Supermarket market share and experience marketing

About 27 years ago, in response to the rise of discount closeout chains like TJ Maxx, Kmart Corporation created a new concept called "Designer Depot." But they didn't really compete very well, because it was Kmart applying their way of thinking to a different business category. Imagine a Kmart with clothes on pipe racks, everything crammed in, not much room to walk through the aisles. The chain was eventually shuttered. (Note: I have an affinity for Kmart Corporation because it was the successor of the S.S. Kresge Company, the 5 and 10 cent store founded in Detroit, Michigan.)

Similarly, the newspapers are full of articles about the regional trade magazine, Food World, and its annual study of the market, which finds that Giant has lost four points of market share in the past four years. The article from the Washington Times, "Competition gnaws at Giant Food lead," is typical of the coverage. From the article:

Giant Food Inc., the Washington area's largest grocery chain, saw its market share fall 2 percent for the second year in a row this year as new and existing grocery chains continue to wiggle into a larger slice of the market. ...

"Competition has significantly increased within our market," said Giant spokesman Barry F. Scher. Giant, which now controls 38.02 percent of the Washington-area market, down from 45 percent in 2001, plans to respond to the new competition with about a dozen new stores over the next 18 months as well as a 20-store remodeling project.

The first remodeled Giant store will open in Bowie under a new prototype later this summer. The store's design, modeled after a new Millville, Del., store, will include an expanded produce, deli and meat section, as well as a Boston Market kiosk, coffee shop, video rental kiosks and environmentally friendly features such as skylights, Mr. Scher said. The new store design stresses the most prominent features of Wegmans, Harris Teeter and Safeway's new lifestyle concept stores.

In my experience with the Giant supermarket at Tivoli Square my assessment was that the company can't get out of its suburban-centric, car-centric paradigm. See these blog entries for more:

-- That's not my Giant (or "People that "care", but about different things ")
-- (Urban) Grocery Shopping
-- Urbanity, History and the Giant Supermarket at Tivoli Square
-- News for Downtowns searching for grocery stores

It's not just the product offer that differs between stores like Giant and Safeway vs. Whole Foods, Trader Joes, and Wegmans, more importantly it is the experience.

Giant or Safeway can sell more organic food, but it is the experience, the way the products are merchandised, the development of a lifestyle that is more important, just like Kmart proved to be unsuccessful at importing the Kmart way to discount clothing, which still is a profitable business for TJ Maxx 27 years later...

The "new" Safeway Lifestyle concept isn't all that special. And in urban areas, Safeway fails to focus on the value of connection and the ability to open onto the street. Although according to the table in the Washington Times article, Safeway's market share has been increasing (this is one of the markets where they are holding their own--Safeway acquisitions and subsequent management failures in Texas and Illinois destroyed billions of dollars in value...).

Index Keywords: supermarkets