Las Vegas Specialty Foods - Specialty Foods in Las Vegas
Supermarkets Go Specialty
By Denise Purcell
The adage that the middle always gets squeezed is playing out in today's hypercompetitive food retail landscape. Discount supercenters and upscale merchants are crowding conventional supermarkets' territory with value pricing on one end and luxury, quality and service on the other.
In retailing, the last place you want to be is in the middle," commented Rod Hawkes, a professor at the Cornell University Food Industry Management Program, in a recent seminar, "Supermarkets Go Specialty: How to Stay Competitive," held at NASFT's Super Retailer Summit II in Napa, Calif. "What do you stand for? You are undifferentiated on price, assortment or quality."
To create their own point of distinction, traditional grocers are eying a specialty niche. Though supermarkets currently account for the majority of U.S. specialty food sales-71.8 percent, according to Specialty Food Magazine's State of the Specialty Food Industry 2006-many companies desire a higher profile in the specialty sector. Some supermarkets are expanding in-store selections of prepared foods, higher-quality perishables, organics and service counters, whereas others are operating exclusively upscale smaller-format locations.
"There is no longer a ‘one format fits all' kind of supermarket," says Michael Sansolo, senior vice president of the Food Marketing Institute in its study, Facts About Store Development 2005. Among the 77 companies representing 4,208 stores surveyed, there is a strong interest in developing niche-focused stores to broaden market share. Among retailers trying this avenue, gourmet/specialty foods ranked as the most embraced format, offered by 66.7 percent of companies, followed by natural/organic (50 percent) and ethnic (25 percent).
Wal-Mart Goes Organic
Supermarkets are the sales leader in food sales, comprising $457 billion annually. But their market share is declining as discount and other mass-market formats multiply. "Supermarkets have struggled to stay viable, but are losing to supercenters," explains Nick McCoy, senior consultant of Retail Forward, a Columbus, Ohio-based retail market tracker.
Megamerchants have become a dominant force in grocery. Wal-Mart alone operates 1,866 supercenters with grocery departments-and that number could triple by 2010. Minneapolis' Target Corp. plans to incorporate larger grocery sections into most of its 1,239 stores.
"Supermarkets can compete by focusing on an area that Wal-Mart has traditionally not been so good at," says McCoy, who anticipates an influx of smaller stores with an upscale or fresh-foods focus. Ethnic niches will also prosper in certain communities, such as Lakeland, Fla.'s Publix Super Markets' two-unit Hispanic-format Publix Sabor.
Wal-Mart, however, has launched two new endeavors with decidedly upscale themes, both anticipated to shift the retail playing field. In March, the company revealed that it will double organic produce and dairy selections, beginning in its Texas stores. It also opened a 217,000-square-foot behemoth in Plano, Tex., that features a sushi bar, specialty foods and a wine department with bottles ranging up to $500.
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