Many retail groceries are at a critical turning point as consumer demands rise, shopper preferences change, and competition increases in a mature market with low margins. The most pressing challenge for retail groceries is adapting business models to align with the shift in consumer preferences toward online purchase and delivery options. Retailers are facing intense competition from both traditional brick and mortar stores with online platforms as well as Amazon and other web-based grocery product providers.

Millennial consumer shopping habits continue to raise the bar of expectations for grocery retailers by demanding personalized in-store experiences, high quality products, convenience, and low prices. As a result, we’ve seen an increase in alternative concepts focused on either low cost and no-frills or elevated in-store experiences aimed at capturing different segments of the market. Consumer buying trends have also skewed to favor healthy options, organic products, and prepared meals over the past few years. In response, many grocery retailers have utilized private label brands as a means of offering customers a superior value proposition.

There has been significant consolidation in the grocery industry over the past decade as the larger players make strategic acquisitions to position themselves to leverage better pricing with vendors. We expect this trend to continue into the foreseeable future as grocery chains pursue all avenues to drive down costs. In this mature industry, differentiation from other brick and mortar brands and competing with online retailers are the two of the biggest challenges for grocery retailers.

Carl Marks Advisors has a team of investment banking and restructuring advisory professionals with experience in and knowledge of the grocery industry developed through multiple engagements with various grocery chains and distributors. Our work with clients in the grocery industry often includes:

  • Liquidity forecasts, management and preservation: Carl Marks Advisors has extensive experience in cash flow modeling, forecasting and identifying opportunities to enhance liquidity.
  • Interim management: We often act in advisory capacities as well as C-suite executive functions.
  • Cost reductions: With experience in providing turnaround services and conducting financial analysis, Carl Marks Advisors identifies unnecessary costs and develops operating structures that maximize profitability.
  • Inventory management: Our professionals understand the systems and protocols of inventory management. We have worked with supermarkets and distributors to put controls and processes in place to identify optimal quantities for inventory investment as well as to enhance liquidity by removing unnecessary SKUs.
  • Deep understanding of logistics and distribution: We have worked with distributors across a wide range of products and have extensive experience optimizing facilities and creating efficient fleet management systems.
  • Knowledge of Co-ops: Carl Marks Advisors has valuable insight into the unique ownership structure of a co-op and we have worked with a number of co-ops to leverage economies of scale and maximize return for members.
  • Detailed understanding of PACA regulations: The team at Carl Marks Advisors has worked extensively with PACA vendors and lenders to ensure adequate reserves are in place for priority creditors.
  • Debt financing: We have helped numerous grocery retailers raise financing in order to replace or enhance existing debt structures.
  • Vendor management: Carl Marks Advisors has worked with clients in the grocery sector to communicate with vendors and manage promotional and rebate programs.
  • Incentive programs: Carl Marks Advisors has fine-tuned existing and implemented management incentive programs to deliver optimal results for clients, management teams and distribution personnel.