Cable, Sally S.

Vastine, William J.

Texas A&amp;M Repository

L-1077YOUR GUIDE TO FOOD STORESSally S. Coble and William J. Vastine*Have you ever wondered how the present foodstore came to be? How do chains differ from in-dependents? What is a supermarket? What doesthe food store offer in the way of products andservices? What are the central issues in the "con-sumer movement?" What can you do to take betteradvantage of the products and services offered? Ifso, this fact sheet is for you.Part of the U.S. EconomyThe retail food industry has played a vital andintegral role in the economic development of theUnited States. Consumer interests have had tre-mendous impact since 1773 with the dumping ofEast India Tea Company's tea into the BostonHarbor. Many changes have occurred rangingfrom credit order delivery systems to cash-and-carryoperations."Cheapy" markets, the forerunners of today'ssupermarkets, were formed to do large volumes ofbusiness with low-profit margins during the 1930depression. Most of the growth in the retail foodindustry has occurred since World War II. Thechanging nature of our total economy has influ-enced and been influenced by supermarkets. Con-sumers have required new products and services to*Extension foods and nutrition specialist and Extension econ-omist-marketing-food distribution, The Texas A&M UniversitySystem.14.6meet the demands of their changing lifestyles andstandards of living.Food Store Clas~ificationsYou can't tell the players without a score card.It is important to understand how food stores areclassified. They may be classified by size category,ownership and product-service type.Size Categories usually reflect sales levels, butalso may involve physical dimensions. All fallunder the broad term of grocery and combinationstores which carry a variety of canned, frozen anddried groceries, fresh foods and other perishablesfor home consumption. In 1974, Progressive Gro-cer's Annual Report reported 198,130 stores withtotal sales of $130,835 billion plus another $7,925billion from specialty stores for a grand total of$138,760 billion. Food stores were divided into thefollowing size categories according to ProgressiveGrocer:Supermarkets with annual sales of $1,000,000 ormore accounted for 15.9 percent of the stores and71.8 percent of sales in 1974.Superettes with annual sales of $500,000 to$1,000,000 accounted for 5.8 percent of the storesand 7.4 percent of sales in 1974.Small stores with annual sales of less than$500,000 accounted for 66.9 percent of stores and16;7 percent of sales.Texas Agricultural Extension Service • The Texas A&M University System • H. O. Kunkel, Acting Director • College StationConvenience stores were defined by ProgressiveGrocer as small compact stores doing up to $250,000in sales per year. Under this definition, they ac-counted for 11.4 percent of stores and 4.1 percentof sales in 1974. Convenience Store News AnnualReport indicated 26,870 stores with annual salesof 5,827 billion compared to 22,700 such storesand sales of 5,320 billion reported by ProgressiveGrocer.Superstores are larger than traditional super-markets, normally in excess of 30,000 square feet ofselling space with an extensive line of non-fooditems and expanded perishable departments. An-nual sales of superstores usually exceed $5 million.Ownership Categories. Grocery store compa-nies can be classified as chains or independents.There are various defini tions of chains. ChainStore Age defines a chain as two or more storesunder common ownership, but Supermarketing'sfour or more stores and Progressive Grocer's 11 ormore stores appear to be more commonly used.Regardless of which definition is used, it is clearthat the independent grocer is still an importantforce in grocery store competition (Tables 1 and 2).in case or half-case quantities only. Frequently, thecustomers select iterns from the displays and pricemark it themselves for verification at a centralizedcheckout. Warehouse stores are high-volume, low-service stores that appeal to the price conscious con-sumer.Mini-market, a smaller version of the tradi-tional convenience store, offers a very limited lineof products and usually is in conjunction with agas outlet.Farmers' markets range from small roadsidestands selling products on a seasonal basis to largeunits that may rival tradi tional upermarkets.They may sell their own production, but usuallyadd to that production through purchases fromnormal sources such as produce terminals andwarehouses.Specialty stores may take any number of pos-sible forms, including health food stores, specialtybakeries, meats stores or produce specialty stores.These are usually small stores that cater to a verylimited clientele.Table 1. Number of stores and sales by ownership, UnitedStates 1974*• Progressive Grocer, "42nd Annual Report of the GrocerIndustry," Vol. 54, No.4, April 1975Convenience Independentumber