For groceries, take your pick

Smaller grocery stores move in, boost consumers' options

Grocery shopping used to be a pretty simple affair.

You would go to your favorite store and load up enough milk, eggs and bread to last your family for the week.

These days, many families stock the pantry using a different routine: a trip to Wal-Mart for bargain prices on paper towels, an excursion to Whole Foods for organic or specialty produce, and perhaps a stop on the way home at BJ's for a family-size box of Hot Pockets and a bunch of fresh flowers.

For shoppers today, loyalty is out; diversity is in.

"Before, shoppers had two kinds of shopping trips -- the stock-up trip and the fill-in trip for anything like milk or bread or eggs," said Jon Hauptman, partner for Chicago-area retail consulting firm Willard Bishop. "Now there are probably nine different types of trips. ... Shopping now is driven by need as opposed to just filling up the basket."

That kind of shopping is the opposite of what the grocery industry was expecting just a few years ago.

When Wal-Mart and Target pushed into the grocery business, traditional chains worried themselves over competing with Wal-Mart on price.

The result was homogenous shopping: Whether a store had "Kroger" or "Food Lion" on the sign out front, the insides of the stores were pretty much the same.

In the Triangle, five major chains -- Food Lion, Kroger, Harris Teeter, Lowes Foods and Winn-Dixie -- had 85 percent of the market share.

But nowadays there are a lot more options. Winn-Dixie left the region, and the four remaining chains only control 79 percent of the market.

Newcomers in the local grocery market have largely been smaller chains or specialty stores such Earth Fare and Trader Joe's.

Traditional grocers are remodeling and building stores and experimenting. Food Lion recently announced plans for the Triangle's first Bloom store, which will target younger, tech-savvy shoppers.

"Shoppers have more choices than ever before," Hauptman said. "Success -- and in some cases even survival -- for traditional grocers is that they have to come up with new ways to attract and keep their shoppers."

The result of all the innovation and competition has been more selection and competition for the consumer.

"You're finding more price competitiveness on core commodities," Hauptman said. "But also, in order to differentiate, a lot of retailers are out there with very unique variety."

Stores are going further, with special services, online grocery shopping and even diet plans.

"Our shoppers have very hectic schedules, so we're trying to make shopping as simple and customer-focused as possible," said Harris Teeter spokeswoman Jennifer Panetta. "Now you have to be the best at customer service -- that's variety, quality and one-stop shopping."

Quality vs. value

And as more people really begin to focus on health and nutrition, the number of shoppers willing to try new options is increasing, said Whole Foods spokeswoman Teresa Jones.

"I do think there are customers for whom it is all about value," she said. "Those are people who we are not necessarily going to be able to convince. ... But we're seeing definite growth with all of the stuff that's going on -- meat recall after meat recall, other concerns for safety about the food supply. More and more people are concerned."

Raleigh nursing student Alisa Shepard says she shops at Wal-Mart when money is tight but prefers to go to The Fresh Market when she can afford it.

"I'm just trying to eat better and be a little more health conscious," she said. "I'm studying nursing, and I read about how important nutrition can be to you."

As long as shoppers are willing to shop at several stores and pay higher prices for premium goods, retailers will have a multitude of areas in which they can compete, said Food Marketing Institute spokesman Bill Greer.

"I always go back to the consumer," he said. "Those retailers who are best able to serve their immediate consumers are going to be the winners."

As competition intensifies, customers will be won or lost at the local level. Many big chains are increasingly empowering managers at individual stores with more buying decisions and more power to fix problems for customers.

"The average store draws customers from within a two- to five-mile radius," Greer said. "You've got to keep a sharp eye on what they're buying and what they're not buying."

Despite the heavy competition and changing market dynamics, Hauptman said there's room for growth in the specialized grocery business.

"There is a concern about food inflation, and there is a concern that the economy is not in great shape," he said. "However, I think typically what that means is people end up spending less eating out and spending more on groceries."