COMPETITORS BY DESIGN

JON SPRINGER

CHARLOTTE, N.C. -- Foot traffic at the new Bloom store here isn't only from local moms.

"The minute Bloom opened up, we saw a ton of guys with suits and ties, but no shopping cart," said Tom Henken, vice president of store design for Architecture Plus International, the Tampa, Fla.-based firm that designed the innovative new Food Lion banner that opened here in late May. "I think every grocery chain in the country had a representative in that store within a week, and all of them were thinking, 'How can I spin this off? How can this apply to my store?"'

Bloom is attracting this attention not only because it is different, but for the reasons it differs: It was designed specifically to address the threat of other formats competing for the food dollar. "The biggest trend in grocery store design today is addressing the supercenter phenomenon," said Henken, noting that the first Bloom store zeroed in on several perceived weaknesses of large-format supercenters, most notably their relative lack of convenience. Other conventional supermarkets are using store design and architecture to drive brand messages of service, selection or freshness, and differentiate themselves from price-driven competitors. "Design can be the only way out," said Kevin Kelley, co-founder and principal of the design firm Shook-Kelley, Los Angeles.

Designers and architects interviewed by SN said supermarkets should look to their stores as agents of their brand message and as their best weapon against competition from other formats. They cautioned that it's not easy, particularly in an environment of reduced capital budgets and the industry's traditional emphasis on function over form.

"You have to find new ways to engage customers, and design is one of the best ways to do that because it's where the customer interacts with your brand," said Kelley.

Building vs. Rebuilding

Industry figures indicate supermarkets are building fewer new stores than they used to. New-store construction in 2002 decreased for the third year in a row, reaching 3.4% of all stores, according to Food Marketing Institute's most recent Facts About Store Development survey. At the same time, the percentage of store remodels increased sharply, to 7.5% of all stores. The survey projected that remodels would continue to be popular, while new-store construction would rebound only slightly.

Reduced capital budgets in the wake of a slow economy and rising costs associated with new builds are principal reasons for the slowdown, architects said. However, some have also worked on ways to reduce building costs. Josh Burrows, vice president of chain retail for Boston-based architecture and design firm Cubellis Associates, said one of its chain clients in the Northeast has saved money on its building program by standardizing back-of-house structures and equipment for multiple stores. "They're getting smart on cost-saving without affecting the customer experience," Burrows said.

Renovations in many cases simply make better financial and strategic sense, others said. A typical new store in 2002 cost $5.9 million, while average remodeling costs were $927,000, according to FMI figures. "There's much more of an impact you can make, dollar for dollar, with existing stores than you can with a new one," said Henken. "In terms of getting a competitive edge, hitting a whole market area is a better approach than doing a single new store that might have a great impact in one area alone."

The concept for Bloom, noted Henken, was intended for existing store remodels and not ground-up construction. (The first Bloom store in Charlotte was going to be a traditional Food Lion store and was already under construction when the decision was made to debut the concept.)

As a result, designs for future Food Lion-to-Bloom conversions (there are four currently planned) limit the movement of major refrigeration equipment and other fixtures in the store, Henken said.

Some sensed that increased pressure from competing formats, along with better economic times, will spark innovation among stores again. Signs pointing that way are already emerging as new concepts with an eye on supercenter competition have been rolled out this year by Delhaize USA, Salisbury, N.C., which debuted Bloom, a Food Lion Market, and announced a re-bannering of Tampa-area Kash n' Karry stores under the Sweetbay name; Marsh, Indianapolis, which opened prototype "new lifestyle" stores; Kroger, Cincinnati, which expanded its Marketplace stores to Utah and Ohio; and independents like Felpausch, Hastings, Mich., which recently rolled out a gourmet/organic concept called Zucca's in a converted conventional store.

"There really haven't been many superstar stores in the last few years since 9/11," said Kelley. "I think there's been a lot of soul-searching, stores trying to figure out what they're about. So I think in the next three years, we'll be seeing a lot more building. It wasn't just the economy. It was that everyone had to take a step back and see where it is they want to go."

Extra Credit

That supermarkets need to differentiate themselves from competitors isn't news to anyone. Nor are the means much of a mystery: Stores may focus on some combination of convenience, service, selection and price as differentiators.

What might be surprising, said one designer, is how poorly some stores carry out those plans.

"Supermarkets will say, 'We've already gotten broader assortments. We've done product differentiation. We've gotten better service,"' said Joe Jackman, chairman and chief creative officer, Perennial, a Toronto-based retail design firm. "But the reality is, they're not getting credit for it."

Jackman said, for example, that he sees too many stores with service meat departments that position their butchers behind high counters or sliding doors. "Service meat can be a major point of differentiation in your store. Why put it behind a hole in the wall?" he asked. "If you spend money for service, I want to be able to see it. Make them look like pros and build an environment to support that," he said, citing Wegmans as an example. "They've pushed their bakery to the fore and made it quite a show."

