merchant, is transforming its stores into grocery-delivery meccas. We should cheer Walmart for this. It is giving borderline-monopoly Amazon a run for its money after Jeff Bezos acquired Whole Foods with a plan to do for groceries what he did to other retailing: Own It All.
An old source from my days on the business news beat, food industry maven Jeff Metzger, agrees with my analysis.
“I think the traditional supermarkets in general, whether they’re urban, suburban or exurban, stand to be the biggest losers," Metzger said.
Supermarkets used to offer good wages and benefits to even part-time workers. The jobs from all the new competition? Crummier, for sure. And so we lose not just stores, but jobs that sustained households.