of storesSalesChain12.2%46.8%11.5%4.1%76.3%49.1%How Stores CompeteThe retail food store represents a complex mixof products and services that the retailer offers inhopes of attracting customers. A typical super-market, for example, offers 8JOOO to lOJOOO differ-ent items. These items usually are presented indepartmental categories such as dry groceries, freshproduce, fresh meats, dairy foods (including refrig-erated products and eggs), frozen foods and non-food items. Some stores also have delicatessen serv-ices, on-premise bakeries or other fast-food services.Table 2. Number of stores and sales by ownership, UnitedStales, 1974·*Supermarketing, "27th Annual Consumer ExpendituresStudy," Vol. 29, No.9, September 1974Warehouse store is a relatively new conceptoriginating in Europe. The warehouse store usuallydisplays merchandise in bulk displays and sales areProduct-Service Mix stores offer different com-binations of products and services to meet consum-ers' needs. Precise defini tions for some of thesestores are not available and some stores representa combination of the types presented here. Thewide variety exemplifies how retailers compete forthe consumers' dollars.• parking facili ties• credit and use of credit cards• check-cashing facili ties• carry-out services• music during shopping• shopping carts• trading stamps• helpful personnel• home delivery• post office basesThe average shopper spends 28 percent of herfood dollar on nonfood items. This percentage in-creases as food stores continue to add more non-food items to their product mix. This trend isparticularly evident in family centers and one-stopshopping centers.Services may become more important thanproducts as stores try to compete. Services offeredby supermarkets include the following.82.4-%40.5%Independent17.6%59.5%Chainumber of storesSales• money orders• utility bills payment centers• convenient store hours• other promotional devices• use of food stampsTrading stamps. Although the trend is awayfrom trading stamps, many companies still offerthem.Stamp companies sell stamps to participatingstores for $2 to $3 per thousand stamps. Storesusually give one stamp for every 10 cents spent.The shopper then redeems the stamp books formerchandise or cash at a value of $2 to 3 perbook.If all stores gave stamps of equal value, theircompetitive effects would be eliminated and stampswould merely represent a cost of doing business.The consumer would base her store selection deci-sion on other price and quality considerations.When stamps are not offered by all stores, how-ever, they may represent a competitive advantagethat does not increase food prices.Check cashing and providing money orders canbe an expense to the food store because of the ad-ditional time required. Bad check losses (which costbusinessmen $900 million in 1971) are a direct costof doing business.Advertising and promotion. Informative, fac-tual advertising and promotion within the storeprovide consumers with information they may notreceive from other media. Most food stores providethis service, and food ads generally are reliable.Consumers should compare prices and labels.Personnel. Relationships between seller andbuyer are important to some food shoppers. Theseller's honesty, his willingness to stand behind hisgoods, and the efficiency and courtesy of his em-ployees may greatly influence a shopper's choice.Store personnel are often valuable sources of infor-mation on how to buy and prepare foods. Somelarge stores even provide consumer specialists forthis purpose.Food stamps are available to families with lim-i ted incomes to increase their food purchasing pow-er in an effort to provide more adequate diets.Usually, food stamp recipients pay a portion of thevalue of stamps received. Major concerns about thefood stamp program include eligibility require-ments, operational procedures and purchasingpower of the stamps. This food assistance programremains a key issue in Congress every year.Current Consumer IssuesInterest in consumerism has increased in recentyears. Consumerism includes drawing the con-sumer's attention to problems confronting him andindicating procedures to change the situation. Nouniform consumer movement exists, but a largenumber of people act as vehicles to institute changesby individual or group action. Many issues are re-ceiving attention by consumers and legislatiors. Be-cause of their importance to our everyday lives, itseems appropriate to summarize today's major con-sumer issues.Prices. Food prices have been escalating rapidlyin recent years, along with nearly everything else.Changes in food prices can be explained in termsof supply and demand conditions for individualitems. In the short run, changes in supply or antici-pated changes in supply are probably more respon-sible for price changes than any other single factor.Additionally, there has been continuous