Food Retailers Should Not Let Up on Efforts to Improve Productivity Amid Wal-Mart Move to Pare Supercenter Growth, Consultant Says

NEW YORK, June 14 /PRNewswire/ — Food retailers who view the recent move by Wal-Mart Stores (WMT) to trim back Supercenter expansion as an opportunity to relax should think otherwise, warned veteran grocery industry consultant and store designer Joseph Bona.

“Don’t rest on your laurels, as this is only a temporary pause,” advised Bona, president of the retail division of CBX (Colemanbrandworx), the New York City-based strategic branding, design and consultancy agency. “And bear in mind that this is hardly a complete retrenchment; they’ll still be opening 190 to 200 U.S. Supercenters this year and approximately 170 annually over the next three fiscal years. When Wal-Mart returns to its full-blown expansion strategy, they will be smarter, meaner, more efficient and ready for the challenge. So, take this opportunity to forge ahead with ideas of your own.”

With low prices widely considered the driving force behind Wal-Mart’s rapid emergence as the U.S.’ leading grocery retailer, supermarket operators desiring to maintain or build their market shares through the end of this decade should continue to strive for differentiation via product offerings, service and the overall store experience, he stressed.

“Just as Target figured out a long time ago on the general merchandise side, the smart grocery chains learned in the last few years that can’t win the battle with Wal-Mart on price alone,” Bona observed. “While not losing sight of the need to remain somewhat competitive on price, those who have succeeded have focused their energies on bringing other values to their proposition. You need to define your own unique strategy for going to battle in the marketplace and then defend it without hesitation or diversion. You need to decide what you will become ‘famous’ for. Establishing key destination categories could help to define a unique point of difference.”

Those points of differentiation, he said, can range from carrying specially cut cheese or salmon flown in daily from Nova Scotia, to offering the area’s widest selection of prepared meals, or fielding updated store environments that are dazzling and easy-to-shop. Such attributes can be further enhanced by providing an extra layer of service, be it well-staffed service departments or employees who cheerfully carry bags out to customers’ cars.

“As demonstrated by the improved sales at national chains like Safeway (SWY) and Kroger (KR), and the ongoing success of regional powerhouses like Publix and Wegman’s, these distinguishing attributes need not only be the province of high-end specialty markets,” Bona said.

Elaborating on some of those differentiation points, he noted that time- starved families will continue to forgo ingredients in favor of meal solutions, thus shopping more frequently for fresh items that will be prepared for use that night. “Stores that make perishables ‘the hero’ will continue to drive momentum vs. those that emphasize ingredients,” Bona commented.

“Despite the movement to perishables,” he added, “better performing chains have also begun to understand that their stores don’t start and stop with the perimeter. Center store doesn’t have to be a mundane lineup of aisle after aisle of metal shelving. Layout, lighting, color, graphics and product specific fixturing will be as important as product, placement, promotion and price. Also in the center store, the strong performers have learned the value of building their offering of better quality private label groceries, providing another point of differentiation and the ability to counter the margin erosion arising from their moves to be more price-competitive with Wal- Mart on national brands.”

As for the overall store experience, he said that today’s consumers have a high expectation of the “minimum threshold” for retail environments. “Customers are telling us the overall store experience does matter,” noted Bona, who, over the course of his career, has created new prototypes for such food retailers as Stop & Shop, Shaw’s, Safeway Canada, and Japan’s Jusco, and is currently working on the new environment for Pathmark Stores.

“Consumers have many choices where to spend their hard-earned dollars. As demonstrated by the success of retail brands like Starbucks, Abercrombie & Fitch and Apple, those merchants who understand the importance of creating an engaging and memorable retail experience will be the ones rewarded with higher customer loyalty while also attracting a wider audience,” he continued. “A few years ago, critics thought that brick and mortar would be overtaken by ‘e- tailers,’ but brick and mortar has come back stronger than ever as customers expect to be seduced by the environment in which they shop. Supermarket shopping will always be a chore, but the experience doesn’t have to be boring – one of the vital considerations for any operator looking to hold their own against Wal-Mart.”

About Colemanbrandworx

With clients such as Johnson & Johnson, Nestle, General Mills, CadburySchwepps, Petro-Canada and ADP, CBX (Colemanbrandworx) is a fully integrated creative agency specializing in consumer brand design, retail design, and corporate identity design. At present, the CBX Worldwide Partnership LLC has offices across the United States, the UK, the Netherlands, Australia, Chile, Argentina, Mexico, Brazil, and China.

CBX

CONTACT: Media, Joseph Bona, president, retail division ofColemanbrandworx, +1-212-404-7970; or Bill Parness, +1-732-290-0121, or MartyGitlin, +1-914-528-7702, parnespr@optonline.net, both of Parness & Associates,for CBX