Are conventional stores going away?
No, they aren't, but, as has been the case for a while, they continue to be overshadowed by other food-retailing formats. That fact was made plain in a newly issued store-development study that shows that, for the first time, less than half of all food-retailing stores under operation are considered to be conventional supermarkets. Let's see if we can figure out what that means for the industry and what might be done to shore up conventionals' place in the scheme of things.
The fact of conventional stores' attenuation as a proportion of all formats is one of the major themes running through the "1995 Facts About Store Development" study published by the Food Marketing Institute. The study, which presents data based on an industry survey of 166 companies operating more than 6,000 stores, is the subject of a news article on Page 7. Before we take a closer look at what the numbers say and suggest about store formats, here are some of the format definitions used:
· Conventional supermarket: A unit with a total area of 30,000 square feet or less.
· Superstore: A store of more than 30,000 square feet featuring expanded service and nonfood departments.
· Combination store: A superstore with 25% or more of products in nonfood.
In general, the survey found that in 1994 the net number of stores remained about constant, as had been the case for the last two years. That's because the number of stores opened was about equal to the number closed. But, it develops, growth in the number of big-footprint stores -- especially the combination stores -- is driving down the proportion of conventional stores. In 1994, the proportion of stores considered to be conventional was 48.9% (as compared with 59.3% the previous year) while combination stores as a function of all stores jumped to 20.6% (against 13.7% a year earlier) and superstores rose to 25.1% (against 21.6% the previous year). Meanwhile, an analysis of store size shows that the median new-store size rose by an amazing factor of more than 10,000 square feet in 1994, to 48,200 from 38,000 square feet in 1993.
The driving factor when it comes to median store size is the superstore. The median size of a superstore built in 1994 went to 53,533 square feet, from 49,236 square feet in 1993. Meanwhile, conventional-store size remained constant at 32,000 square feet for 1994 and 1993 (slightly exceeding the size of the official definition), and the size of combination stores has been dropping steeply, from 60,860 square feet in 1992 to 50,791 in 1993 and 49,622 in 1994. Since it's the superstore that's increasing in size while the other formats are generally stable or declining in size, let's find out what features are filling supercenters' space.
The study shows that newly opened superstores -- and combination stores for that matter -- almost invariably offer deli, bakery, floral and seafood departments.
But in-store banks, photo centers and fast-food-style food service, with some kind of in-store consumption area, are more commonly offered in superstores than in combination stores or other formats.Those departments are what make supercenters successful in the destination-shopping battle since they offer services needed by a host of shoppers, multiplying the number of times shoppers feel compelled to enter the supercenter. Can conventional-store operators take action to fight the ascendency of supercenters? In many cases, departments driving supercenters' success could be replicated in smaller form by conventional stores or, if resources or space preclude that, a careful analysis of which departments are essential ingredients for survival should be undertaken, and remodeling considered.
