Sanwiching supermarkets

By Michelle Jarboe
News & Record, Greensboro, NC

GREENSBORO, N.C. - Nakia Yarborough doesn't mess around.

A meticulous coupon-clipper, the 25-year-old keeps spreadsheets of her grocery expenses -- about $200 a month.

Nine times out of 10, she'll put her buck on the bottom line, buying canned goods and cereal at the Wal-Mart Supercenter nearby or discount store ALDI.

But when it comes to meat and produce, Yarborough, who lives in Winston-Salem and works in Greensboro, spends extra to get things fresh.

"There's definitely a difference," said Yarborough, who buys perishables at Harris Teeter. "The produce, per pound, is a lot cheaper at Wal-Mart. But I wouldn't touch it."

She represents a striking shopping trend: Diminishing loyalty to a single food store.

Instead of one-stop shopping, consumers split time between extremes, searching for the best bargains on basics and the highest quality in produce, meats and organic products.

Shoppers younger than 35 do most of their food shopping at natural supermarkets such as Whole Foods and supercenters such as Wal-Mart, according to an April report from research firm Retail Forward.

So traditional chains such as Harris Teeter, Kroger and Food Lion are changing, trying to succeed where other players, including Winn-Dixie, which filed for bankruptcy in February, have stumbled.

"You can't be traditional anymore," said supermarket analyst David Livingston. "You have to change along with the customer."

That means offering what supercenters and warehouses don't. Wal-Mart has become the country's largest grocer, selling an estimated $109 billion during 2004, according to Retail Forward.

And Livingston estimated that the typical Costco store, geared toward a more upscale shopper than Wal-Mart, sells more than $1 million a week in food -- 77 percent of that purchased by households. Costco Wholesale reported $47.15 billion in total sales for 2004.

From 1999 to 2004, the average household's supermarket trips dropped from 83 to 69 annually, according to trade publication Progressive Grocer. Annual household visits to supercenters went from 15 to 27 during that period, and warehouse shopping also increased, albeit more slowly.

For instance, Yarborough said she can save 20 percent on a box of cereal at Wal-Mart. But, she said, that means grappling with crowds and putting up with cluttered and dirty stores.

That's exactly what supermarkets need to keep in mind, said Jenny McTaggart, senior editor at Progressive Grocer. They need to look beyond price to things supercenters don't offer.

"If they get too focused on low prices, they might lose sight of other things that are important to consumers," she said.

What shoppers want
Earlier this year, Progressive Grocer published 45 reasons consumers choose a supermarket. Cleanliness -- not price -- came first.

The top 10 factors did include price, but layout, pleasant clerks and produce also made a strong showing.

These are draws Food Lion considered in bulking up its produce offerings and remodeling some of its stores, including 60 in the Triad.

The consumer is key to the strategies behind Bloom and Bottom Dollar -- two experimental store lines Food Lion has launched in the state. Bloom right now is only in the Charlotte market, but the company expects to expand it next year.

"The customer base is changing, and it's hard to serve a diverse customer base through one store or one concept," said spokesman Jeff Lowrance.

Bottom Dollar has a simple gimmick: discount stores that don't look the part. They're meant to compete both with supercenters and discount stores such as ALDI, where Yarborough heads to buy sugar and other staples.

Located on Kivett Drive, the High Point Bottom Dollar, one of three in the area, is bright and cheerful. Customers bag their own groceries, which they choose from a selection of 6,500 products. Traditional Food Lion stores boast a 28,000-product lineup, Lowrance said.

The stores, the first of which opened in September, took over three Food Lion locations, but Lowrance said the low-price format won't replace the traditional supermarkets.

If supermarkets are looking for an edge, it's in trends such as meals-on-the-go, which are gaining popularity as consumers cook at home less. And fresh-prepared main courses are a major draw for shoppers ages 25 to 34, according to Retail Forward.

"They're making changes. They're trying to change along with the consumer," Livingston said. "The old, plain Food Lion is really no longer competitive with Wal-Mart."

Find a niche
As one segment of shoppers hugs the bottom line, another opts for unique products from more upscale retailers.

In October 2004, Retail Forward found that quality fresh foods are a top priority for 95 percent of shoppers. Those younger than 35, in particular, want healthful food on their tables.

That's where stores such as Whole Foods and Earthfare, an Asheville-based chain that's been expanding throughout the region, fit in. It's also where Greensboro-based The Fresh Market finds its niche.

Whole Foods and Earthfare offer goods from produce to cosmetics and cleaning products. Whole Foods, a national chain, reported about $3.86 billion in 2004 sales.

The Fresh Market is a bit of a different store, one that reached out of the Southeast for the first time this year, opening four stores in the Midwest.

But as it expands, Fresh Market doesn't expect to become a one-stop shop for their customers.

"Even if people love our stores -- and fortunately people do -- you're going to have to shop somewhere else," said Eric Blaesing, the company's community relations director.

The Fresh Market tries to create the feel of a old-world market with fresh produce, meat and fish.

Shoppers won't find cat litter or baby food there, but they'll have no problem picking up Chilean sea bass for dinner, Blaesing said.

Traditional retailers have glommed on to the trend toward fresh, boosting their produce and meat departments while keeping their cosmetics, magazine and medicine aisles.

Harris Teeter's approach -- boosting its Farmer's Market produce -- successfully snared Yarborough, who used to shop at a real farmers market. It helps, she said, that the store doubles manufacturer's coupons.

Harris Teeter also boasts fresh bakery items and 11 store brands aimed at customers seeking higher quality. The chain, which reported $2.57 billion in sales in 2004, is one experts consider more stable.

But that's just relative to other grocers at a time where the industry message to supermarkets might be as dire as change or die.

"I think all retailers need to evolve," Lowrance said. "Retail is based on serving customers, and you have to change with your customers."