NY Chain D’Agostino’s Faces Challenges As Grocery Industry Innovates

In a fate shared by several independently owned grocery chains around the country, original family-run New York grocery store, D’Agostino’s may soon go out of business. The 84-year-old supermarket chain, known as DAG, runs just nine remaining stores, down from 26 at its peak 20 years ago, and the company may be looking to sell those locations. It’s a sign of a changing landscape for grocers, as middle-market, conventional retailers have failed to evolve with the segmentation of the market and modernizing consumer shopping habits.

“DAG’s really hasn’t evolved its stores, operations, or marketing for some time, and that has hurt in the face of growing and changing competition,” says Gary Hawkins, CEO of the Center for Advanced Retail and Technology, who keeps a close eye on the grocery market. “DAG’s stores look much the same way they did a decade or more ago, and yet consumers today want more.”

Currnently, niche retailers like Whole Foods, Trader Joe’s and specialty food markets lead the charge as consumers demand niche products, prepared foods, and natural and organic offerings. Hawkins explained that New York has evolved especially quickly with the introduction of tech-savvy specialty retailers as well as Fresh Direct, which not only offers gourmet foods, but also the convenience of online ordering and home delivery.

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