American luxury grocer struggles to survive as sales fall

Bloomberg

Dean & DeLuca, the gourmet grocer whose trend-setting New York store introduced Americans to international delicacies more than four decades ago, is struggling to hold on amid stalling sales and a cutthroat competitive landscape.
Some shelves at its flagship store are bare, and suppliers have gone to court over unpaid bills. Other US locations have been shut, leaving Dean & DeLuca with only four company-operated stores in the country, its chief executive said.
Dean & DeLuca’s pioneering business model helped create a cohort of upscale gourmets, but now those same consumers are being targeted by bigger rivals with deeper pockets. Items that once were hard to get are now readily available from massive chains such as Trader Joe’s and Whole Foods and its online parent, Amazon.com Inc.
“There are so many other options now,” said Ethan Mitchell, a film editor who stopped by the SoHo store on Prince Street this week and says he’s been a regular visitor. “Whole Foods is still expensive compared to other places but cheaper than Dean & Deluca.”

Empty Shelves
The pressures were evident on a recent visit, when shoppers were greeted by signs asking guests to “please excuse our appearance and apologies for the inconvenience,” and fresh food stands that were mostly empty, covered in long black sheets made of cloth.
Dean & DeLuca’s owner, Bangkok-based Pace Development Corp, acknowledges that the situation has worsened in recent months, forcing a delay in payments to some suppliers.
“The lack of financial resources make it very difficult for us to maintain the necessary investments to improve and keep our franchise competitive and attractive,’’ Sorapoj Techakraisri, Pace’s chief executive officer, said.
Outside of the US the company is doing well, with 70 stores in Asia. “The US has a very tough environment, but it doesn’t mean we will stop expansion in other regions.’’
The US operations are being reorganised to stem losses, improve efficiency and boost the chain’s online presence, Sorapoj told a press briefing in Bangkok. The company will improve the flagship store, he said. Food and beverage sales attributed to Dean & DeLuca plunged 23 percent to $15.8 million in the first quarter, according to company filings, which also mentioned a debt abatement but didn’t elaborate.