SAN ANTONIO -- Supermarket remodels surged last year to become the "store development activity of choice in 2002," according to the Food Marketing Institute's annual survey, "Facts About Store Development," released during FMI's recent Retail Store Development Conference here.
ngs went up, from 2.3% in 2001 (also a 10-year low) to 2.7% in 2002. FMI noted that recent economic conditions may have led to this increase.
Said Mike Sansolo, FMI's senior vice president, "As a result of the unpredictable environment, companies shifted their efforts toward remodeling, adding numerous services and enhancing the overall shopping experience."
While the decline in new development and the increase in closings were relatively slight, the leap in the amount of remodeling was significant. In 2001, only 2.1% of stores had major remodels, another 10-year-low. However, last year, 7.5% of stores were remodeled. Remodels took place at 62% of the companies surveyed -- nearly twice the 2001 percentage.
Reasons for remodeling varied. Nearly 30% of companies participating in the survey said after a certain number of years, company policy requires remodeling. Anticipation of competition entering the market was the motivation for 26% of participating companies, while another 26% said they remodeled to meet the needs of changing demographics in their trade areas.
Remodels also decreased in cost, the survey noted, with the typical capital investment per major remodel declining 23.7% to $926,500 in the last five years.
In addition to sprucing up appearance, remodels also involved adding more services, including self-scanning areas (34.1% of all remodels); a separate natural-foods aisle or section (17.9%); and fresh, prepared foods for takeout (8.9%).
As for the few new stores that opened in 2002, the survey found that they are getting slightly larger -- an average of 47,500 square feet -- and considerably more expensive to build. Total construction costs (including equipment, fixtures, decor and building) rose 14.8% to $124 per square foot, a record high.