Stop & Shop refines balance between food, GM

DSN Retailing Today, May 23, 2005 by Mike Duff

While many supermarket operators are getting into general merchandise, few are integrating food and nonfoods with as much care as Stop & Shop. It's one thing to add departments, it's another to spend months and even years testing and fitting general merchandise into the traditional supermarket format.

Stop & Shop remains a neighborhood supermarket format, but it has added quite a bit to that concept, and continues to roll out new store formats despite the fact that its parent, Ahold USA, has had critical accounting and financial troubles over the past couple of years.

The company developed two stores, one each in Massachusetts and New York, to test a greatly expanded general merchandise section including a major seasonal presentation and significant media presentation ranging from books and magazines to DVDs. It also tested cooperative arrangements with specialty retailers, experimenting on a home office/stationery section with Office Depot and a toy section with Toys 'R Us.

One of those cooperative initiatives was expanded, although with another partner, just this year. From now through July, Stop & Shop will roll out to all stores a co-branded Staples home office/stationery section. The sections range in size from 40 linear feet to 80 linear feet and feature Staples and national brands of school and home office supplies. The assortment will include 500 to 1,200 items, depending on the size of the supermarket.

The rollout will be across the Stop & Shop chain in New England and the New York metropolitan area. It will also include Ahold's Giant banner, which serves the region between Philadelphia and Washington D.C.

A second initiative at Giant reorganized the health and beauty aids section beneath signage resembling a large collar hanging from the ceiling embossed with the theme "Relax. Renew. Revive." A TV provided customers with beauty advice and in stores with a significant African-American customer base sections included about 24 feet of ethnic beauty products. The adjacent pharmacy department featured satellite displays of more health and beauty products.

Stop & Shop units rolled out over the past couple of years include both the full-line general merchandise expansion and the "Relax. Renew. Revive." HBA departments. To maintain reasonable store size, the chain has edited its grocery and other food departments. Like supercenters, Stop & Shop operations confine selections to higher-velocity product and don't necessarily carry all line extensions, even in major brands.

This makes the Stop & Shop approach distinctly different than that of supermarket operators who are attempting to position themselves against supercenters and warehouse clubs by adding new service counters, expanding perishables and broadening selection to include more gourmet, exotic and ethnic products.

That's not to say that Stop & Shop has ignored those elements of the operation, it simply edits them more closely than some of its supermarket rivals.

It also has maintained the familiar and, to many consumers, comfortable supermarket environment. Even its larger stores don't approach the scale of formats such as Kroger's marketplace or Wegmans' mega-supermarkets.

Ultimately, Stop & Shop has remained a supermarket even as many food retailers have moved away from the traditional models. Indeed, BJ's actively targeted supermarkets as an antiquated retail platform as it revised its approach to food and general merchandise.

The careful integration of food and general merchandise operations makes Stop & Shop a one-stop shopping solution for most of the food-related visits customers make, which should help keep them out of supercenters and warehouse clubs while cementing stores in the community and keeping them easy to shop.

STOP & SHOP (1)

2004 SALES*: $16.1 billion

NUMBER OF STORES: 556

Source: Company reports

(1) Div. of Ahold

* For fiscal year ended Jan. 2, 2005