StORES Magazine - August 2007 - (Page 34)

SUPERMARKETS vulnerable. This is an unforgiving marketplace, and shoppers have an increasing number of food choices. No food retailer can afford to be complacent.” Lee Peterson, vice president of retail and restaurant design firm WD Partners, empathizes with supermarket operators saddled with legacy systems, store designs and business methods, but urges executives to look closely at ways to improve the customer experience. “It’s an over-simplified truism that retailers have to think like customers,” Peterson says, but “in the case of food retailing it couldn’t be more accurate. People are having a love affair with food, but most are not in love with their local supermarket. How can they be passionate about shelves stocked high with product?” Peterson believes the supermarket of the future will need to be smaller and more easily accessible, and will need to do a better job at merchandising and “romancing” food as opposed to behaving like an outpost for supply. “They need to shift the paradigm from a grocery mentality to one that stresses food “People are having service,” he says. “The focus has to shift from quantity to a love affair with quality, the environment has food, but most are to shift from static to dynamic not in love with and supermarkets need to their local supershift from the self-service market.” model to one where employ— Lee Peterson, ees serve consumers – no easy WD Partners task in a largely unionized arena.” Supermarket executives face the daunting challenge of becoming more relevant to young people, Peterson says. The next generation of consumers has become “accustomed to ordering the basic supplies online and picking up fresh food at Starbucks or at a limited-serve restaurant. If supermarkets are not thinking about how to win over this demographic, we’re going to have a lot of dark supermarkets dotting the landscape,” he says. Numbing numbers Statistics bear out the need for change. NPD Group recently reported that more than half of the meals purchased at the nation’s restaurants are eaten elsewhere. In 2006, the average American placed 127 “to go” orders while sitting down to only 81 meals inside a restaurant. During an analyst meeting late last year, a SuperVALU executive said company research indicated that half of all food is eaten away from home. Of that figure, one-third is purchased on the way home from work. The numbers are numbing for grocery retailers that, despite 34 STORES / AUGUST 2007 the desire to be the answer to the “What’s for dinner” question, seem to be losing ground to casual and quick-serve restaurants that are doing a better job on at least two fronts – convenience and fresh food. That’s not to imply that supermarket retailers have been juggling cans of peas while the food landscape changed around them. Many have tested new in-store shops and new approaches, and several are recognized by industry experts for changes they’ve made to evolve the business: Whole Foods wins praise for its prepared foods area, its artful displays of produce and for elevating food shopping to an experience. Trader Joe’s garners applause for its high-quality, reasonably priced private-label program, an edited assortment that shoppers trust and a commitment to service. Safeway’s lifestyle stores focus on product presentations that sell solutions to shoppers and the newly opened Citrine restaurant indicates that company executives are willing to spread their wings. Wegman’s is best described as a food emporium. With in-store specialty shops, cooking classes and – in one store – a restaurant that offers three distinct eating areas, it’s an industry stand-out. Publix links its success to a willingness to test new things like the Greenwise and Sabor concepts, the Crisper’s chain of restaurants and “Aprons” cooking demonstrations. Now, they’re testing curbside pick-up of phoned in deli orders. Others that triumph for their inclination to break away from the same-old include Giant Eagle, Bloom, HEB and Kroger. Jack Horst, an industry expert and a principal at Kurt Salmon Associates, recommends that supermarket retailers figure out which bells and whistles set them apart and focus attention there. “This will always be a cost-driven industry, so telling supermarket executives that they need to completely overhaul their business will fall on deaf ears,” he says. “I counsel them to appeal to their most loyal shoppers by making improvements to one area that can set them apart from their competition.” How critical is it for supermarkets to continually evolve their business? According to Horst, 30 percent of existing stores won’t be open five years from now. “Those who win in this space are those who succeed in turning the chore of grocery shopping into a food experience,” says Wendy Liebmann, president of WSL Strategic Retail. “Shoppers are willing to pay more for convenience, and they’ll pay more for prepared foods. But they won’t pay more for the same-old same-old. “That’s the challenge supermarket retailers face,” she says. “It’s time they learned how to put food on a pedestal.” StORES WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of StORES Magazine - August 2007

Contents Executive Editor's Page President's Page Upfront NRF News Retail People Concept2Watch Supermarkets Cover Story Online Marketing In-Store Marketing RFID Data Management Payment Systems Software Loss Prevention E-Commerce Risk Management Communications Loyalty Marketing Human Resources Mobile Commerce Loeb Retail Letter Arts Update Point of View Advertising Index Retail Industry Calendar

StORES Magazine - August 2007

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