PORTLAND, Ore. -- Retailers who have the capabilities more than the scale are likely to sustain growth for the rest of the decade, a management consultant told Executive Forum 2004 here, sponsored by the Food Industry Leadership Center at Portland State University.
"There is no direct correlation between scale and growth," explained Phil Bonanno, vice president, training and content, Management Ventures, Cambridge, Mass. "Many large-scale operators will see a deceleration or even negative growth. It won't be the big companies that get bigger, but the best companies that get bigger."
Of the 10 retail companies likely to experience the most growth between now and 2010, only one is a supermarket, Bonanno said -- Publix Super Markets, Lakeland, Fla.
According to Bonanno, the top 10 growth companies will be Wal-Mart Stores, expected to grow 18.4% by 2010; Walgreen, 5%; Lowe's and Best Buy, 4.4% each; Target Corp., 3.8%; Costco Wholesale Corp., 3.2%; CVS, 2.5%; Kohl's, 1.3%; and Publix, 1.2% -- combining for 45.2% of all growth, Bonanno said.
Based on format, the biggest gainers between now and 2010, he said, will be dollar stores and supercenters, with dollar store sales growing 10.4% over the next six years, compared with a growth rate of 12.2% between 1999 and 2003; and supercenter sales growing 13.3%, compared with 19.5% growth over the last four years.
Among other formats, drug store sales will increase 8.5% between now and 2010, compared with 9.4% since 1999; sales among category killers like Home Depot, Lowe's and Best Buy will grow 7.3%, compared with 7.6% over the last few years; warehouse club sales will grow 6.7% by 2010, compared with 10.1% since 1999; and supermarket sales will grow 3.4%, compared with 2.1% since 1999, Bonanno added.
He said he is very upbeat about the prospects for value discounters like dollar stores.
"Value discounters have only a 60% household penetration today. But over the next three years, 25% of all new retail stores will be value discounters," Bonanno said, "and they will be the most disruptive force in U.S. retailing for the foreseeable future."
Bonanno said he anticipates food will become an important part of the value discounters' offerings, "and those stores will eventually get into pharmacy as well and attract new shoppers, with household penetration similar to that of warehouse clubs today."
Yet as time becomes as important as money to consumers over the next few years, "the most visible companies will make it easier for customers to make faster decisions," Bonanno said. "In an Internet age, assortment might be considered clutter.
"One edge value discounters have is limited price points. More price points makes it harder for customers to make decisions and slows them down."
Among Bonanno's other comments:
"If the Wal-Mart supercenter is the T-rex of food retailing, then the 99,000-square-foot supercenter prototype in Tampa [Fla.] is the velociraptor."
As the focus of supermarkets turns more toward perishables, traditional supermarkets may begin asking themselves, "If I can't win at center store, why have it? And they may ask of consumer packaged goods manufacturers, 'If you can't make it better, give me a reason to continue to carry it."'