|
|
|
Food Fight
A growing number of grocery giants vie for an ever-bigger slice of the state's multi-billion-dollar supermarket pie
|
Business New Haven
11/16/1998
By: Linda Mele
|
Americans spent $323.2 billion in the nation's 29,900 supermarkets during 1997, according to Progressive Grocer magazine, not to mention another $425.7 billion in 127,000 grocery stores across the country.
According to PG, the average consumer spends $100 on:
• Perishables ($50.21)
• Non-edible grocery items ($9.12)
• Miscellaneous grocery items ($9.56)
• Beverages ($9.53)
• Snack foods ($5.59)
• Main courses and entrees ($5.07)
• General merchandise ($3.94)
• Health & beauty-care items ($4.01)
• Other ($2.97)
But the way consumers shop is changing rapidly, and the supermarket/grocery industry has to change with consumers' demands if they want to stay in business.
While store loyalty plays a role in where someone shops, today's consumers demand vastly more than the customers of yesterday's general store.
Working parents are busier than ever and many choose stores that are conveniently located or that offer additional services all in one place.
Pamela Hudak of Milford used to shop at the Shop-Rite on Route 1, but when it closed several years ago, she says she started patronizing the Stop & Shop at the Connecticut Post Mall, which recently moved out of the mall proper and across the street.
“It's convenient,” Hudak says.
“I used to compare prices and use lots of coupons. I'd drive to the different stores, but found out that while they had a few things I wanted on special, many other items I'd buy were more expensive. The money I might save on a few items would be used up in the increased cost of other items and the cost of gas to get around to the different stores. It just wasn't worth it,” Hudak concluded.
“I'm also partial to certain brands, so I won't buy a store brand or some other national brand just because it's on special. I don't have the room to buy in bulk, so even though I'm a member, I only go to Costco occasionally,” Hudak says.
Veronica Franco of North Haven says she's been shopping at Stop & Shop for more than 30 years.
“I know where everything is, it's convenient and now my bank is even there, so there's no reason to start going somewhere else,” Franco says.
“Some items may be a few cents cheaper somewhere else, but that doesn't entice me to shop there,” explains Franco.
In fact, Franco admits to using convenience stores on a regular basis. “I go to convenience stores more than I probably should,” Franco says, “and while the prices are much higher I actually save money because if I went to the supermarket I wouldn't just buy one or two items, I'd end up with a whole cart full of stuff.”
Franco explains, “I might pay two dollars for a bottle of soda at the convenience store, but if I went to the supermarket I'd end up spending $40 or $50.
“I woman I work with religiously searches all the circulars, clips coupons and goes to a number of different stores every week,” she says. “To me, my time is too valuable to drive around like that to save a few dollars.”
Franco adds, “Another neighbor of mine drives to the new Super Kmart in New Haven, but Stop & Shop would have to burn down before I'd travel that far to buy groceries.”
Susanne Tatta of West Haven says she rarely if ever patronizes convenience stores.
“I go for the sales,” says Tatta, “and go to either the new Shaw's in Orange or Super Stop & Shop.”
Tatta says she studies the weekly sales circulars in the newspaper and goes where the items she needs are on sale and takes advantage of the savings offered by coupons and rebates.
“Price is very important when I shop,” Tatta notes.
Orange's Marie Calabro says she looks for quality before price and shops at Stew Leonard's and Stop & Shop.
“I go to Stew Leonard's every three or four weeks because their quality is top-notch,” Calabro says.
“While specials are important - because who doesn't want to save money where they can? - I don't mind spending more if the quality is there,” Calabro says.
All four women say other important criteria include the cleanliness of a store and wide aisles so they're not constantly bumping into other shoppers.
Connecticut's major supermarkets include Stop & Shop, Shaw's, Big Y, Shop-Rite and Foodmart. Warehouse chains include BJ's, Sam's Club and Costco. In addition, “super” stores like Kmart and Wal-Mart also offer extensive grocery sections.
