LA TIMES: Safeway tries downsizing to better fit local needs

The grocer is testing a small-store concept that offers convenience. Wal-Mart has plans to do the same.

By Jerry Hirsch, Los Angeles Times Staff Writer
May 17, 2008

Some of the world's retail titans are headed for a battle over smaller grocery stores.

Safeway Stores Inc. jumped into the fray when it quietly opened a 15,000-square-foot store named the Market by Vons in Long Beach on Thursday as part of a test to see whether California shoppers like smaller neighborhood stores.

THOUGHTS

• Smaller stores can be closer to consumers
• Smaller stores have more location options [big store locations have large land requirements]
• Closer community connections [a community store will draw more local shoppers. Instead of a three mile shopper radius it might be less than half a mile. You will see more people you know.]
• An aging population prefers smaller stores. [Large stores are hard to navigate and the parking situation can be challenging (are there enough handicap parking spaces for peak shopping times at bigger stores?). Small local stores may be close enough to walk to. This will allow seniors who may not drive or no longer have cars to continue living independently.]
• Smaller stores will have a smaller selection [The average number of SKU's a person/family buys in a year is around 300 (source). A large assortment is not necessary for most categories. Some categories are dominated by a brand and size (Ex: Ketchup). Store assortment should be determined by the consumers that shop there.

OTHER OBSERVATIONS

More bicycle racks would be helpful.

• Stores can serve more customers with a smaller parking lot if people who live close by ride a bike.
  
• This reduces traffic as well as improves air quality.
  
• The fitness level of people who bike is improved.

Here in the metropolitan Detroit area Kroger dominates in supermarket sales. When Farmer Jack left the market Kroger acquired the best locations. This increased Kroger market share and keeps competitors with similar store size from expanding here. There are few locations where new 40-60,000 square foot stores can locate. The small store format allows location choice for firms that want to enter the metro Detroit market.

What are your thoughts?