It used to be supermarkets strived to be all things to all people, a role they fulfilled by adding departments and services that oftentimes stretched beyond food. While many of these add-ons remain popular today, amenities like banking, DVD rentals and dry cleaning are no longer compelling reasons in and of themselves to choose one store over another. Shoppers, becoming increasingly diversified and independent, have found plenty of new options, including the Internet, for most of these conveniences.
Such changes in consumer behavior have required conventional retailers to completely re-assess their market strategies, or risk becoming irrelevant. One result of this self-examination has been the introduction of smaller, focused stores in unique locations that are anything but all-in-one supermarkets. Some serve inner-city neighborhoods revitalized by a booming housing market and young families; other banners provide specific ethnic groups with foods of their native countries; and now, a new generation of stores offers the emerging lifestyle consumer solutions for diet, health and happiness.
The cover story of SN Whole Health, the health and wellness supplement accompanying this week's issue of SN, focuses on these new stand-alone store formats just now folding out from the shadows of conventional retailers: Supervalu's Sunflower Market; Publix's GreenWise; and Ike's Farmer's Market from Bashas'. The stores differ in many ways from their big-box elders. But there will be similarities, as well. For instance, each banner places a fairly strong emphasis on price; that is, making natural/organic "sticker shock" less of an issue by offering more private label, or taking a little less margin in return for volume.
Regardless of store size or format, pricing has forever been an obsession with food retailers, and it serves them well in this case, because even though polls say consumers are interested in healthful living, the high prices associated with many of the products they need to satisfy that desire keep them from following through. Finding the right mix of store brands, national-brand incentives and merchandising might be the way for conventional operators to get in on the whole health game, and execute an effective end run around gourmet-minded, supernatural retailers like Whole Foods and Wild Oats.
The health and wellness business is a real bright spot in the economy right now because it makes food a fundamental part of its own success. Retailers already have had first-hand experience in their mainstream stores with certain categories like organic produce and dairy, or diet-related foods. They know what kind of sales health and wellness products are capable of generating. Organics alone are thriving on a 20%, year-over-year growth rate. It's numbers like those which are compelling supermarkets to get involved as soon as possible.
What retailers must remember is that the stores opening right now require a completely different mind-set. They are not drawing an all-in-one consumer. What's truly different about these stores is the specific role in the community they serve. And, while it's great that they don't have to be the biggest, or offer everything under one roof, they are special formats, and need to provide an authentic shopping experience. Only the unqualified dedication of management will bring success.