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The big picture: Wal-Mart is now the biggest competitor to the supermarket industry and, almost single-handedly, is changing the face of the entire retail industry. (From the Publisher).

An article in The New York Times in late February basically summed up the state of grocery retailing in the United States.

The article, which discussed Wal-Mart's desire to attract a more upscale audience, contained one important passage from a consumer in Suffern, N.Y. Asked why she shopped at Wal-Mart, Kathy Sullivan stated the obvious, "Normally, I shop A&P, which is very expensive, relatively."

The grocery industry should look at this woman's comment as a sweeping review of the entire industry. We all know that Wal-Mart has developed a reputation in the industry as a retailer with lower prices. What we must realize, however, is that Wal-Mart is now the biggest competitor to the supermarket industry and, almost single-handedly, is changing the face of the entire retail industry.

Wal-Mart is playing a game with the rest of retail. The chain is winning over new consumers by the droves by opening stores in prime locations, utilizing sound advertising methods and, most importantly, playing to the wallets of the American shopper. Now, according to the Times article, Wal-Mart is stretching its wings to attract more affluent consumers who previously did not view the chain as an option.

Don't think for a moment that Wal-Mart officials are going to be content with the consumer base they already have. Wal-Mart is a $200 billion a year giant, capable of launching devastating attacks on any competitor that gets in its way. Just ask the folks at Kmart. They tried to compete head-to-head with Wal-Mart and ended up in bankruptcy court.

Grocery retailers have two simple choices at this point. Individually and collectively, we can continue to go about our business as usual, hoping that the Wal-Mart phenomenon passes our chains by, leaving operations relatively untouched. More realistically we, as an industry and as separate retailers, can launch an offensive of our own, utilizing smart tactics to show consumers that there are alternatives to the Wal-Mart experience.

First, we can make sure that our stores are up to snuff. Not only does that mean that they have the proper merchandise mix, but also that the stores are well-lit, clean and contain fresh, well-maintained products. Sounds easy, right? Well, a tour through many supermarket stores will find quite a few failing in these areas.

Then, it means housing these stores in convenient locations that makes it easier for the consumer to get in and out of the store on their way home from work or play.

Most significantly, however, it means developing a special place in the consumer's heart. The bottom line is that with the exception of the five or 10 largest chains in the nation, most grocery retailers don't have the resources to fight Wal-Mart on the pricing issue. That means that there has to be another way of winning this fight.

The logical answer is to use a particular department or category, whether it is the deli, bakery, produce section, meat display or a nonfoods section like greeting cards or the pharmacy, to serve as a magnet for the consumer.

What we need to do is create a "Wow!" factor where the consumer who shops a traditional supermarket will be impressed by the experience of that store, whether it is because of convenience, better service, fresher merchandise or a more unique product mix.

The shopper wants to be cuddled and catered. By offering a broad array of product backed by several specialty departments, retailers can set themselves apart from the competition. And, today, more than ever, Wal-Mart is a big part of that picture.

William J. D'Alexander is publisher and editor-in-chief of Grocery Headquarters magazine. He can be reached at 312-654-2300.
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Author:D'Alexander, William J.
Publication:Grocery Headquarters
Date:Apr 1, 2002
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