Grocery Retail Industry Trends

Strategic Store Layout

Conventional supermarkets change their layout to steer customers to the highest-gross-margin items (bakery is typically 40 percent, deli is 38 percent, produce is 30 percent) and to new high-margin services such as take-out, natural foods, salad bars, party planning, film processing, DVD rentals, and flowers.

Variety of Store Formats

Several different store formats have evolved recently to take advantage of changing consumer buying habits. A typical new store is less than 49,000 square feet, declining for the first time in five years. The largest section of the new stores is often bakeries (2,100 square feet). New stores frequently offer delis, fast food eating areas, pharmacies, health and beauty products, and gas pumps; 68 percent of new stores have pharmacies.

More Services

Grocery stores are adding new sources of revenue such as pharmacies, banking centers, take-home prepared foods, gas pumps, and dry cleaners. Some stores are going further, opening cafés, restaurants, and instore kitchens with chefs preparing gourmet specialties.

Centralized Buying

In a bid to match the buying efficiencies of giants like Wal-Mart and Costco, more supermarket companies are switching to a centralized purchasing system for perishables. Many other supermarket items are already being bought this way, but regional and local buying have been the norm for perishables.