What's in store...?

Is the face of supermarket retailing changing?

Certainly, when it comes to size, change seems to be in the air and in stores across the country. FMI's annual study of store development trends (Facts About Store Development) found a number of interesting trends that might provide a clear picture of how retailers are trying to match stores to different types of shoppers and shopping trips.

At the top of the list is the sharply increasing number of small targeted stores that opened in the past year. Although these specialty operators make up only two percent of the current store population, nearly 15 percent of the new stores opened in the past year fell into this category. These small stores are focused on three main merchandising areas: gourmet, natural foods and Hispanic shoppers.

The impact of all these new smaller stores was profound on the statistical averages FMI tracks, specifically for store size, which fell to 34,000 square feet. This was the first time in a decade that average store size dipped below 40,000 square feet, but it's not a sign that large stores are going away. Rather, it demonstrates the target marketing that is happening across the country with retailers attempting to find the right store size for different shoppers and different shopping occasions.

An interesting aspect of small stores is the speed with which they can arrive on the scene and begin to alter a market area. On average, it takes 32 weeks to build and open an average new store; but the smaller stores join the marketplace in a remarkable 12 weeks.

What's being put inside all stores today - and what's on the drawing board for the future - paints a clear picture of what works best for today's shoppers. Delis and fresh seafood departments were part of every new store opened in the past year; while ethnic foods departments, floral, take-out food, pharmacies and low-carb sections are planned for 90 percent.

The emphasis on value shopping and speed-of-checkout is also clear. Dollar-item aisles were included in 20 percent of new stores (as compared to just six percent one year earlier). Likewise, the number of new stores featuring self-scanning checkouts jumped to nearly one-third in the new report, up from 17.5 percent a year earlier.

Retailers expect to remodel 10 percent of their stores in 2005, and no doubt, we'll continue to see stores evolve as they probe for winning strategies.

Needless to say, the era of change isn't over.

A New Perspective on Retail Performance

The ability to monitor business performance has been an essential part of the CPG marketer's toolbox since Arthur C. Nielsen created the concept of market share more than 80 years ago. While the original process may seem crude by today's standards - physically counting products on store shelves - it provided important new insights.

Since then, measures of share - market, wallet, stomach and more - have become an integral part of the business lexicon, and the measurement process has become much more sophisticated. However, despite these advances, retailers have lacked a reliable means to monitor total-store market share.

Intense competition between supermarkets, drug stores, discounters, dollar stores and others have caused monumental shifts in the retail landscape, making performance measurement even more challenging. In the dollar store channel, the fastest-growing channel in the U.S., stores are opening at a rate of six per day! And in the mass merchandiser channel, over half of the eight new stores that open every week are supercenters, showing a shift from the traditional discount format to one that includes a grocery component.

As channels continue to blur, it is more important than ever to have reliable, trendable and timely competitive performance benchmarks. Moreover, information must be increasingly flexible to account for each retailer's unique trade area definition, yet also able to conform to industry standard geographic definitions (DMA, MSA, and Scantrack Major Markets)

To address those needs, ACNielsen has now launched Retail ACView. Developed in conjunction with TDLinx, a division of ACNielsen, the web-delivered service provides key quarterly metrics such as: ACV market share trends, channel share trends, store count changes, market entrants and seasonal share variability. With this tool, retailers are able to analyze market share and store count trends in their own custom geographies and across channel definitions.

As the competitive retail landscape continues to evolve, so does the marketer's toolbox. While success ultimately depends on how well retailers connect with their shoppers, Retail ACView is a critical new component in helping them understand their competition and make informed business decisions.