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The incredible shrinking grocery store Add to ...

When it comes to grocery stores, size matters.

The big-box chains such as Wal-Mart, who have established themselves as competitive food retailers, aren't quite passé yet. But a new trend has emerged – driven on one end by aging customers who are downsizing and on the other by urbanites, often childless, who make cooking only an occasional habit.

What it's adding up to is a shift toward smaller stores, particularly in urban centres. Grocers are moving away from 100,000-square-foot monster spaces (which is where the average Wal-Mart or Highland Farms grocery stores sits) to stores in the 30,000- to 50,000-square-foot range, with boutique operators coming in at 15,000.

“We're seeing size come down a bit,” says John Scott, head of the Canadian Federation of Independent Grocers. “The consumer doesn't want to feel like they're going up and down a football field,” he adds, speaking specifically about baby boomers crossing the threshold into retirement.

Today's urban shoppers – whether they're 35 or 65 – are generally looking for two things in a grocery store: prepared food that tastes homemade and household staples such as paper towels and dishwashing detergent. They want a shopping experience that's more contained but still meets all their needs.

“These people don't want to make all their own meals, and they have small pantries, so they're not stocking up on food,” says Mr. Scott.

“But they need to buy toilet paper, too. They just sure as hell aren't going to get into a car and go to a suburb to pick it up,” he says.

“Big chains and independent stores are saying, ‘How do I satisfy that demand?'” says Mr. Scott. “And so we're seeing combination stores with prepared foods and traditional shopping items.”

Chains are recognizing that their future depends on smaller, better organized, better supplied stores, says consumer behaviour researcher Paco Underhill, who has been consulting on grocery store developments for some 25 years, including the newly opened Longo's flagship store in downtown Toronto.

Improved supply-chain management, he says, makes it possible for grocers to carry a wide range of products – from pre-made lasagna to laundry soap – without using valuable retail space for storage.

The new Longo's flagship location, which opened its doors in the basement of the Maple Leaf Square office-residential-hotel complex to much fanfare in October, strikes the balance that urban consumers are demanding, says Mr. Scott. It offers a vast selection of prepared food as well as aisles well-stocked with household staples.

At 48,000 square feet it's much larger than Longo's Market stores, which target office workers on lunch breaks and busy commuters en route to their homes. But it's a far cry from a Loblaws-run Real Canadian Superstore, which can be as large as 200,000 square feet.

Longo's satisfies customers' demands for prepared food with a stone oven churning out pizzas, a 40-item salad bar and a glass display case featuring about a dozen high-end, house-made dishes such as stuffed chicken breast and cranberry-studded rice. (Customers will find dozens more pre-packaged meals throughout the store.)

Grocers are dedicating more space to prepared food, says Mr. Underhill, not only in response to condo living but also as a direct result of the changing status of women.

Back in the 1930s, “I could have stopped a woman on a Tuesday and she'd know what she was feeding her kids for dinner on Thursday,” says Mr. Underhill, author of the recently published consumer behaviour book What Women Want: The Global Market Turns Female Friendly. “Today, if I stop a woman she probably doesn't know what she's feeding her kids tonight.”

The 70 per cent of women working outside the home in North America still need to feed their families, he says, and that's where stores like Longo's, with an emphasis on high quality prepared food, come in.

But simply packaging food made behind the scenes won't cut it in the increasingly competitive grocery space, says Mr. Underhill (Longo's set up shop within walking distance of Loblaws and Sobeys stores).

“We're seeing these offerings as entertainment,” he says, “meaning it's a sensual experience.”

Which is why Longo's' oven churns out pizzas in the middle of its store, easily visible to shoppers making their way through the aisles.

And in the back of the store is an area known as the Loft, with a Starbucks, cooking class area and a fully functioning bar called Corks with a sizable seating area.

To make room for all that prepared food, grocers are shrinking space devoted to non-food items. Sales on such goods as laundry soap, storage bags and aluminum foil are falling by roughly 5 per cent a year, says Mr. Underhill.

“We've trained people to shop for these things in a wide cross-section of places, and mass merchant retailers are selling these at aggressive discounts.”

On the flip side of all of this, Mr. Underhill sees suburban stores going in a different direction altogether.

“Globally we're seeing them trending toward customers e-mailing or calling in a shopping list and then picking it up at the door.”

Coming to a store near you



Grocery store guru Paco Underhill on three trends he expects to see in North American supermarkets:



Hybrid stores: Think part traditional shopping, part Internet shopping. He expects customers to shorten trips by submitting shopping lists in advance to stores and selecting only certain items – produce and meat, for instance – themselves when they pick up their order.



Refillable containers: He expects a bulk shopping model – widespread today for dry goods – to take off for household supplies such as laundry soap, where shoppers will bring back large containers for refills.



Private label ‘stores’: Imagine all of Loblaws’ President’s Choice products in one spot within the store. “Rather than shelving these products throughout the store, they’re concentrated in one area, so the shopper looking for the best price sees it all together,” says Mr. Underhill.



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