FORMAT PROLIFERATION

David Merrefield

The supermarket industry was once characterized by its ability to throw off new formats at a rapid pace. Included in the pantheon of once-innovative formats is the box store, the warehouse store, the superwarehouse store, the combination store and so on.

In more recent years, the full-scale invention of new formats has quieted some. But maybe the time has come to institute a search for new formats.

As you'll see by a look at this week's front-page news feature, Costco Wholesale Corp. has plans to downsize its membership-club plan into a format more similar to a conventional supermarket, and to plant it into urban locations. The test market is to be Manhattan.

The initial phase of the test would center on a store model of about 60,000 square feet in which would be sold mostly food and sundry items. The new format would differ significantly from Costco's usual operating mode in terms of size, in that it would be less than half the size of its typical store, and content, in that it would strip away general-merchandise categories that are at the heart of conventional Costco units. Costco also has plans for a couple of other minor format modifications for doing business in other Manhattan locations. Assuming Costco is successful, and that it can overcome the the usual neighborhood opposition that surrounds such developments in New York City, it would probably roll out the smaller models in other urban and suburban locations. (Costco already operates several full-sized warehouses in outer boroughs of New York City, and in nearby areas.)

Meanwhile, Wal-Mart Stores is tinkering with its Neighborhood Market conventional format of about 40,000 square feet. That model too is intended to get around the hobbling effect of big-box merchandising. In Wal-Mart's case, though, the idea is to offer a more convenient shopping venue to those shoppers unwilling to tramp through a vast supercenter. But, as is the case with Costco, if this Wal-Mart format proves successful it will multiply quickly from its current handful of locations.

Naturally, from the viewpoint of conventional-store retailing, these two format developments aren't unmitigated good news since they both represent an incursion from the outside into supermarket-style retailing. But there's no rule that says conventional operators can't lift a leaf from a different book and develop a style of retailing that could fit unusual locations.

To cite an example, one supermarket chain that has done so lately is Food Lion. As was reported late last year, Food Lion has opened stores under the Village Market banner in a couple of resort areas. The stores cater to vacationers' needs, such as for convenience and for fresh-prepared offerings. It's instructive that a chain such as Food Lion would take such a leap, given that it was once known as the ultimate cookie-cutter operator, reluctant to make much accommodation with layout or merchandising. There's little doubt that more of this kind of format development is on its way. The only question now pending is whether innovation will spring from conventional operators, such as Food Lion, or from alternate-format operators, such as Costco or Wal-Mart.