Supermarkets

Bluntly stated, supermarkets are losing the battle for consumers’ food dollars. Adjusted for inflation, sales declined 0.5 percent and identical store sales dropped 1.2 percent year-over-year, according to the Food Marketing Institute.

Supermarket operators have been forced to adopt tactics to battle the recession, as well as strategies that will keep them competitive for the long haul. Short term, grocery chains are discounting products via promotions and couponing, while increasing the offerings of private-label goods.

Longer-term planning involves diverse strategies. Kroger is maintaining an aggressive campaign of format diversification led by its Marketplace concept. These stores are typically in the 120,000- to 130,000-sq.-ft. range, combining a full-service supermarket that includes such amenities as a drive-through pharmacy window and a wine store with general merchandise offerings that could include a Fred Meyer jewelry department or a Kitchenplace full of cookware and gadgets. In other words, there are a lot of merchandise lines found in a supercenter.

Safeway is taking its century-old tradition of making and selling private-label goods to a new level. Its O Organics and Eating Right house brands are being sold in supermarkets from South Africa to South America, as well as Taiwan, Singapore and Hong Kong. Stateside, Hy-Vee, Price Chopper and Big Y are selling Safeway’s private-label brands.

Cost-cutting is another tool supermarkets use to compete with supercenters. Ahold USA’s Stop & Shop division in New England and Giant Foods in the mid-Atlantic are counting on technology to assist in reducing labor costs while improving the customer shopping experience. The chains are providing hand-held scanners for customers to use as they move through the store, selecting items, scanning bar codes and bagging as they go. This provides a running total for the shopper and greatly reduces the time spent at checkout. In addition, the hand-held devices call attention to sale prices and promotions as the shoppers move into range of the products.