IN THE TRENCHES: Bigger is no longer better these days
IN THE TRENCHES: Bigger is no longer better these days
This is an interesting food industry. It is amazing to see how it evolves from year to year under so many struggles and challenges. Yet it continues to change dramatically and move forward each time we turn around.
I can remember being invited to a milestone birthday celebration for the founder of a large produce growing and shipping company. After the traditional birthday cake ceremony, it was gift opening time. The guest of honor was handed one gift at a time by his family members for him to open. Most of the gifts were in average-size packages. But when one very small parcel was handed to him, the room became considerably quieter. The guests were in wonderment about what could be in that little box. How could anyone give him such a small gift? It was then that the star of the party said with a big grin on his face, "Big things come in small packages." It sure did. He received a memorable gold watch from his family.
Could the phrase, "Big things come in small packages" also apply to the supermarket industry? There appear to be more smaller-type grocery store formats popping up these days. A great number of retailers seem to be leaning in that direction. For example, Home Depot has introduced a smaller unit in California half the size of its regular outlet that resembles a neighborhood hardware store. Walgreen Co. is looking at some smaller store formats in future expansions. Even Tiffany & Co. announced plans to develop some smaller stores. In the supermarket circuit, Safeway has opened a smaller-format store called Market by Vons in California. Recently, Jewel- Osco announced that it would open a smaller-format store under the Urban Fresh by Jewel banner in the Chicago area.
And of course, there is the well-known debut of Tesco's Fresh & Easy stores in California, which are around 10,000 square feet in size. Many other well- known major chains are planning to follow in these footsteps by opening smaller stores as well.
The dollar-store retailers began their small-format success right out of the starting gate. They built immediate growth with their limited-line variety without overwhelming customers with a mega-sized facility. The model was centered on price, value and convenience, all of which captured consumer appeal.
I visited a brand-new Whole Foods store that recently opened in my town, and it is absolutely fantastic. The total store is not overpowering in size. It offers customers a more relaxed feeling while they shop in aisles that are not so long. The gourmet fresh departments are of a comfortable size yet stocked with a suitable variety of merchandise.
It doesn't matter how huge and dominating traditional supermarkets are with their vast aisles of groceries, fancy fresh departments, in-store banks, pharmacies, hair-styling salons, fast-food restaurants, eye glass stores or ice cream parlors. This format has become somewhat timeworn. There is a new kid on the block today in the form of a dramatic and compact grocery store, and it is coming to a town near you very soon.
So why the smaller store concept all of a sudden? What started this frenzied trend on a different playing field? The answer is simple: Shoppers are turning to smaller, less-expensive food stores these days, especially during a sliding economy. Consumers are influencing a grocery store "format correction."
According to a survey by TNS Retail Forward, an information research group in Columbus, OH, there is an increasing number of consumers who are interested in shopping in smaller stores. The survey results revealed that 64 percent of the participants said they would probably shop at a smaller store, while 30 percent said they might not and 6 percent said they definitely would not.
Grocery chain retailers are even welcoming the change to a smaller store format with open arms. They want and need to turn over a new slate by creating a different niche. Downsizing to a less massive store will bring essential savings to the bottom line.
The average supermarket store is close to 50,000 square feet in size, and it takes a whole lot of energy to heat the building in the winter and cool it in the summer. Add a multitude of lighting and refrigeration necessities, and the utility bills rocket into outer space. With consumers cutting back on their food-spending budgets, those enormous energy costs will take longer to pay off.
Smaller stores also do not require as much inventory stock amounts. Only the basic items furnished on grocery shelves and in the fresh departments that consumers prefer the most are required. Therefore, no unnecessary assets of slow-moving items tie up space and money.
Greater productivity can be found in labor by operating smaller units. Stocking levels of a faster-selling, limited line of products makes sales easier to handle than when every item is made available. Maintaining and cleaning small stores takes less time.
Today, smaller is the new big -- and this trend applies to all levels. It is the next stage of a customer-focused solution in the food industry. Think big but operate smaller. All you have to be is "smarter."
