Muncie Times, Muncie, Delaware County, 1 March 2001 — Page 39

The Muncie Times, March 1, 2001, page 39

Department stores jump into supermarket competition

The highly competitive supermarket industry is getting more crowded with the addition of the nation’s three largest discount retail chains, said a Ball State University expert. With Wal-Mart, Kmart and Target, the nation’s largest discount chains getting into the grocery store business, it could push smaller chains out of business, James Lowry, a marketing professor ,said. “Right now Wal-Mart is the largest retailer and the second largest seller of grocery items,” Lowry said. ‘That will change as it expands into more and more markets in the coming years. “General merchandise retailers found the average consumer will to a discount store once or twice a month, but if add groceries, they visit at least once a week. “By combining general merchandise with groceries, you draw more people in more often. Overall, it is a more productive situation for these retailers.” Wal-Mart Neighborhood stores, which at 40,000 square feet are much smaller than any store it has opened before are intended to fill some of the gaps between its’ big, out-of-town supercenters, which sell a mix of general merchandise and groceries, and regular grocery stores.

Lowry said the new retail grocery stores are an assault on the supermarket industry, signaling an attempt by Wal-Mart to establish itself as the nation’s No.1 grocer. Not to be outdone, Kmart has its Super K grocery/general merchandise combination and Target is opening its upscale Archer Farm Store to go along with its Big Target supercenters. All the competition means consumers will continue to see relatively inexpensive food items on the shelves, Lowry said. “There is a lot of competition out there to keep prices low and provide consumers with better value,” he said. “Retailers realize that you have to give consumers what they want, when they want it.” Lowry also said some small grocery chains or independents will disappear, by merging or being purchased by larger and wealthier competitors, or simply going out of business. “Companies will have to find a niche. In Indiana, Marsh has gone upscale in larger communities and cater to those people. They are trying to attract customers who might not frequent a Wal-Mart or other discounter.”

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