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SpartanNash CEO Tony Sarsam on winning grocery

Nov 27, 2023
an illustration of Spartandash CEO Tony Sarsam on a gingham background surrounded by a fork and knife

Illustration: Axios Visuals; Photo: Courtesy of SpartanNash

Amid a fast-evolving grocery landscape, understanding the needs of the modern-day shopper is crucial, SpartanNash CEO Tony Sarsam says.

Why it matters: The food distributor, wholesaler and grocery retailer has plenty of headwinds to navigate, between a changing competitive landscape and a challenging macroeconomic environment.

Why we chose the restaurant: As part of our 1 big meal series, we ate at the East Village's Au Za'atar, which reminded Sarsam of a "taste of home."

What we ate: We shared the mixed mezze tray, the mixed grill platter, and a side of hummus, baba ganoush, lahm bi ajin (minced meat on flatbread), za'atar manouche (za'atar spread on a flatbread), and halloum mekli (fried cheese).

This interview was edited for clarity, style and length.

What's different about today's consumer versus three years ago?

  • "There's a lot of energy for people to get back to that nostalgia and comfort of a family gathering, which was sort of off-limits in '20 and '21. And maybe inched back a little bit in '22.
  • They're doing more indulgent things with their discretionary income while they're looking for great value.
  • People are making more choices to eat at restaurants and food away from home. It's so much about the social [experience], and convenience and indulgence and what they want to do to add to their lives. Nothing is really about being away from home. It's about the feeling of a social gathering.
  • So when you encounter something like Thanksgiving or Christmas, that same exact feeling gets translated to the home."

What kind of technological investments are you making?

  • "We have a product from a company called Simbe that is an inventory management robot that basically runs automatically down the aisles, takes pictures, [and] reports back to us what's in stock, what's out of stock and fixes it in real time. That was hours and hours of work for somebody.
  • We're launching a robot — a drone, in this case — that's going to fly up and down the aisles, and then do the same thing to everything else.
  • We just launched an upgraded transportation management system that does a dynamic routing process that actually uses some AI tools to help better manage the perfect efficiency of our trucks as they go out and run their routes."

How does SpartanNash view its e-commerce strategy, and do grocers need it to compete?

  • "We want to make sure that we provide a great option for folks with e-commerce to either do click and collect and also the delivery. We have partnerships with a number of providers to do that.
  • It's a competitive reality. Your customer is going to want that either periodically or maybe even all the time. You need to have a good offering, or you're going to lose customers.
  • There's a little bit of an element of, in any store, a little bit of treasure, when you bump into stuff: 'Oh, that'd be great, I'd like to buy that.' You see things differently online and encounter them differently.
  • It's going to get to that place where that becomes a really elegant experience, when you can actually experience the fullness of that shopping experience online. I think there's work that the entire industry has to do on that."

Amazon is a big wholesale partner. Do you think their revising their grocery strategy is reflective of the rest of the environment?

  • "Amazon obviously is a gigantic phenomenon in the world of business. It certainly did not grow up on food though.
  • It grew up in shelf-stable items like books, ventured into things that were more than a grocery store.
  • So they got into things that were fresh, for example. Their model wasn't built for that. I think they're learning how to adjust their models so they can actually get into what is a very different type of supply chain.
  • It would not make sense for Amazon to manage inventory of their goods the way traditional retailers manage it, because [their customers] can get what they want — access to spectacular variety and speed. You have a clock that makes a difference.
  • The biggest challenge is how do you manage when you're going to tell people you're going to be in stock on what they want, almost instantaneously.
  • They've talked about how they want to simplify the model. Our team is talking to them every week on how to simplify the model in terms of where they were, how they want to position goods across the country."

Do you see the Kroger-Albertsons merger shaping the landscape and creating more competition?

  • "The FTC signal has not been particularly positive on their sides. But it's certainly fraught with some challenges right ahead of it.
  • They're the number ... three and four, but a three and four in a sort of vast plurality of how people buy their groceries. So their combined share, I don't think gets them all the way to number two. So it's not like they're going to be near a monopoly. They may have a monopoly on a block with two stores across the street from each other. That's important.
  • But in terms of the industry, they're going to be bigger, but bigger is not always better. Does that additional scale change the balance of the industry? I don't think so."

1 fun thing: Noticing a lack of civics education in society, Sarsam started "Tony's Civics Class," where he has conversations, in person or over Zoom, with college-age adults about the government process and how business works.

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