Online food shopping is becoming increasingly popular, and many larger national chains have Web sites. Many stores also offer online coupons consumers can print out at home and specials for Web surfers.
Connecticut's leading competitors - Shaw's and Stop & Shop - are both foreign-owned: Shaw's by England's J. Sainsbury and Stop & Shop by the Netherlands-based Royal Ahold NV, the fourth-largest food retailer in the world.
Shaw's currently has 126 stores in six states, employs more than 22,500 people and reported sales of $2.8 billion during its 1998 fiscal year. It is headquartered in East Bridgewater, Mass.
Stop & Shop boasts 187 locations in four states, reported sales last year of $5.5 billion and employs 39,000-plus workers.
The New Jersey-based Great Atlantic & Pacific Tea Co. owns 34 A&P, Waldbaum's and Super FoodMart stores in the state as well as eight other chains throughout the U.S. and Canada. It employs more than 80,000 people and reports annual U.S. sales of $10 billion-plus.
The Springfield, Mass.-based Big Y Foods has 41 stores in two states, 17 of which are in Connecticut. The company employs about 7,000 workers.
ShopRite is the largest retailer-owned cooperative in the country and the largest employer in its headquarters state of New Jersey. The cooperative comprises 43 members who individually own and operate supermarkets under the ShopRite banner. More than 50,000 people are employed by Wakefern Food Corp., the company's distribution and merchandising arm, in 190 stores in five states, ten of which are in Connecticut. The company reports annual sales in excess of $5 billion.
The $64,000 question for the supermarket honchos remains how they'll compete to get shoppers into their stores.
The privately held, Stamford-based GranCentral Supermarkets recently closed its New Haven store, according to owner Steven Lotstein, because of “declining sales and the opening of the new 56,000-square-foot Shaw's on Whalley Avenue.”
“It wasn't doing enough business to warrant it staying open,” he says, simply.
At one time the company had 11 stores in the state, some of which were closed and others sold, Lotstein says. He currently employs 100 workers in one 20,000-square-foot store in Milford and an 8,000-square-foot outlet in Fairfield.
“It's getting exceedingly more difficult to compete with the big guys,” Lotstein explains. “We're a small company and they've made it very tough for us.”
The big operators have done so by offering consumers more. Many now have bank branches, pharmacies, catering operations, florist departments, service businesses like dry cleaners and even baby-sitting services.
Shaw's New Haven store recently announced it will provide older residents who live in the city free bus transportation to and from the store. Super FoodMart in Danbury features a two-aisle “Everything For Kids” section.
Online, stores like FoodMart, ShopRite and Stop & Shop offer special savings at their own Web sites and through services like Valu-Page, where consumers can electronically “clip” coupons for items they wish to purchase.
ShopRite's Web site features an electronically generated shopping list and most offer recipes, store locator maps and news about and job opportunities with the company.
“Our main competitor is Stop & Shop,” says Shaw's spokesman Bernie Rogan, “and when the competition is really there, others may not be able to compete on that level.”
Lotstein says he's looking into the feasibility of consigning space in GranCentral stores to other businesses like the big operators do, but space limitations are a constraining problem.
All the big companies are upgrading old stores and adding new services. Now, Shaw's, Stop & Shop and ShopRite all feature machines where shoppers can bring their bags of coins and have them wrapped.
“It's a bit of a foot race for the customers' loyalty,” Rogan says, “and
we must constantly be more innovative in our marketing strategy.”
The early success of the New Haven Shaw's - and Rogan says it is successful so far - begs the question of why did it take so long for a major supermarket chain to locate a store downtown, and what does that say about the city's economic development efforts to lure such a business to the city?
According to Rogan, locating in the heart of a major city isn't an easy thing to do and city officials often can't do much about it.
Last year, Rogan said the biggest problem was in finding a location that would accommodate a store of Shaw's size in the heart of a city because the land required isn't often available. Other businesses had to be relocated so a parcel big enough to construct the store and provide adequate parking in order to build the Whalley Avenue store.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
