Newspaper article St Louis Post-Dispatch (MO)

Super Stores Will Change Retailing, Study Says Groceries, Drug Stores Will Have to Shift Focus

Newspaper article St Louis Post-Dispatch (MO)

Super Stores Will Change Retailing, Study Says Groceries, Drug Stores Will Have to Shift Focus

Article excerpt

Small chains and independent retailers of food, drugs and general merchandise - many of them already squeezed by stronger competition - will find life more and more precarious, according to a recent study.

The supercenter, the combination of discount store and grocery store operated by giants like Wal-Mart and Kmart, is "terrorizing conventional competition." That's one of the conclusions of Retailing 2005, a report from Management Horizons, the retail consulting division of Price Waterhouse LLP.

With economies of scale and well-organized supply systems, supercenters can easily price their goods lower than traditional groceries and drugstores. The supercenters treat health and beauty aids, historically a high-profit category for supermarkets, as loss leaders, the report says.

Profit-and-loss breakdowns are not easily obtained, but supercenters may be treating their entire grocery businesses as loss leaders.

"I suspect they lose a little on groceries," said George Gillen, executive vice president of Management Horizons, "but other sales increase more than 30 percent" when a discounter like Target or Wal-Mart adds a grocery store. Gillen addressed a seminar here recently.

By 2005, Management Horizons' report says, supercenters will have more than 10 percent of food store sales, and one or more of them will become a national grocery chain, something this country has never had.

The massive stores won't eliminate the need for convenient neighborhood food shopping, however.

"The supercenter is too big for the milk and bread stop," Gillen said. He predicted that convenience stores will upgrade to fill the gap left by the shrinking number of traditional groceries. They'll have to improve quality and lower prices, he said. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.