(Ron Pelger is the owner of RONPROCON, a consulting firm for the produce industry. He can be reached by phone at 775/853-7056, by e-mail at [email protected], or check his web site at www.power- produce.com.)
I can remember being invited to a milestone birthday celebration for the founder of a large produce growing and shipping company. After the traditional birthday cake ceremony, it was gift opening time. The guest of honor was handed one gift at a time by his family members for him to open. Most of the gifts were in average-size packages. But when one very small parcel was handed to him, the room became considerably quieter. The guests were in wonderment about what could be in that little box. How could anyone give him such a small gift? It was then that the star of the party said with a big grin on his face, "Big things come in small packages." It sure did. He received a memorable gold watch from his family.
Could the phrase, "Big things come in small packages" also apply to the supermarket industry? There appear to be more smaller-type grocery store formats popping up these days. A great number of retailers seem to be leaning in that direction. For example, Home Depot has introduced a smaller unit in California half the size of its regular outlet that resembles a neighborhood hardware store. Walgreen Co. is looking at some smaller store formats in future expansions. Even Tiffany & Co. announced plans to develop some smaller stores. In the supermarket circuit, Safeway has opened a smaller-format store called Market by Vons in California. Recently, Jewel- Osco announced that it would open a smaller-format store under the Urban Fresh by Jewel banner in the Chicago area.
And of course, there is the well-known debut of Tesco's Fresh & Easy stores in California, which are around 10,000 square feet in size. Many other well- known major chains are planning to follow in these footsteps by opening smaller stores as well.
The dollar-store retailers began their small-format success right out of the starting gate. They built immediate growth with their limited-line variety without overwhelming customers with a mega-sized facility. The model was centered on price, value and convenience, all of which captured consumer appeal.
I visited a brand-new Whole Foods store that recently opened in my town, and it is absolutely fantastic. The total store is not overpowering in size. It offers customers a more relaxed feeling while they shop in aisles that are not so long. The gourmet fresh departments are of a comfortable size yet stocked with a suitable variety of merchandise.
It doesn't matter how huge and dominating traditional supermarkets are with their vast aisles of groceries, fancy fresh departments, in-store banks, pharmacies, hair-styling salons, fast-food restaurants, eye glass stores or ice cream parlors. This format has become somewhat timeworn. There is a new kid on the block today in the form of a dramatic and compact grocery store, and it is coming to a town near you very soon.
So why the smaller store concept all of a sudden? What started this frenzied trend on a different playing field? The answer is simple: Shoppers are turning to smaller, less-expensive food stores these days, especially during a sliding economy. Consumers are influencing a grocery store "format correction."
According to a survey by TNS Retail Forward, an information research group in Columbus, OH, there is an increasing number of consumers who are interested in shopping in smaller stores. The survey results revealed that 64 percent of the participants said they would probably shop at a smaller store, while 30 percent said they might not and 6 percent said they definitely would not.
Grocery chain retailers are even welcoming the change to a smaller store format with open arms. They want and need to turn over a new slate by creating a different niche. Downsizing to a less massive store will bring essential savings to the bottom line.
The average supermarket store is close to 50,000 square feet in size, and it takes a whole lot of energy to heat the building in the winter and cool it in the summer. Add a multitude of lighting and refrigeration necessities, and the utility bills rocket into outer space. With consumers cutting back on their food-spending budgets, those enormous energy costs will take longer to pay off.
Smaller stores also do not require as much inventory stock amounts. Only the basic items furnished on grocery shelves and in the fresh departments that consumers prefer the most are required. Therefore, no unnecessary assets of slow-moving items tie up space and money.
Greater productivity can be found in labor by operating smaller units. Stocking levels of a faster-selling, limited line of products makes sales easier to handle than when every item is made available. Maintaining and cleaning small stores takes less time.
Today, smaller is the new big -- and this trend applies to all levels. It is the next stage of a customer-focused solution in the food industry. Think big but operate smaller. All you have to be is "smarter."
(Ron Pelger is the owner of RONPROCON, a consulting firm for the produce industry. He can be reached by phone at 775/853-7056, by e-mail at [email protected], or check his web site at www.power- produce.com.)
