How does an industry that historically catered to white suburbanites reinvent itself to attract more diverse shoppers?
Millennials often get touted as the “new consumers,” with a whole new way of shopping than the generations before them. They’re tech savvy, they stay on top of the latest trends using social media, and they’re brand conscious. But there’s at least one industry that’s struggling to figure them out: supermarkets—in particular, chains that cropped up in the early 20th century.
Supermarkets have been grappling with their image since the ‘80s, when “traditional mass retailers started to be seen as having this legacy of being déclassé,” says Benjamin Davison, a Ph.D. candidate at University of Virginia who’s writing a book about the history of supermarkets. Even though there is a Kroger—one of the oldest grocery chains in the West—down the street from his home in Seattle, he says prefers to drive farther away to shop at “more bourgie” places. And when I tell him that I prefer the Trader Joe’s 15 minutes away over the older Giant grocery chain near my apartment, he assures me that many people under 30 would say the same.
According to BrandIndex, which measures brand perception among the public, Trader Joe’s and Whole Foods were the most popular grocery brands in 2015 among people ages 18 to 34, with Kroger ranking third.
The struggle, Davison says, stems from how supermarkets came to be. “If you think about the history of the supermarket as a economic and cultural institution, it’s always kind of catered toward the suburbanites, the car owners,” he says. “If you think about urban living, the supermarket isn’t part of that. And the industry consciously built itself that way.”
Historically, food retailers targeted the white, affluent middle-class families in the suburbs. “There’s a real racial story that is parallel to the history of the supermarket,” Davison says, “that had a lot to do with the separation of ‘socially undesirable’ shoppers from people who were middle class.”
Before there were supermarkets, grocery stores were connected to gas stations, which meant that patrons tended to be people who could afford a car. In the 1910s, the auto industry took off in Los Angeles’ fast-growing residential areas—but since parking lots and street parking weren’t widespread, families with cars couldn’t use them to run daily errands. At the time, gas stations were little more than pumps nestled inside a dedicated open space that branched off from the main roads.
These stations “were actually a substantial investment, because you had to buy land, and then you’re not really doing much with that land except the pump,” Davison tells CityLab. So real estate entrepreneurs started putting small grocery stores inside the same lot. The so-called “drive-in” groceries, which looked like today’s strip malls, flourished in southern California during the 1920s, according to The Drive-In, the Supermarket, and the Transformation of Commercial Space in Los Angeles, 1914-1941, by historian Richard Longstreth:
Many consumers acquired a preference for the drive-in market over chain and other neighborhood food stores because of its convenience. The opportunity to pull off the street, park adjacent to the store, and have purchases placed in the car by an attendant was regarded as an enormous advantage.
Beginning in the late 1920s, however, owning a refrigerator became more common, and Californians preferred to buy a lot in fewer visits. That created an obstacle for drive-in markets, which couldn’t hold such a big inventory of items for customers to shop in bulk. “[The] drive-in was structured to fit the traditional routine of shopping on a more or less daily basis and purchasing a modest quantity of goods on any given trip,” writes Longstreth.
There was another problem: “People who shopped in those stores were overwhelmingly concerned with respectability,” Davison says. Though convenient, the fact that fresh bread and meat could be sold next to mechanics and auto shops left a bad taste in some people’s mouth.
These circumstances paved the way for Ralphs Grocery Company, which already had a handful of drive-in groceries, to open the country’s first supermarket: a standalone building (equipped with plenty of parking space) that increasingly catered to, as Longstreth wrote, “an elite trade that sought a wide range of fancy goods as well as stock items.” The first Ralphs supermarket also moved away from the urban core and into the fast-growing Southwest district, which had been eyed for middle-class residential development.
“There was this real relationship with putting these stores in areas where the real estate itself was not expensive, but also in places most likely to be frequented by the kind of shoppers they wanted: well-to-do whites who had a car,” Davison says.
“Food retailers really like to have reliable, predictable customers who want reliable, predicable food stuff, and they found that in predominantly white suburbs.”
But today’s Millennials are more diverse, with whites making up just a little over half of the group. The economy hasn’t particularly worked in their favor, and perhaps more importantly, a large portion of that age group live in cities, either by choice or not. “So how does a food retail industry, which has always configured itself to people living outside the city, orient itself to people who stay in the city?” asks Davison.
Some retailers are literally moving into the city, occupying into multistory spaces as a consequence of smaller, more expensive commercial real estate. Others are making grocery shopping virtual, letting consumers shop online and pick up their groceries at designated transit spots. Entrepreneurs have also come up with some possible solutions to attract the tech-savvy generation, such as “smart” checkout lanes that promise to shorten queueing time, and mobile apps that will eliminate checkout lanes altogether. Some remain concepts, while others are in the works or already installed in a few supermarkets.
But all those tech innovations are only part of the answer, says Davison. Supermarkets might need a new business model altogether. He points to Whole Foods’ ambitious plan to open a lower-budget chain called Whole Food 365 that specifically targets Millennials. Its promise to have tattoo parlors and fashion shops alongside fresh produce and pre-cooked meals caters to what Davison calls the “micro-identities” of the generation—for example, cohorts who self-identify as socially conscious, deal seekers, or health obsessed.
“We don’t really recognize the degree to which our consumer choices are very much influenced by our identities,” he tells CityLab. So whereas supermarkets were historically associated with white, affluent suburbanites, traditional chains now have to come up with ways to appeal to America’s diverse population.
This feature originally appeared in Citylab.