The supermarket industry at one time worshipped the generalist and eschewed the specialist, but as the steady flow of new formats in 2006 demonstrated, that is hardly the case anymore.
Designed to capture a niche here, or a market sector there, or head off the expansion of a discount or high-end competitor, these stores illustrated how retailers can turn from generalists into specialists as a means of growing their share and/or protecting their turf.
Fresh Acres, a new store opened by Big Y Supermarkets in October, was both a defensive and offensive move, an analyst told SN. The 30,000-square-foot store, located near Big Y's headquarters in Springfield, Mass., targets young professionals turned onto the natural/organic and healthy lifestyle trends but who didn't have a Whole Foods or Wild Oats store nearby — at least, not yet.
Set at the site of a former Big Y supermarket that closed two years before, Fresh Acres also emphasizes local products, officials said, providing the store appeal that would change with the seasons.
Inspired by the theatric presentations of such stores as H.E. Butt Grocery Co.'s Central Market and Wegmans, Giant Eagle last June opened a pair of foodie-focused stores under the Market District banner near its Pittsburgh headquarters.
The stores — each a converted conventional Giant Eagle location — feature an array of chefs and highly trained staff that serve, according to Giant Eagle officials, as “ambassadors of the food they sell.” Offerings include hundreds of varieties of organic produce, bulk foods and spices along with gourmet candy, specialty products and a vast selection of prepared foods, entree salads and gourmet deli items.
Company officials said they envision Market District as a specialty concept that may only achieve a density of three or four stores in the Pittsburgh area. But they're arriving at the right time — Whole Foods Market has a presence in downtown Pittsburgh and Trader Joe's debuted there last fall.
While the so-called “mainstreaming” of the natural/organic trend sparked a lot of new concept development, few concepts matched those products with “mainstream” pricing. But that could change as the result of Sunflower Market, a low-priced natural/organic store that launched its first two locations last year.
“Natural and organic products are going more mainstream,” said Jeff Noddle, chairman and chief executive officer of Supervalu, Minneapolis, in a speech marking the opening of Sunflower's first store, in Indianapolis, in January. “But any research that you do very clearly says that the barrier to [mainstream consumers] buying natural and organic is that traditionally, these products have been very, very high priced.”
Supervalu officials said Sunflower, which had added a second location in Chicago by year-end, could be a 5,000-store chain within five years. The concept generates savings through a strategy to re-use existing space (between 15,000 and 18,000 square feet per store, officials said), and by leveraging Supervalu's buying power, specialty produce distribution facility and distribution efficiencies, Noddle said.
Supervalu — which also last January debuted a Hispanicthemed concept called El Primero Mercado — noted also that its array of alternative concepts (which also include the discount Save-a-Lot banner, and full-service price operations like Shoppers Food & Pharmacy) could be alternative outfits for select locations of the Albertsons-owned stores it had begun operating last year.
Other retailers were also testing new ideas in 2006. Busch Supermarkets, Ann Arbor, Mich., opened a new store last summer in Rochester Hills, Mich., offering exotic items like ostrich and rabbit meat in an upscale setting neighboring a Trader Joe's. Officials of Busch told SN it would watch the store's performance to see which concepts it could import to punch up its existing stores.
Phoenix-based Bashas' and Publix Super Markets, Lakeland, Fla., are also planning natural-focused stores, dubbed Ike's Farmer's Market and Greenwise, respectively. The concepts are expected to open their doors this year.
Demographic shifts calling for attention to the Hispanic market, particularly in the Southwest, sparked new concepts from Kroger and United Supermarkets last year.
In Phoenix, a Fry's Marketplace store owned by Kroger, Cincinnati, underwent transformation to Fry's Mercado, which opened in late June.
The former Fry's Marketplace store — serving a neighborhood that by one estimate was 65% or more Hispanic — includes leased space to independent merchants selling items such as clothing, bridal wear, jewelry and accessories, and food offerings including a restaurant for in-store or take-home consumption; a Hispanic tortilleria and scratch bakery; and renamed and remerchandised product departments.
A spokeswoman for Fry's told SN the Mercado concept could be imported to other locations as Kroger fine-tunes its store assortment — although no plans to do so had been announced.
In Wichita Falls, Texas, United Supermarkets converted two acquired stores to a Super Mercado concept last year, but recently said it planned to shutter the stores this month. The stores were acquired from Brookshire Grocery Co., and were outfitted with increased produce selections, more Hispanic-oriented baked goods, more prepared foods and more Hispanic items in the Center Store, according to United.
Officials of United, based in Lubbock, Texas, said the two stores were used as laboratories for other United locations in Hispanic markets that will be part of its new “international” division.
United also created a new division for its more upscale Market Street banner, which encompasses six locations plus other United-bannered stores with a specialty-product focus.