Supermarkets strike back with hybrid - hybrid stores and marketing - Editorial

Discount Store News, June 1, 1992 by Tony Lisanti

Everyone loves to hear a story about a new retail concept, right? Well, guess what, I've got one for you.

This concept is particularly interesting because it's directly related to the results of a research study on Alternative Store Formats released last month by the Food Marketing Institute during the supermarket industry's annual convention.

The FMI study analyzed the new competitors threatening supermarkets (primarily warehouse clubs, supercenters, and deep discount drug stores) and offered several suggestions for supermarkets to offset the onslaught.

And that's what this new concept is--one supermarket chain's reaction to the mounting competition from alternative retail concepts. It was developed quickly and quietly by ShopRite, the largest chain of supermarkets in the Northeast, in the small, affluent suburban New Jersey town of Bernardsville. It is located next to a full-size ShopRite Supermarket and is appropriately called "ShopRite Annex." It occupies the former site of Jaeger Lumber, and according to a source, ShopRite grabbed the location before other interested chains including CVS, could.

What's so special about the ShopRite Annex? Let's take a look at this hybrid concept which combines a bit of a drugstore, warehouse club and discount store. In other words, aggressive pricing, value, convenience, deep selection and brand names.

The store, which currently utilizes about 20,000 sq. ft., is promoted as a law price neighborhood drug store. Its tag line states: "The lowest prices that ShopRite is famous for, plus service and variety of a neighborhood drug store." ShopRite Annex is divided into several key high-traffic departments:

* Pharmacy--A full pharmacy is promoted by coupons offering $3 off any new or transferred prescription.

* Movie rentals--A complete video rental department promotes current releases at 99 cents.

* Books and magazines--Like a discount store or warehouse club, bestsellers are heavily discounted at 30% to 40% off list price.

* Health and beauty care--about one-third of the store is devoted to wide selection of name brands in standard sizes in all categories.

* Greeting Cards--This department is consistent with what other types of retailers offer.

* Seasonal--An impressive selection of plants, seed and fertilizer is currently being merchandised along with resin chairs, grills, and accessories.

* Giant Value--This is, perhaps, the most interesting area of the store. The last two aisles are set up like a warehouse club with a limited selection of soda, cereal, coffee, household cleaners, paper goods, and condiments in large sizes and multipacks.

This hybrid test concept, which is very similar to the new F&M deep discount drug store prototype, is further evidence of the blurring of retailing. It should be a remainder to everyone that the supermarket industry has begun to flex its muscle and react to the challenge of discount stores and warehouse clubs.

I wonder how many similar concepts are quietly sprouting up around the country? I bet there are quite a few. Beware.