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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For years, the space around a supermarket was golden for other retailers, said Mark Malone, a commercial real estate broker in southern Maine. The regular foot traffic the supermarkets pulled in made other retailers practically line up to get a space next to them, Malone said.

If there was an opening in a shopping center with a supermarket, he said, "I had a list of a few people who I could call and they would take the space right away."

But now, it can take up to a year to fill a vacant space in a supermarket-anchored shopping center, he said. Some of that is due to the sluggish economy, Malone said, but it also reflects the fact that supermarkets are no longer the automatic draw for many communities.

Malone reflected on his own family's shopping habits, prompting him and his wife to put together a list of the different places they had bought groceries in the previous few weeks. They came up with 12 different stores, he said.

Those competitors "are just picking away at the edges of the grocery stores," Malone said. "It's definitely changing."

JUMPING INTO THE MARKET

Amid that corporate weakness in the supermarket industry, department stores began eyeing the food market more than two decades ago. Walmart was among the first to jump in, converting some of its department stores to "Supercenters," with full grocery stores -- including butcher shops, bakeries and seafood departments -- alongside the televisions, clothing and kitchen appliances.

Locally, Walmart closed a relatively new store in Scarborough four years ago and moved a few hundred feet away to open a Supercenter, more than twice as large as the original store, primarily to add a full-size grocery store.

Although some items in their grocery sections sell on slim markups compared to their other goods, Walmart and supermarkets' other competitors saw a way to wring a few more dollars out of consumers before they headed back to the parking lot. With gas prices rising, consumers were eager to combine shopping trips to save a few dollars at the pump.

For consumers, the idea of even small savings accelerated the shift away from supermarkets during the recession, Lempert said.

"When the economy went south, people started shopping around and going to different locations and that's when the trend really took off," Lempert said. "It's ingrained now. It's never going to change."

Lempert said it's natural for department stores and other retailers to try to offer a wider selection of goods to consumers, but selling food takes the connection with the consumer to a different level than simply adding a new line of clothes or expanding the electronics department.

"Foods are very primal and if you become someone's source of food, you build a much stronger relationship," he said.

Shelley Doak, executive director of the Maine Grocers Association, said the erosion in supermarkets' hold on consumer food spending is a natural outgrowth of heightened competition.

She said that in addition to a wider range of stores selling groceries, Maine has also experienced a sharp increase in the number of farmers' markets, selling fruit, vegetables, meats and other products and eating into supermarkets' natural customer base.

The increased competition and greater number of options are good for shoppers, she said, because they keep prices down.

"From a consumer's perspective, wow!" she said.

But Doak said she thinks consumers still maintain a strong allegiance to Maine's leading supermarket chains, which are members of her association, amid all the other choices. And, she said, smaller communities have independent grocers, with family ownership that goes back several generations, and they attract plenty of local shoppers.

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