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1 Introduction
The retail food industry is a highly competitive and challenging industry that has been experiencing significant change in the past few decades. As retailers have focused on creating successful retail formats, a natural distinction has developed between conventional and specialty format stores. Conventional grocery stores (e.g. Kroger, Meijer and Albertsons) operate under a traditional supermarket format offering a full line of groceries, meat and produce, with some operators offering a mix of general merchandise items. Additionally, conventional grocery stores are typically located as an anchor in a strip center or in a stand-alone location. With average annual sales of $14 million, these stores are self-service formats that carry about 40,000 SKUs and range in size from 40,000 to 100,000 square feet ([33] Hoovers, 2008a). Products sold may include national manufacturer brands as well as store brands/private label items. Promotion typically involves traditional methods: newspaper advertising, coupons, store events, and discount price sales ([33] Hoovers, 2008a). Conventional grocery stores target the mass-market customer, and often compete heavily on prices.
Specialty grocery stores focus on a single food category (e.g. meats, produce, or bakery) or engage in selling special types of food products (e.g. natural/organic, gourmet and ethnic). Usually located in strip centers, specialty grocery store size varies widely from 1,000 to 20,000 square feet and generally stores carry fewer SKUs than conventional stores ([34] Hoovers, 2008b). Often, the specialty products carried at a specialty grocery store may not be available in the range of assortment or at the same (or perceived) quality levels at conventional grocery stores. Examples of retailers that represent specialty grocery stores include Whole Foods Markets and Wild Oats, as well as local ethnic food stores, local butcher shops/produce markets, and local health food store operators. Affluent customers are the target for specialty food stores as products are often priced at a premium ([34] Hoovers, 2008b). Grass roots marketing, word-of-mouth, and community support (e.g. recycling events and cooking classes) are important promotional techniques for specialty stores ([34] Hoovers, 2008b).
The distinction between conventional and specialty supermarkets can be compared to the distinction historically made in the apparel industry between department stores and specialty apparel retail formats. While various research studies have examined customer preferences and shopping behaviors which compare department stores...