Though intimidating to some supermarket operators, the supercenter is being seen less and less as a retail juggernaut.
ing, wields hefty buying leverage with suppliers and has proliferated in recent years, industry executives and observers said.
However, they noted, supercenters face a number of obstacles in competing with supermarkets, including the following:
Big general-merchandise drawing radius restricts the number of stores that can be opened in a market. Opening too many could result in cannibalization of higher-margin GM sales.
Large store size limits penetration into metro markets, hampering the customer shopping frequency needed to boost food sales. A supercenter's food drawing radius typically is 2 or 3 miles, similar to that of a supermarket-drug combination store, observers say.
Low prices fall short in swaying consumers, who place more value on perishables offerings, cleanliness, service and selection. But supermarket prices must be in the ballpark.
Huge store sizes may discourage consumers from shopping both food and nonfood areas. Big parking lots also may deter customers unwilling to park far away from the store entrance.
Supercenters are not as adept at micromarketing as supermarkets, which can zone-price stores around a supercenter.
Manufacturers market regionally, so supercenters -- which buy centrally -- won't necessarily get as many deals as a market's leading supermarket chains.
Multiregional distribution centers are less efficient. Supermarket regional DCs are much closer to stores, meaning lower trucking costs, faster delivery and more opportunities for backhaul business and cross-docking.