Supercenter operators continued on the move during 1995. The three discount-store operators with supercenters -- Wal-Mart Stores, Kmart Corp. and Target Stores -- rolled out sites and continued to grow more sophisticated and attuned to consumer tastes, posing an ever-growing threat to traditional supermarkets. The changes and refinements that supercenters underwent in 1995 included the following: · At Wal-Mart, fine-tuning the mix, particularly in perishables, and developing a smaller prototype to replace existing discount stores in rural markets.
· At Kmart, attempting to standardize the Super Kmart Centers concept and improving product presentations, particularly in perishables, despite financial challenges at the corporate level. · At Target, moving food to the right side of SuperTarget locations to increase its exposure and emphasizing that the stores are both supermarkets and discount stores. Wal-Mart, Bentonville, Ark., continues to pursue expansion with the philosophy that more is better, with nearly 250 supercenters in 30 states open by year's end, including 103 new units opened during 1995, and plans for 110 more in 1996. Many new supercenters will replace existing older, smaller Wal-Mart discount stores.
The company has been attempting to refine its mix, particularly in perishables, by adding varieties in the produce, bakery, meat and seafood departments -- part of an effort, the company said, to cater more precisely to consumer tastes at each location by improving the inventory selection. While Wal-Mart Supercenters usually run between 180,000 and 190,000 square feet, the company experimented in 1995 with a smaller prototype to serve more-rural areas where existing discount stores are due for replacement.
The company tested minisupercenters of 110,000 square feet at three locations in 1995 -- Cameron, Mo.; Union, Mo., and Stuttgart, Ark. -- all of which were replacement units for existing discount stores in the less populated areas that have been the company's traditional bread-and-butter. The smaller prototype features smaller produce fixtures, frozen food cases built into the walls and fewer facings for most grocery items; it also eliminates video rentals, optometry and fast food sections. Kmart, Troy, Mich., has continued to expand much more slowly than Wal-Mart, with 87 Super Kmart Centers at the end of 1995, ranging in size from 162,000 to 185,000 square feet. Tentative plans call for Kmart to open 20 to 30 more supercenters in 1996. Kmart is hoping that problems in its core discount store area don't alter the company's supercenter plans. Those problems are being addressed by Floyd Hall, a former chairman of both Grand Union and Target Stores, who was named chairman, president and chief executive officer of Kmart in June to reverse the company's downward spiral. Hall sounded particularly optimistic about the longterm prospects for supercenters when he said at the time of his appointment, "Supercenters are certainly a very, very viable prototype, and there's no reason they can't be a major part of our future business." A number of observers have said Kmart's corporate challenges can have an impact on supercenter growth plans. Those include new management, increased competition and continued financial difficulties.
A major change that Kmart has attempted has been to introduce a more standardized approach to the supercenters, rather than leaving merchandising decisions to a variety of local management teams. Other changes involve moving produce from the back of the store, where it was positioned close to the loading dock to achieve greater efficiency, to the front of the store, where it can drive sales; shrinking the size of some service departments to make them more efficient; offering a more consistent private-label program; shifting greeting cards to the food side of the store, and doing more cross-merchandising using better signs. Target, a division of Dayton Hudson Corp., Minneapolis, entered the supercenter in March with the opening of its first supercenter in Omaha, Neb. It currently has only two supercenters in operation -- the one in Omaha and another in Lawrence, Kan., each about 195,000 square feet. Both Omaha and Lawrence are considered very competitive markets, with Target opting to test its supercenter format's viability under the most extreme conditions. In a bit of fine-tuning from its Omaha store, Target dubbed the supermarket section in its Lawrence store "The Food Center" and moved it from the left to the right side of the store to give it better exposure for optimum sales. Target plays up the dual nature of its supercenters on grocery bags that read, "It's a grocery" above the words, "It's a Target." Target will open its third supercenter this spring in Papillion, Neb., about 5 miles from the first SuperTarget. Its plans reportedly call for up to 10 more SuperTargets in 1996 and another 10 in 1997 -- with several stores likely to be clustered in Salt Lake City, the first of which may open in the first half of 1996.