The year of the supercenter
Welcome to the world of retail statistics. That’s what I tell every editor the first time they’re introduced to the daunting task of compiling the annual Retailing Today Top 150 report. Despite having to decipher the cryptic ways in which most retail accountants present their facts and figures, it’s deep within the 10-Ks, 10-Qs and Proxy Statements that we get the ammunition needed to compile our Annual Retailer Ranking.
And when the whole thing is done, one of the most valuable byproducts of combing over reams of annual reports is the snapshot it provides us of year-over-year changes in the overall retail sector—only a portion of which make it to our Top 150 ranking.
The type of thing you’re likely to notice is that in 2006, Target overtook Costco (after two years in which Costco held the edge). What you’re less likely to pick up on, at least not immediately, is that Target also overtook Meijer as the company with the second largest number of supercenters (177). And while that may seem like a minor detail in the overall scope of annual retail trends, it’s only one of several changes in the supercenter space that may very well be game-changing in the years to come.
When you read through this year’s special feature on supercenters (see page 12), you see that Target is far from the only top retailer vying to be a player in this space. Among the six major retailers that operate a supercenter, hypermarket or multi-department concept, five are within this year’s Top 12 rankings: Wal-Mart, Target, Kroger (Fred Meyer/Marketplace), Sears (Kmart Super Centers) and Supervalu (bigg’s). And the sixth, Meijer, isn’t far behind in the rankings (24).
Together, the formats that make up the $225 billion supercenter sector account for nearly 15% of the total Top 150 retail marketplace. That’s a staggering 125% increase over the size of the supercenter channel just five years ago. You’ll also notice that it’s the second-largest channel in all of retailing, and the fifth-fastest-growing (at a rate of 17.7%).
The most important thing to remember about the supercenter space, however, is not something you can easily deduce from any chart or graph. The part about supercenters that has most industry observers so intently focused on developments in this area is that, despite its size, the supercenter channel is still very young—with significant room to grow.
Kroger, with its new head-turning Marketplace stores, has only scratched the surface in the Midwest market. Target, whose supercenter growth has been painfully slow in coming, still only operates fewer than 200 grocery departments. Meijer, the granddaddy of the U.S. supercenter concept, has only recently expanded outside its core Michigan market. Supervalu, has more than 2,400 stores to which it could import gm best practices from its celebrated bigg’s supercenters. And even Wal-Mart, with an industry-leading 2,256 supercenters, has more than 1,000 discount stores from which to select as potential conversion sites.
Collectively, these statistics suggest a very promising future for the supercenter channel—and that doesn’t even take into consideration many other examples of supermarket/gm hybrids the likes of Wegmans, Super Stop & Shop and HEB Plus!.
If you only draw one conclusion from this year’s report, let it be this: 2006 was the year of the supercenter, if not for what it means today, then for what it will mean to retailing in the very near future, as companies like Kroger, Target, Wal-Mart and Meijer pour dollars, energy and innovation into one of this industry’s most dynamic channels of trade.