Structural And Marketing Changes In U.S. Retailing, 1987-1997, Foundation For The Future
U.S. Food Retailing has undergone tremendous structural and marketing change in the past decade. Marketers of consumer goods are increasingly competitive in gaining the attention of a more time-starved, demanding, buyer savvy consumer. As a result of these and other macro changes in the marketing environment, retailers have been forced to add, delete, modify, or create new techniques to deliver their products. More specifically, in the channels of grocery, drug, and mass retailing, manufacturers and retailers alike are in constant search of the "store design of the future" that will generate consumer excitement and sustain and increase sales. This foundation study investigates specific changes in marketing and structural techniques in these three channels of trade from 19871997. The research methodology employed was that of secondary data collection, analysis, and synthesis. Insight gained from examples and anecdotes taken in sum across these three channels formed the basic trends identified in each channel. From this point, possible conclusions and implications for the future were drawn. These possible outcomes and predictions were tested against a number of retail executives at the Food Marketing Institute in May of 1998. Following expert advice, final predictions for the store design of the next five years were outlined and summarized. Main results of this foundation study are best summarized in the three channels discussed. First in the grocery trade trends driving the past ten years include: grocery store numbers in steep decline, store openings and remodeling continue, hiring and retaining quality employees a challenge, home meal replacement dominates landscape, store-within-a-store designs are popular, grocery store operators need food service expertise, consumer direct an area of investigation, centerof-store is concern spot, and loyalty marketing on the rise. As a result of analysis and discussion, conclusions for the future include: store-within-a-store dominates grocery retailing, an "inversion" of the store draws attention to prepared foods, a movement of physical locations will better serve a busy consumer, more alliances and partnerships to improve efficiencies and deliver appropriate products, innovation imperative, consumer direct remains uncertain. In the drug store retail arena the following trends were identified: total stores in decline, sales in precipitous increase, consolidation dominates, convenience is critical, professional health care is a differentiation point, pharmacies work on "warmth", stores are easier to navigate, front end merchandise gains prominence, store-within-a-store designs on rise, home health care becomes a key deliverable. These trends combined with market forces lead to the following trends over the next five years: product diversification is critical to long term sustainability, consolidations continues in dramatic fashion in next five years, "me-too" retailing is severely punished by demanding consumers, customer convenience drives store layout, Home Health Care and Wellness dominates all departments. Finally trends identified in mass retailing include: explosive growth in terms of area and store numbers, a plethora of store formats dot the landscape, convenience again drives layout, store-within-a-store designs gain more popularity, foodservice becomes an increasingly important business. Projections for the next five years in mass retailing include: a continued rising interest from consumers to have food in mass retail stores, product adjacencies and bundling key to meeting customer convenience, stores will become more simple in layout, higher margin products will drive profitability, and unique mass retailers will find their own niche in market. These conclusions provide a solid foundation from which to frame discussion of the consumer retailing marketplace. It is recommended that primary data studies be conducted to confirm and/or modify these implications and predictions. These studies should be conducted on regular basis to gain a complete understanding of this rapidly evolving environment.
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