Four months ago, the Safeway supermarket at 1743 Columbia Road NW was expanded from 21,750 square feet to 34,358 square feet, a deli was installed and the lines of frozen foods and produce were enlarged. By offering shoppers a bigger product line, Safeway hoped to increase sales to regular customers and to lure new customers who had been shopping next door at the smaller Giant supermarket.
Giant Food Inc. responded immediately to the Safeway challenge by shrinking the merchandise assortment at its store.
When it was closed for remodeling in August, the Giant was carrying about 10,000 items; when it reopened 11 days later as a Save Right store, it was stocked with only about 3,500. At the same time, Giant decided to include some special ethnic foods popular in the Adams-Morgan area, which has a high proportion of Spanish and black residents, and to make the produce department the centerpiece of the store. Among the items now routinely available at the Save Right store are fresh prickly pears, packages of cactus leaves, tomatillas (small green tomatoes) and chayote (pear-shaped squash).
What happened on Columbia Road is one example of the experimentation in marketing now underway in the supermarket industry, which has been beset by slower growth in sales and fundamental changes in shoppers who today are older, more price-conscious and more eager for ethnic foods and product information than ever before.
The standardized supermarket offering the same variety of products in the same setting has become a casualty of this changing market. Increasingly, supermarket chains are tailoring individual stores to meet the tastes and backgrounds of their customers. This tinkering with store formats, according to supermarket officials, reflects a fundamental truth about the food industry.
"There is no shortage of retail supermarkets -- it is a mature market, and operators must steal from each other to make a profit ," said Tim Hammonds, senior vice president of the Food Marketing Institute (FMI), a trade organization based in Washington. "Growth for the company comes from getting customers from the competition or by bringing products into the stores that previously were sold by other industries. That is why you see pharmacies in supermarkets, you see green plants and delis and bakeries and homemade pasta in supermarkets."
The pace of experimentation with store formats and store products has escalated over the past five to 10 years throughout the United States, Hammonds said. "I think there is as much innovation going on in supermarkets right now as in the entire 50-year history of the supermarket industry," he said.
"In a real sense, we have given up the notion that the U. S. is a vast melting pot and that you put everyone in a pot and get a homogenized America," he said. "There are real differences in ethnic and regional shopping patterns and in the kinds of products they look for. So we have important distinct demographic groups in the U. S., and supermarkets are looking for ways to serve those groups of people."
Besides the growing number of ethnic shoppers, there are increases in the number of single-person households, in the number of elderly and, according to a recent FMI survey, in the number of teen-agers who do the family grocery shopping, apparently because both parents work.
Meanwhile, a common theme affecting all types of shoppers is continuing concern about grocery prices because of the sagging national economy, record unemployment and high interest rates, Hammonds said.
"At one time, in the 1950s and 1960s, store operators would tell you that they knew the right kind of supermarket to build--they had a prototype . . . and all the stores of a company looked alike," Hammonds said. "Now you find supermarkets tailoring a mix of store formats to fit the neighborhood as well as a mix of products to fit the neighborhood. Now a company may put in several different types of stores, depending on what they think that particular neighborhood needs."
Different supermarket chains can look at the same neighborhood and draw different conclusions about what store format would work best. Safeway, for example, decided that its traditional store was best for Columbia Road, while Giant decided to try its limited assortment store and emphasize ethnic foods.
"There was no way Giant could expand its store, so they went to the limited assortment format ," said Ernest Moore, a Safeway representative. "Had the situation been reversed, if they had been able to expand and we had been unable to expand, then we might have gone to a limited assortment."
Giant officials said that their Columbia Road store, which is the second oldest in the chain, was too small and too outdated to continue as a regular Giant store, particularly after its Safeway neighbor was enlarged. "We had 11,000 square feet at that location, compared to 45,000 square feet in our newer stores," said Cliff Logan, Giant's vice president in charge of corporate planning. "We would have expanded if we could have, but we couldn't."
