Small Stores Getting Bigger Share of Business
By George Anderson
The retail grocery business, it seems, has moved into the age of the very big box.
Everyday, the headlines scream out the same thing. The Supercenters are coming! The Supercenters are coming!
That may very well be true, but as Willard Bishop Consulting’s (WBC) Store Format report points out, small units, including convenience, drug and dollar stores, are gaining business as they broaden their focus to emphasize consumables.
According to WBC, convenience, drug and dollar stores captured 18.2 percent of grocery and consumables’ dollar share in 2003.
Because of their smaller size, these stores are attractive to consumers on fill-in/convenience shopping trips. Even though these outlets tend to cater to smaller transactions, it’s clear that they already sell a significant share of groceries and consumable products, even when foodservice is removed from the convenience store mix (which was done in WBC’s analysis).
Looking to 2008, WBC projects smaller stores increasing their dollar market share to 20 percent. It expects to see increases in dollar and drug store sales offset an expected modest decline in convenience stores’ share of market.
Moderator’s Comment: What do you believe accounts for smaller stores growing market share? Is their small size
a source of competitive advantage?
WBC’s numbers also show that smaller “traditional” grocery formats, including limited assortment stores, made up 4.3 percent of total dollar sales in 2003.
Looking ahead to 2008, WBC projects limited assortment stores to maintain their present share of the market. –
George Anderson – Moderator
One reason for the growth is all the cheap commercial real estate available after a Supercenter opens. Supermarkets can be subdivided up into two or more smaller stores, such as dollar stores, etc.
Ron Margulis makes somes good points above. One thing I would add is that as stores get bigger, sales per sq. ft. gets smaller. You would be surprised at how many retail executives don’t understand that.