NEW YORK (CBSNewYork) – Running any business in New York is tough, but the grocery business is notoriously challenging.

Increased competition and online shopping have put pressure on familiar store brands like Fairway, which filed for Chapter 11 bankruptcy last month.

So what does this mean for shoppers?

Alan Sytsma from Grub Street, New York Magazine‘s food and restaurant blog, stopped by CBSN New York to discuss it.

“I think you’re seeing a lot of different factors contributing to the close of local institutions,” Sytsma said. “In New York, it really comes down to mismanagement for a lot of these brands. It’s not only that the competition is so tough. Chains have moved into the city. As you said, the profit margins are razor thin. So already you’re working in a really cutthroat business. Now you have private equity coming in. Dean & Deluca got bought by a real estate company from Thailand. These are people who are not in the grocery business, and all of the sudden, you just watch these great brands collapse.”

Sytsma says “it’s tougher to do anything” as a small business in New York City, but grocers have it especially rough.

“It gets extra tough when Amazon comes in with Whole Foods. When you have Trader Joe’s, people are lining up for a new Trader Joe’s. And when you have Wegman’s coming in also,” he said.

So why when some local markets are closing up shop are stores like Trader Joe’s thriving?

“It’s a chain. People are excited. They have scale that a lot of businesses don’t. There’s the nostalgia factor – people who grew up with a Trader Joe’s. Also, have you been there? It’s cheap. They have everything you want. The stuff is good. And really, these chains, they caught up to what the luxury grocers were doing in New York and they can just beat them. It’s just a better business,” Sytsma said.

So if you’re a local grocer, how do you differentiate yourself?

“What we’ve seen is that the companies that have success really doubled down on the luxury and offering products that the chains just don’t have,” Sytsma said. “That’s what it takes to get people to go out to the store and to shop at your business.”

Comments
  1. tmillar007 says:

    I always shop locally, I get to know them, and they get to know me.

    How can anyone blame the locals.
    Their profit margins are much lower, so what…….

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