Facing the Inevitable: Last Stands for Struggling Supermarkets in 2024
The ink isn't even dry on the sale papers for 18 struggling Real supermarkets, but already the company is preparing for a final farewell. Real, a down-on-its-luck supermarket chain, plans to close its remaining 45 stores by the end of March 2024. The announcement, made this week in Mönchengladbach, Germany, is a culmination of months of turmoil for the company and its 5,000 employees.
Despite its efforts to sell off unprofitable locations, no buyer has emerged for these properties. As a result, the stores will close their doors for good, leaving behind a void in the local retail landscape.
The retail sector has been hit hard by Real's struggles, and competitors like Rewe and Kaufland have benefited from the chain's misfortunes, acquiring several stores along the way.
On the Brink of Collapse
Real isn't the only struggling supermarket chain this year. Financial investor SCP acquired the chain in 2020 with plans to break it up and sell it off. Kaufland, Edeka, Globus, and Rewe snatched up the most desirable locations in the process, leaving Real with a smaller but still formidable 62 stores.
Then, in a surprising twist, SCP reacquired the chain in May 2023, citing a "critical economic situation." CEO Bojan Luncer was optimistic about the transfer of 18 stores to competitors, saying it would secure long-term prospects for around 1,500 employees. However, the remaining stores remain unaffordable, and their closure appears inevitable.
Impact on Local Businesses
As more supermarkets fall to financial difficulties, small businesses and alternative retailers may see an opportunity to fill the void. Traditional markets, specialty stores, and online retailers could all potentially benefit from the increased foot traffic and consumer spending in alternative retail environments.
A Changing Landscape
The closure of large supermarkets is just one symptom of a much larger problem in the retail sector. As consumers increasingly turn to online shopping and alternative retail options, traditional brick-and-mortar stores must adapt or risk falling behind.
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As the retail landscape continues to evolve, local businesses stand to gain from the empty spaces left behind by struggling supermarket chains.
- Traditional Markets: Smaller markets that have traditionally served local communities might gain customers as shoppers seek out alternative shopping options. Some merchants in Jung-gu, Seoul, have even converted mandatory holidays to weekdays in response to large supermarket closures, indicating a potential shift in consumer spending towards traditional markets[5].
- Specialty Stores: Small, specialty stores that offer unique products or services might attract more customers as people seek alternative shopping options. This could include boutiques, artisanal food shops, or local convenience stores.
- Restaurants and Cafes: Restaurants and cafes near large supermarkets often benefit from the foot traffic generated by these stores. When a large supermarket closes, these businesses might see an increase in customers looking for alternative places to spend their money[5].
- Online Retailers: The closure of large supermarkets could drive more consumers to online retailers, especially those offering household essentials and groceries. Companies like Amazon, Walmart, and other e-commerce platforms are poised to benefit from this trend.
- Discount Stores: While some discount stores like Family Dollar are also facing challenges, others might benefit from the increased demand for affordable shopping options as consumers seek alternatives to closed large supermarkets[4].
As the retail sector continues to shift, it's essential for businesses to stay agile and adapt to the changing needs of their customers. This might mean investing in new technologies, offering unique products or services, or finding ways to better compete with online retailers. By doing so, they can position themselves to thrive in a steadily evolving landscape.
