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COMPETING FORMATS KEPT RETAILERS SHARP

Supercenters, club, drug and convenience stores gave supermarkets a run for their money this year with new, improved or expanded fresh-food offerings.For all the competing formats, the focus on food was part of a strategy to give customers more reasons to shop at the stores more frequently, and thus boost sales. Convenience and quality -- whether real or perceived -- were defining characteristics

Supercenters, club, drug and convenience stores gave supermarkets a run for their money this year with new, improved or expanded fresh-food offerings.

For all the competing formats, the focus on food was part of a strategy to give customers more reasons to shop at the stores more frequently, and thus boost sales. Convenience and quality -- whether real or perceived -- were defining characteristics of the new products that were launched, even though the initiatives made the distinctions separating the channels even fuzzier.

In the past year, "we've seen consumers continue to look at other channels, including convenience stores, to meet their fresh-food needs," said Jeff Lenard, director of communications for the National Association of Convenience Stores, Alexandria, Va. "It used to be grocery stores were the only place in town to get fresh foods. Now, that universe has expanded. The walls are breaking down in the retail channels as far as distinctness."

It's more of an evolution than a revolution, he said. Here are some examples:

Club stores. BJ's Wholesale Club, the smallest of the three warehouse club companies, introduced smaller packages to increase the frequency of member shopping trips. Initially a test at a handful of clubs, the strategy was expanded to 100 locations. Nearly three dozen items, including bakery, meat, poultry, seafood and produce products, are offered in smaller packs rather than institutional-sized containers. BJ's also expanded its rotisserie chicken and slicing deli departments, according to one industry observer who follows the club store segment.

Supercenters. Target Corp. announced plans to increase the number of food items sold in its SuperTarget stores under the retailer's Market Pantry and Archer Farms private labels. The retailer launched a makeover of its entry-level, Market Pantry food brand, and announced plans to add a variety of items, including yogurt and organic meat, to the more upscale Archer Farms label.

Convenience stores. C-stores tested new food-service concepts. Industry leader 7-Eleven rolled out fresh sushi at stores in Southern California. The C-store operator also partnered with Tony Roma's to offer a selection of Tony Roma's barbecued ribs, sandwiches and chicken strips at stores in the Austin, Texas market. Officials said it was the first time a C-store operator sold casual dining fare.

Drug stores. Drug retailers used their dairy cases to boost traffic. Cases stocked with everything from gallons of whole milk to single-serve flavored milk drinks in portable bottles, drinkable yogurts and cartons of eggs, helped sales at drug stores. In fact, one dairy industry watcher described drug stores as "convenience stores for women." Dairy sales were up 20% compared to a year ago, reported the National Association of Chain Drug Stores, Alexandria, Va.