Several consumer surveys taken over the past few years indicate a growing indifference when it comes to shopping for food at a supermarket.
The store's aisles are either too narrow or too crowded, the checkout lines are too long, and when it comes to pricing well, there's always Wal-Mart.
Newer, well-designed supermarkets are only part of the answer to such concerns voiced by shoppers.
It's what goes inside those stores that matters a lot.
And that is something that keeps supermarket executives awake at night.
Responding to the challenge of how to keep existing customers and draw in new ones has set off one of the biggest marketing battles pitting investor-owned giants such as Safeway, Kroger, and Albertson's against not only priceleader Wal-Mart, but also against regional privately- held chains such as Raley's and Scolari's.
Safeway is developing a strong brand identity in its packaged meats.
All of the chains, including Raley's and Scolari's, have a wide array of their own labeled products.
And virtually all place a lot of emphasis on their fresh produce departments.
Quality meats and fresh produce have not been an area where the Wal- Mart supercenters have proven they can be competitive.
But when the chain rolls out its "neighborhood market" stores in the Truckee Meadows in the next couple of years, that could change.
Most securities analysts say it is a given that none of the national branded supermarkets are going to beat Wal-Mart and its supercenters when it comes to saving money on groceries.
So, if you can't beat your competitor on price, you crawl inside your customer's head to find out what will make that trip more pleasant for them and more profitable for you.
"All the leading supermarket chains seem to be focused on changing the atmosphere inside their stores," says Erin Smith, an analyst at New York-based Argus Research."The traditional grocery stores are simply not that appealing to today's shopper." Recently,Albertson's installed self-checkout lanes inside most of its Truckee Meadows stores in an effort to cut down on time the shopper must wait in line.
But this feature also portends a reduction in the number of frontline clerks and,when self-checkout stations are spread throughout the chain's more than 2,000 stores nationwide, it is evident there will be future cost savings from not having to hire as many front-line clerks.
Albertson's gets good marks from Argus' Smith,who said the chain's loyalty card program is already proving successful in helping the company better understand which products its customers want.
"Albertson's '10 items for 10 bucks' promotion is all derived from the data gathered whenever a customer hands the clerk their loyalty card," she says."That information is fed immediately into a database and the company can respond to that quickly, either in a local market, regionally or nationally." Safeway has chosen to stamp an upscale brand on its stores.Older stores typically were about 45,000 square feet in size.
The new prototype as depicted by the company's newest store on Vista Boulevard in Sparks is called Safeway's "Lifestyle Store" which features a warm and inviting decor with special lighting to highlight products and departments.
The company is also developing a branded identity with its meat and is expanding products offered in its deli and food service departments.
Safeway, like the other large grocery chains, seeks to provide a wider variety of product in a more pleasant atmosphere that will, hopefully, result in the customer spending more time in its store.
But the large chains also know that getting the customer to spend more time and thus more money in their stores is a difficult challenge.
Chris Hoyt heads a packaged goods training organization in Scottsdale,Arizona.He believes if supermarket chains do the right things, they can build customer equity that will ultimately transcend pricing differences.
"The more equity one builds,"he contends, "the less dependent on price one becomes." How is this accomplished? "You ask your customers what they expect, what they would like to see improved,why they shop other channels,"he says."Then you enlist the support of your suppliers who provide data and intellectual capital.
They have unparalleled marketing expertise and they want to help at every turn.
That's how you begin to build sustainable value." That is precisely what the Sacramentobased Raley's supermarket chain has done.
Two months ago, the company, which has been tabbed three times by Consumer Reports magazine as the top grocery company in the nation, announced it was dropping prices on some 5,000 grocery items.
When asked how Raley's determined which items should be repriced, spokeswoman Jennifer Ortega replied,"We listened to our customers, worked with our store managers and then with our vendors to come up with a list.
And that list continues to grow.We have just expanded it to 7,000 items." Pricing is just one part of Raley's longerterm strategy to both retain and bring in new shoppers,Ortega says."We do have a strategic plan," she says, and Scottsdale's Hoyt says the fact Raley's is a privately held company works well in its favor to succeed.
"The other big chains Safeway, Kroger (Smith's Food and Drug is part of the group) and Albertson's all have to meet those quarterly financial goals,"he says."The pressure mounts from large shareholders for them to perform.
That's why I am pessimistic about their chances to develop a long-term plan and see it through.
If your owners don't think you are producing results fast enough, senior management is gone and the next group comes in to try something else." Hoyt says the supermarket giants have one huge advantage over competitors such as Wal- Mart and Costco.
"Their advantage has always been location," he says."On average, the closest supermarket is five miles from the customer's home.
The closest supercenter is 13 miles.
The philosophy has always been to build the supermarket and they will come.
Today, each company needs to find ways to differentiate itself from each other." Self-service checkouts are but one avenue.
The next wave to be felt in the Truckee Meadows is likely to be 42-inch plasma TV screens throughout the stores where sophisticated "advertorials" can be viewed, pitches can be made on certain products, and current news and weather information can be carried as well as consumer educational content.
Boise-based Albertson's has recently entered into an agreement with Premier Retail Networks to develop such in-store narrowcast networks.
The grocery chain with 1,715 stores across the country is also in the process of rolling out an automated pharmacy system that will provide access to customer prescriptions, account information, and pharmacy records at any of the company's pharmacies via phone or computer.
"It's a long-term strategy designed to win customer loyalty," says Larry Johnson, the company's chief executive officer.