One common problem architects encounter when implementing new store designs is bridging the gap between designs that meet brand objectives and those that work operationally. The supermarket industry, they said, often clings too tightly to the latter concern. This can be seen most often in conventional center store layouts, which tend to vary little between stores.

"For most supermarket chains, fixture plans are what they relate to best. They look at the store as a planogram and quantify things in terms of packout and dollars," said Daniel Montano, director of retail design for Little Diversified Architectural Consulting, Charlotte. "The most interesting stores to me are the ones that break the typical back-and-forth of aisle shopping.

"The American grocery store in a rectangular box is predictable in how it's laid out, in the same way with the same sequence of departments," he commented. "That may be fine for people who think their grocery store as merely a stop along the way of their chores every week, but it's not a place where people want to hang out and find out about the quality of food."

Chains looking to differentiate themselves should consider new product adjacencies in center store, and merging aspects of the center store and perimeter departments, said Nick Giammarco, principal of Cubellis, Boston.

"Maybe peanut butter and jelly should be next to the bread display instead of next to the artichoke hearts," Giammarco said. "There are opportunities to juggle categories that are typically found in the center of the store and making them into new departments with perishables. The last frontier is looking at center and perishable as one great experience."

A focus on operational efficiency often obscures opportunities, he added. "The end of the aisle is some of the best real estate in the store. A department store would put their very best display there. It would be arranged and lit carefully. Supermarkets usually have a set of double doors there leading to the back room because it gives the fastest access," he said. "We understand those operational needs, but it has to change. There's a passion that's missing."

"There isn't a good linkage between the best practices of retailing and marketing and the best practices of aesthetics and design," said Kelley. "Designers talk about schematics and don't really embrace capitalism. Retailers are thinking about sales and have a whole different mentality. Trying to bridge that gap is like linking doctors and massage therapists together."

You Gotta Believe

If there's a common ideal that grocery stores are attempting to aspire to today, it may be authenticity, designers said. Grocery stores are trying to position themselves as distinct, but not as "show-offy" or "cartoony" as the trend of the 1990s. This, designers emphasized, helps stores connect to their customers on a personal and emotional level. Call it a retail reality show.

Kelley, whose firm handled the brand positioning and design for the new flagship of Kroger's Fry's Marketplace in Phoenix, said his goal was "to make the place believable." The store, which sells food and general merchandise, is broken into four distinct zones, each with a different feel not unlike rooms in a home. Each area acts as "a surrogate for the product," said Kelley, but quietly so: Design is accomplished more with color, lighting and style elements than with large signs or bold images.

"When we did brand strategy for Fry's, we weren't just given the design job, we were given the question, 'How do we compete with Wal-Mart?"' Kelley explained. "We said, 'Don't take them on with price. Take them on with lifestyle. Offer aspirational views of how people want to live and become an advocate of living better."'

Likewise, Shook-Kelley's designs for Whole Foods Market's new stores in Nashville, Tenn., and Princeton, N.J., said Kelley, are "more humble" than Whole Foods' designs of a few years ago. "They don't want to mistake success with opulence," he said. "So the stores are about purity and enlightenment, and they're more accessible. They're simplified."

VG's Food & Pharmacy, a 14-store independent chain based in Fenton, Mich., uses new layouts, materials and graphics that its designer, Giammarco of Cubellis, said conveys "an honest, hands-on attitude." Some VG's stores use carpeted flooring in the produce section. "We're very happy with the results," Giammarco said. "It's fun to watch -- you can see customers slow right down as soon as they hit the carpet, and they tend to linger in an environment like that. It makes a real psychological difference."

Little Diversified Architectural Consulting recently completed a brand reposition and design for The Home Economist, a natural/organic foods store in Charlotte that opened in a former 1950s-era supermarket building in June. The store features gondolas with low-profile shelving that allows shoppers to see the entire store at a glance from inside or outside of the store. Graphic elements include murals in "sophisticated, earthy and warm" colors, said Montano, as well as striking wood tones that convey the store's organic positioning with subtlety.

According to Kelley, supermarket chains should devote certain resources and stores to experimental design on a constant basis, noting that supercenter competitors can, and will, eventually learn from, and respond to, the superior designs of their competitors.

"Target and Wal-Mart know they're weak in store design, but there's a mandate they figure out how to make their stores live up to the robustness of their ads," said Kelley. "They might not have figured it out yet, but they will."

Henken, whose firm designed the "Urban 99" prototype for Wal-Mart Stores, a smaller version of its food-and-general merchandise hybrid that debuted this spring in Tampa, agreed, adding that the Bentonville, Ark.-based giant is getting more knowledgeable about "tighter" stores that still carry a lot of product.

"Whenever there's an action in the marketplace, you see an equal and opposite reaction," he said. "There's constantly a tug and pull between grocery stores and any other competition."