In some cases, supermarket officials simply decide that a particular location cannot support any kind of store. Two weeks ago, for example, when the lease expired on the Safeway store at 8325 Grubb Rd., Silver Spring, Safeway decided to close the store. Spokesman Moore said the store had been losing money for two years and couldn't be expanded.
"Companies today are flexible. They try this idea and if it doesn't work, they close the store and try something else," said Karen H. Brown, FMI communications vice president. "It is a monkey-see, monkey-do business: You find some who are first out on the block with a format and if it works, you see it replicated."
The results of the experiments are apparent throughout the Washington area, where a chain typically operates three different types of supermarket rather than one type. Those three types include the traditional supermarkets, the limited-assortment stores and the super stores carrying everything from prescription drugs to hanging plants.
Giant, for example, now operates 132 supermarkets. Most of them are traditional stores with 35,000 square feet and 15,000 items. Ten others are super stores with 45,000 square feet and 20,000 or more items that may include silk flowers, books and even some furniture, such as bookcases. And now Giant has three Save Right stores in varying sizes up to the traditional stores but with only 3,500 items.
Among the items that are not available in the Save Right store on Columbia Road, for example, are Welch grape juice, Archway cookies, Tasty Cake baked goods and Weight Watchers brand products. Right now, the store does have hanging plants for sale, but those are being removed because they haven't sold well.
In reducing the items sold in limited assortment stores, companies typically reduce the variety available. The Campbell's soup line, for instance, includes 30 to 40 different kinds of soup, most of which are available in a traditional supermarket. But only six or seven of those soups may be offered in a limited assortment store. The available sizes also typically are decreased. The Save Right store, for instance, doesn't carry the quart size of Hellman's mayonnaise.
Safeway, the area's second largest chain after Giant, has five different types of stores. Of the 118 located in the metropolitan area, 85 are traditional stores, 23 are superstores, six are Food Barn no-frills warehouse stores with 3,500 items and three are Town House convenience stores with 7,000 items. The company's other store is the Safeway Farmers' Market, a specialty store in Fairfax stocked with 8,000 items including a large selection of produce, natural foods, gourmet foods and one of the largest wine and beer sections in Virginia.
Still another new store type has been introduced in the Washington area by Grand Union, the company that brought warehouse stores to this area. The new Grand Union concept is described by vice president Don Vaillancourt as a "food market." At present, Grand Union has 32 traditional stores in the Washington area, six no-frills stores and one food market.
Located in Rockville's Wintergreen Plaza, the Grand Union food market is the most elaborate of the company's formats and its lavish interior and store services contrasts sharply with the no-frills Basics stores.
There is one notable similarity--both store types are aimed at capturing a particular kind of customer. In the Basics stores, Grand Union has tried to appeal to the economy shopper who will forgo traditional store services and furnishings to reduce food bills. With its food market stores, the company hopes to attract the customer who wants fresh-cut pasta, store-ground coffee and fresh partridge at competitive prices.
Shoppers entering the Grand Union food market in the Wintergreen mall can start by pouring themselves a cup of free coffee near the front of the store. They can then wind around the special sections, which include the fresh fish counter where rainbow trout swim in bubbling tanks, the cheese section containing dozens of varieties of cheese, the coffee section where coffee beans can be ground to order, the ice cream bar where ice cream can be purchased by the cone or by the carton and the fresh meat section where the butcher specializes in USDA prime cuts.
Vaillancourt said Grand Union remains committed to building Basics warehouse stores where sites are appropriate; the company doesn't want to overbuild and cut into its own sales. But in the meantime, it has announced plans to spend more than $700 million over the next six years to build more stores and renovate and enlarge existing stores in the food market format.
"The nature of the business is to increase volume and profits," Vaillancourt said. "One way to do that is by satisfying customers. What we did was analyze our market and decide where we were and where we wanted to be."