Power, who holds it, how it is exercised, and its other various dynamics are impacted by modernization, as was shown by The Grocer and the Chief. It seemed to me that modernization itself, back when the Grocer was first interviewed, was en route to undermine the power of the Chief. Now, the Chief’s power was rooted seemingly only in the traditional. If you ignore the quite literal power transfer that occurred as the Ankara government annexed the town, the act of slowly modernizing, the course the village was on before said annexation, itself would have achieved a similar (quite smaller, as it would not have been as quick or as clean of a power switch) effect of undermining the Chief (apologies for that ridiculous sentence as well). This is clear because modernizing inherently reduces the power of a traditional power figure.
There is also an interesting Havel-ian dynamic occurring here that I do not fully understand. The Grocer is not necessarily outright resisting the authority of the Chief like Havel’s grocer could, but he is certainly opposed in spirit and in practice to the Chief and traditional dynamics. Is he operating within the system, like Havel suggests, because he is embracing the forthcoming “system” of modernizing? Or is he outside of the “system”, which in this case is the traditional, by embracing the modern?
I do agree with your assertion that the process of modernization undermines the power of traditional authority but I think that the grocer himself is simply emblematic of this shift rather than a particular force for this change.
Regarding your question of the grocer’s position vis-a-vis the “system,” as a symbol of modernity, he is indeed outside the confines of a traditional system however, society cannot be said to have a singular system. While he is indeed outside of the traditional system, he is firmly within the cultural and philosophical ambits of the modern “system.”