RUBEL SEES CONVENIENCE ROLE FOR SUPERMARKETS

David Ghitelman

NEW YORK -- Tom Rubel has glimpsed the future of retailing and said he believes supermarkets will have a role to play in it, although the competition from supercenters will grow even more fierce by the end of this decade.

Rubel, president and chief executive officer, Retail Forward, a Columbus, Ohio-based consulting firm, said last month at his company's 2003 strategic outlook conference here, "Supermarkets have a number of viable strategies, except for one -- standing still."

His presentation, "Twenty Trends for 2010: Retailing in an Age of Uncertainty," focused on how retailing will change over the next seven years and opened the full-day conference, whose theme was "Retailing 2010."

One of the trends Rubel emphasized was the continued growth of supercenters, those operated by Wal-Mart Stores, Bentonville, Ark., and by other mass merchants. "Supercenter sales are expected to almost triple by 2010," he said. "To boost revenue and one-stop shopping appeal, supercenters will continue to add non-traditional offers like financial, telecom, travel and entertainment services."

Although "food is becoming an increasingly important part of the mass industry" and consumer preferences are "shifting away from traditional supermarkets," Rubel still said that supermarkets can carve out a place for themselves in the future.

"There is still room to maneuver in the grocery industry," he said. "Forward-thinking supermarkets will expand their one-stop shopping appeal with the addition of fuel pumps, more nonfoods and mealtime options in order to become the new convenience store, or at least a more convenient store."

Change, he observed, is likely to come in two divergent forms. Some supermarkets will add more and more general merchandise and "become more closely associated with the supercenter concept." Others, he noted, "will become more like fashion retailers by tapping the potential of under-penetrated or emerging markets and trends such as natural/organic, ethnic, gourmet/exotic and healthy food products."

Another speaker, Carl Steidtmann, chief economist, Deloitte Research, New York, offered a very different assessment of the supermarket industry's recent achievements in his conference presentation, "Managing Uncertainty: Strategic Flexibility in a World of Retail Change."

He described the mass merchants, and Wal-Mart in particular, as a very strong threat to supermarket survival. "Wal-Mart's success is not solely dependent on its scale or its logistical prowess," he noted. "What is so distressing about Wal-Mart is that despite its size, it continues to innovate."

Innovation, Steidtmann observed, is a quality that has been sorely lacking in the supermarket industry. Traditional supermarkets "have found their business model disrupted by Wal-Mart's aggressive entry into the food business" and in the last decade have lost about 20% of their market share, he noted.

"During that time, grocery stores have done little to change their strategic approach to the marketplace. They have made no change in their real estate portfolio, merchandise mix, branding, customer service, distribution or logistics.

"All they have done is become more promotional, putting additional pressures on their national-brand suppliers for promotional support. The results have been a higher cost business model that makes them less competitive."