Hm...I thought that Israel and America were also different in terms of store size (overall. FYI: I would prefer smaller stores). It seems like there is a new trend developing: smaller stores in America! Will it continue?
September 10, 2008
Miles of Aisles for a Gallon of Milk? Not Here
HARMAR TOWNSHIP, Pa. — Like cars and homes, grocery stores are beginning to shrink.
After years of building bigger stores — many larger than a football field and carrying 60,000 items — retailers are experimenting with radically smaller grocery stores that emphasize prepared meals, fresh produce and grab-and-go drinks.
The idea is to lure time-starved shoppers who want to pick up a few items or a fast meal without wandering long grocery aisles or paying restaurant prices.
Safeway has opened a smaller-format store in Southern California, and Jewel-Osco is building one in Chicago. Wal-Mart plans to open four “Marketside” stores in the Phoenix area this fall, and Whole Foods Market is considering opening smaller stores.
And here in the northern suburbs of Pittsburgh, the grocery chain Giant Eagle opened a Giant Eagle Express last year that is about one-sixth the size of its regular stores. It has gas pumps, wireless Internet and flat-screen televisions in a small cafe, a drive-through pharmacy and an expansive delicatessen that offers sushi, rotisserie chickens and ready-to-heat dinners.
“It’s perfect,” said Dusty McDonald, a 29-year-old bank teller who was buying breakfast sandwiches recently for her co-workers at the Giant Eagle Express. “It’s on my way to work. It only takes me 10 minutes to get in and out.”
The opening of smaller stores upends a long-running trend in the grocery business: building ever-larger stores in the belief that consumers want choice above all. While the largest traditional grocery stores tend to be about 85,000 square feet, some cavernous warehouse-style stores and supercenters are two or three times that size.
Statistics compiled by the Food Marketing Institute show that the average size of a grocery store dipped slightly in 2007 — to a median of 47,500 square feet — after 20 years of steady growth.
The biggest push in such stores is coming from the British retailer Tesco, which made a splashy entry into the United States last fall, opening a 10,000-square-foot Fresh & Easy Neighborhood Market in Las Vegas.
Since then, Tesco has opened 72 stores in Nevada, Arizona and Southern California.
Gary Smith, founder of Encore Associates, which advises the food and consumer goods industry, said the smaller stores opened by other chains were “a loud message to Tesco that they are not going to be able to walk in and grab market share.”
Mr. Smith added: “It’s also a way for them to do some testing for if and when Tesco comes to their market. They are better able to counter it.”
Besides Tesco, grocery retailers face competition on multiple fronts. Chains ranging from Target to CVS to dollar stores are selling more groceries, and some small convenience stores — long the domain of warmed-over hot dogs and microwave burritos — are offering higher-quality food.
The big grocery chains are not thinking about closing their larger stores, which have been a success. But they hope to capture new business with the smaller stores, appealing to consumers on days when they do not have time for a long shopping trip.
“The average person goes shopping for 22 minutes,” said Phil Lempert, who edits Supermarketguru.com, a Web site that tracks retail trends. “You can’t see 30,000 or 40,000 products. We are moving into an era when people want less assortment.”
Jim Hertel, managing partner at the firm Willard Bishop, which advises supermarkets, added, “If you’ve got 50 feet of ketchup and what you want is Hunt’s 64-ounce and you can’t find it, people get overwhelmed.”
Of course, small grocery stores have been around forever, and some old-time neighborhood markets still exist. Meanwhile, a handful of specialty retailers have proved that shoppers will flock to smaller stores if they are offered a novel experience.
Trader Joe’s, for one, has thrived by offering a limited selection of high-quality, relatively inexpensive products in quirky stores that are 15,000 square feet or less. Aldi and Save-A-Lot are drawing customers in droves by selling a limited assortment of aggressively discounted products.
What distinguishes the new stores is that they are being built by more traditional retailers, and they emphasize fresh, prepared foods for busy consumers.
Kevin Srigley, a senior vice president at Giant Eagle, whose stores are spread across western Pennsylvania, Ohio, West Virginia and Maryland, said the express store seeks to provide customers with a “smart stop to save you time on the things you need most,” in addition to offering fresh foods.
He said the idea for the express store came from Tesco stores in Europe — his company has a longstanding relationship with the British retailer — and from research that detailed the varying needs of consumers.
Mr. Srigley said he was pleased with many aspects of the company’s first Giant Eagle Express store, in Harmar Township, like customer reaction to the prepared foods and baked goods. But since the store was meant as a laboratory, he said, Giant Eagle may tweak the concept before opening more of them.
Will customers come to the smaller stores? Analysts said that Tesco’s initial sales fell short of expectations and the company stopped opening new ones for several months this year to assess customer feedback and make adjustments.
Still, a Tesco spokesman, Brendan Wonnacott, said that the company was pleased with the stores’ results and that the number of customers and sales were increasing.
“This is a format we are excited about, that our customers are excited about,” he said.
The Fresh & Easy Neighborhood Market in Laguna Hills, Calif., offers row after row of bagged produce and its own line of prepared meals that are either chilled or frozen. Customers shopping there recently said they liked the store, though several said they wished that Tesco carried more British specialties.
“They have the best frozen food I’ve ever tasted,” said Nathan Cromeenes, 35, who lives nearby and longed for English shortbread.
He said he liked not having to choose among 50 varieties of spaghetti sauce. “They just have one, and it’s really good.”
Dana Gurr, a 49-year-old saleswoman in Laguna Hills, was less enthusiastic. She said the store was sterile and the vegetables went bad quickly. “It’s not that fresh, but it is easy,” she said.
The reviews were similarly mixed, though mostly positive, at the Giant Eagle Express outside Pittsburgh.
Peter and Kim Maguire stopped by the store for some last-minute items en route to a camping trip. They ended up buying chips, strawberries, blueberries and hummus.
“We pop in here for little things we forget,” said Ms. Maguire, 39. Her husband, 38, added that the store has “great lunches,” including sushi and burritos.
RoseAnn Zanoli, 68, said the express store was “good when you need them.” While she found some eggs, she said she came up empty when looking for a card for her 50th wedding anniversary. “They don’t carry everything that you need,” she said.
Will Carless contributed reporting from Laguna Hills, Calif.
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Business
Miles of Aisles for a Gallon of Milk? Not Here
By ANDREW MARTIN
Published: September 10, 2008
After years of building bigger stores, retailers are experimenting with radically smaller grocery stores.
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