WASHINGTON -- Food retailers are differentiating their businesses from competition by launching target market-focused stores and expanding specialty services, according to the just-released 2005 edition of the Food Marketing Institute (FMI) study Facts About Store Development.
Shifting consumer behaviors and attitudes, shorter product lifecycles, new store concepts and competitive pressures from a broad range of retail formats are driving a fundamental change in the way food retail companies do business, said FMI Senior Vice President Michael Sansolo. [image-nocss] There is no longer a one format fits all' supermarket. Understanding the specific needs of your targeted consumers and delivering what they need are essential for success.
Surveyed companies express a strong interest in developing niche stores in order to reach highly selective consumers and broaden market share. They are experimenting with a variety of formats, even offering multiple store types in the same market. Gourmet/specialty is the most popular format, offered by 66.7% of companies, followed by natural/organic (50%) and ethnic (25%).
Food retailers are also relying more on specialty services and departments to attract and retain customers, according to the report. Notable trends:
Space for cooking demonstrations is offered by 72% of new stores, which is being driven by consumers who have less cooking experience and consumers who seek to broaden their range of skills and view cooking as a special event. More than half of companies (53.7%) have a coffee bar in at least one store and slightly fewer (52.2%) have installed dollar aisles, addressing consumers' dual desires for convenience and value.
In-store pharmacies (55.7%) continue to be a popular feature. Besides serving as a cornerstone for consumer health and wellness programs, they have become integral in the marketing of health and beauty care products.
One-fourth (25.4%) of companies offer gasoline sales and nearly one in five (18.3%) feature a conveniently located quick stop area where shoppers can purchase household staples and quick meals, which enhances one-stop shopping appeal.
The addition of low-carb foods sections appears to be on the decline, with fewer than half (49.4%) of all companies now offering them.
Other trends include:
Magazines (95.5%). Greeting cards (94%). Deli (91%). ATM (85.1%). Fresh, prepared foods for takeout (83.6%). Private-label products (83.6%). Ethnic foods aisle/section (79.1%). Floral/plant shop (76.1%). Fresh seafood (74.6%).The report shows that remodeling is the construction activity of choice for food retail companies. Remodeled stores represented 5.7% of all stores (up from 4.9% in 2004), while new stores comprised 3% (flat at 3.1%) and store closings 1.9% (down from 2.5%).
Nearly 60% of companies invested in the remodeling of at least one store. The reasons for making this type of investment include: a company policy to remodel stores after a certain number of years, anticipation of competition entering the market and to meet the needs of a changing customer base. Of remodeled stores, 7.3% included expansions.
The median cost per major remodel was $44.00 per square foot. The median cost of constructing a new store was $124.86 per square foot.
The typical supermarket size is 48,175 square feet, with 72.4% of the store dedicated to selling space, according to the report. These stores carry a median of 45,000 items, have 10 checkout lanes and conduct 15,345 transactions per week.
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