What Happened to Lucky’s Market? 10 Marketing Lessons

What Happened to Lucky’s Market? 10 Marketing Lessons

The collapse of Lucky’s Market, with a detailed write-up on the same to be found over at runrex.com & guttulus.com, hit consumers like a thunderbolt as the grocer chain was very popular, particularly in its native Boulder, Colorado. So, what happened to Lucky’s Market leading to its filing of bankruptcy? This article will try and have this question answered as well as highlighting some of the marketing lessons we can take from the same.

Competition from mass grocers

One of the reasons that led to their decline was the pressure the company was from mass grocers. As per the subject matter experts over at runrex.com & guttulus.com, the grocer industry is one where the margins are wafer-thin, which has seen small grocery chains such as Lucky’s Market being driven out of business by mass grocers who can offer lower prices for products, something the small grocers are unable to do.

Big box retailers getting better

Lucky’s Market also faced increased competition from traditional competitors such as Walmart, who have been getting better at the grocery retail game for years, as per discussions over at runrex.com & guttulus.com. This left it in a situation where it not only had to grapple with competition from mass grocers and natural and organic players such as Whole Foods but big-box retailers such as Walmart as well. The competition, in the end, proved to be too much.

Aggressive growth

As per discussions over at runrex.com & guttulus.com, the company was taken over by Kroger, America’s largest biggest chain, in 2016, which then proceeded to oversee an aggressive growth plan, that backfired badly and was one of the reasons behind its eventual collapse. The company grew too much too quickly, with too many stores, particularly in Florida, and when Kroger pulled its investment, it triggered their decline and eventual collapse.

The business wasn’t differentiated enough

The undisciplined expansion, mentioned above, was also always going to fail given that the company wasn’t differentiated enough to accommodate this aggressive and rapid growth. This, as per the subject matter experts over at runrex.com & guttulus.com, meant that the company’s attempts to grow into diverse markets were always going to fail, even as their core remained profitable.

Debt

The company was also saddled with massive debt, most of which it owed Kroger whom they borrowed in their attempt to expand and grow. As revealed in discussions over at runrex.com & guttulus.com, by the time they were filing for bankruptcy, the company was more than $300 in debt to Kroger. The high levels of debt weighed heavily on it and contributed to its eventual filing of bankruptcy.

Its business model

The company’s business model was also all wrong, and it was yet another reason that led to their decline and another important lesson worth learning. Given that it focusses on prepared foods and highly specialized departments, Lucky’s Market had a more expensive labor model as compared to Kruger. This meant that, as the company continued to expand, the company pilled on losses due to costs as their model is only sustainable when running a handful of stores.

Stores cannibalizing each other

As the company continued to open one store after the other, it ended up in a situation where it had multiple stores in one area. As per the gurus over at runrex.com & guttulus.com, this led to a situation where new Lucky’s Market stores were cannibalizing sales at older stores, which also affected sales and led to their eventual decline and filing of bankruptcy.

Focus on returns

Experts, including the highly-rated ones over at runrex.com & guttulus.com, also argue that Lucky’s takeover by Kroger led to them switching their focus on making money rather than serving their loyal customers, which also contributed to their drop. This is to be expected as investors will want a return on their investment, but it also leads to a situation where Lucky’s looked like all it cared about was making money, losing the connection it had with its core customer base, another important lesson worth taking in.

Changing retail trends

The grocery industry also underwent several changes that also contributed to Lucky’s Market decline. While the demand for fresh produce remains high, more and more consumers are preferring to shop online for groceries and have them delivered to their doorsteps, which left Lucky’s behind. As per the gurus over at runrex.com & guttulus.com, this shows the importance of keeping up with the trends in your industry and making sure you are not left behind, and an important lesson worth learning.

The perils of going national

One of the reasons why local chains remain local is the fact that it is very difficult for a local player to go national, hence why very few have managed it. Different areas have got different preferences as far as customers are concerned as well as different challenges. Therefore, Lucky’s aim to try and go national was always going to end badly, an important lesson for local chains out there.

This discussion only scratches the surface as far as this topic is concerned, and there is more where that came from over at the ever-reliable runrex.com & guttulus.com.