July 28, 2013

Grocery trends mean war for stores

Increased competition in Maine from the usual suspects – and some unexpected ones – has forever altered the supermarket landscape.

By Edward D. Murphy emurphy@pressherald.com
Staff Writer

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Grocery shopping outside the supermarket is a trend that started about 20 years ago and accelerated in the past few years, as the recession forced Americans to cut corners wherever they could, said Phil Lempert, the founder of the website SupermarketGuru and a contributing editor for Supermarket News, a trade publication.

For many, the savings come not only from prices but also from not having to burn gas going to several stores on the weekly shopping trip, and preserving some free time.

"I buy here regularly," Heather Pendleton of Buxton said while loading her groceries and getting her children into her car outside the Target store in South Portland. "It's close to where we have doctors and it has a little of everything that I want to have."

Like many other shoppers, however, Pendleton said she still goes to a supermarket for fresh meat and produce, saying she felt more comfortable buying those items at a Hannaford near her home.

Deb Baginski of Scarborough said she also mixes in trips to the supermarket with trips to Target.

"I'm here every couple of weeks or so, so I'll get groceries also," she said. "It saves me a trip to the grocery store today."

Pendleton and Baginksi are part of a trend that has established itself in recent years.

National figures indicate that most of the family grocery budget -- about 85 percent -- was spent at supermarkets two decades ago, but now less than half goes into cashiers' tills at those stores. Supermarket chains added essentially no additional space from 2005 to 2011, but non-grocery stores added 150 million square feet devoted to food during the same period, according to the Food Marketing Institute.

Supermarket chains are, in some cases, scaling back their presence in the face of competitors almost literally on every corner.

Hannaford laid off 350 workers in February and its corporate parent, the Belgian conglomerate Delhaize, last year closed nearly 150 stores, mostly in the South, that it operated under the Food Lion and Sweetbay banners. In late May, the company sold another 155 of its stores in the South to a rival chain.

Shaw's has gone through several owners over the past decade and in recent years has shrunk its footprint: While there used to be Shaw's stores in all six New England states, the chain no longer operates in Connecticut. It also announced that it would close four stores in Massachusetts and two in Rhode Island in August. The chain still has 22 stores in Maine.

"We are focused on executing our plan and winning New Englanders over again," said Shane Sampson, president of Shaw's and Star Market. "We are competing with anyone who sells food."

The stores that were closed recently, he said, haven't been profitable for some time, but there are no plans to close any of the Maine locations.

Sampson said Shaw's ended the rewards program and is giving local managers more authority as part of its response to heightened competition -- and the company is aware that its competitors are not only fellow supermarkets.

"Stores that offer everything from trash bags to tea bags to tires are always going to be a draw for customers, just as the corner drugstore will be -- we understand the appeal," he said. "However, those customer trips are different than a trip to Shaw's and Star Market for local produce and seafood. We continue to strive to offer the best in fresh, and that's something a superstore or drugstore is challenged to compete with."

But the erosion of supermarkets' hold on the grocery dollar has even had an impact on the real estate market.

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