The Supermarket's Big Change

The supermarket is more than a store.

It is the elegant agora of the new suburbia, the font of everything from Kix to Cheer, and the source of no small amount of corn -- including the gag about the housewife whose shopping cart does $40 an hour. The American housewife thinks nothing of spending an average $1,200 a year in the super market. Altogether, U.S. food stores do a $60 billion-a-year business, as much as the steel and auto industries wrapped together.

Supermarket business is still expanding, but it is not as super as before. Last year fewer new supermarkets opened than at any time since 1947. Sales of the ten largest chains rose only 3.3% above the 1962 mark. And the biggest of all retailers, the Great Atlantic & Pacific Tea Co., registered a decline.

Comeback on the Corner. The nationwide chains are built to the hilt and boxed in by several kinds of competition. They are often outwitted by smaller, local supermarket chains--such as Florida's Publix, Texas' J. Weingarten Inc., California's Lucky Stores--whose managers are more sensitive to neighborhood tastes and do not have to clear decisions with far-off headquarters. The chains are also being nicked by a new phenomenon, the discount food store, where housewives pick their packaged goods from open packing cases instead of neat shelves, and pay prices generally 6% below those in the chains. Most of all, the national supermarkets are giving ground to the little man they had once almost obliterated, the corner grocer.

Though many of the struggling "mom and pop" groceries have gone under, the surviving independent grocers have become bigger and smarter. They have banded into groups, such as the mid-Atlantic region's Foodland Stores and Texas' Minimax. These buy in carload lots, rent computers to watch inventories, and hire experts to keep their books, plan their ads, remodel their stores. The "voluntary chains" increased their share of U.S. food sales from 29% in 1947 to 49% last year.

Not by Bread Alone. Much of the independent grocers' gain has come at the expense of the 4,500-link A. & P. chain, whose sales slipped 2.3% last year, to $5.2 billion. "Image" means much in the supermarket business, and A. & P.'s image sometimes looks old. It appeals to shoppers who fondly remember A. & P. for the bargains it offered during the Depression days. But it has less attraction for the affluent 25-to-40 age group, which buys half of the nation's groceries. To tempt this younger crowd, A. & P; belatedly started distributing Plaid Stamps in more than half of its stores. But that forced the com pany into a 2% price rise, which only irritated the longstanding, economy-minded customers.

Lately A. & P. has started up the comeback aisle. At the cost of lower earnings, it rescinded some of the price rises. Last year it brought in a 52-year-old president, Melvin Alldredge, who, unlike Chairman lohn D. Ehrgott, 68, has worked as an A. & P. store clerk and manager. And it has begun to stock more nonfood items, from towels to toys, which carry markups as high as 42% v. only 16% for the edibles.

Also Decentralizing. Other national chains are diversifying beyond their bread-and-butter business. Second-place Safeway (1963 sales: $2.6 billion) has opened a group of Super S stores that sell sporting goods and small appliances instead of groceries. Third-ranked Kroger now operates 131 drugstores. Two weeks ago, Grand Union announced a 6% sales gain (to $667 million in 1963) but credited one-sixth of its revenues to its nonfood discount stores.

Many chains are decentralizing to give more authority to their store managers, are paying them as much as $22,400 in annual salary-plus-bonus. Managers cultivate local trade with a host of gimmicks: some have opened soda fountains in their stores, and the Colonial chain offers chairs and tables for weary shoppers to rest beside the soft-drink dispensers. Stores are also staying open longer. Kroger two weeks ago started doing business on Sundays in Ohio, and Grand Union in Norfolk stays open 24 hours daily to accommodate the round-the-clock shipyard shifts.

Ironically, supermarkets are emulating the corner grocers. Chains such as Chicago's Jewel Tea Co. are experimenting with "pantries" that are one-fifth the size of usual supermarkets and are conveniently located in high-rise apartments. Bigger stores are also considering clearing their shelves of slow-moving items. They stock no fewer than 56 brands of pickles and 97 kinds of detergents, but about half hardly sell at all. The supermarketeers are now talking about making a higher profit with a smaller selection.

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