upwardpressure on the cost of marketing food, which re-fers to all the costs involved in moving food fromproducers to consumers. Three items account forapproximately 71 percent of the total cost for mar-keting foods-labor, transportation and packaging.Economic pressures will continue to increase thecost of marketing within the next few years, but,hopefully, the rate of increase will slow down.It should be emphasized that high prices andhigh profits are not necessarily the same thing.When inflation has been accounted for, retailershave not really increased their sales during thepast few years, but their cost have increased at arate more rapid than inflation.Quality grades. Consumers are demanding clear-ly indentified, meaningful quality grades. Difficul-ty in making intelligent choices on food items oftenarises because grade names are not descriptive orconsistent. For example, foods may be graded bynumbers, letters or descriptions. Because of thisambiguity, attention has been directed to standard-izing descriptive terms for grades used in food items.Such standards would provide consumers with valu-able information.Open-code dating refers to the process of havinga code on the product telling when the product wasplaced on the shelf, when it should be removedfrom the self or the expiration date beyond whichthe product should not be used. One of the prob-lems with open-code dating is deciding which codetype to use. Another problem is determing the mostmeaningful way of communicating the code. Per-ishable processed items, including milk, meats, dairyproducts and eggs, are currently of major concern.Other publications available from your countyExtension agent:Meat labeling. A voluntary standardized meatlabeling program has been adopted by many grocers.These labels give consumers information on thekind of meat, location on the carcass, standard re-tail cut name and recommended method of cook-ing: Labels on ground meat are stated in terms ofpercentage of lean. These standardized labels en-able consumers to know exactly the cut of meat she/he is buying, regardless of the type of store or geo-graphic location.Metric system. Metrication is coming to thekitchen. As the United States slowly converts tothis system, recipes will be stated in both measures-traditional and metric. New measuring deviceswill be available and weighing of food ingredientswill become more common. This will require amassive educational campaign to help consumerslearn to use the new measures. In addi tion, thiswill require the food industry and kitchen utensiland equipment manufacturers to adjust their mea-sures accordingly.Universal product code. This computer symbolfound on food packages is a rectangle of thick andthin bars and spaces. With the help of the Uni-versal Product Code, the food industry plans tocomputerize the supermarket checkout process.This code gives information on the product's price,package size, manufacturer and the nature of itscontents. Advantages include speedy and accuratecheckout, detailed register tape receipts and im-proved store inventory control. Major disadvan-tages include lack of legible price information onpackages and expense of operation.Unit Pricing and Open DatingWe Want You to Know about Nutri-tion Labels on FoodWhat is Uniform Meat LabelingStandards and Grades Can Help YouShopFood Packaging and Labeling CanHelp You ShopShopping for Convenience FoodsPlanning Your Family MealsYour Food BudgetPlan for Food ShoppingL-117lL-1245L-13l8L-1078L-1079L-1080L-108lL-1082L-1083Pollution and food safety. The causes and ef-fects of pollution have received much attention. Be-cause of the emotional nature of the issue, peopleoften have overreacted. Products to reduce pol-lution and change retail business operations can beexpected in the future. Many firms are now com-pacting and recycling products, and it often paysto do so.Unit pricing refers to reporting the price perounce, price per pound or some other uni t of mea-sure. One of the difficulties with unit pricing isthat the price per ounce or per pound may not bethe relevant information for consumer choices. Theprice per serving is generally of most importan~e.StandardiUJtion of container size to avoid mis-leading packages is also a relevant issue. The foodindustry recognizes many advantages in handlingstandardized products and has been working withfederal agencies to develop standards for packagesand transportation containers. Many of thesechanges would come with the possible conversionto the metric system.Additives and food safety. Various food addi-tives have been used as preservatives and stabilizersto achieve quality products. Some consumer acti-vists have advocated removing all additives fromfood products.Food additives are tested by the Food and DrugAdministration (FDA). Based upon FDA tests, al-lowable levels are established or the additives aredisapproved for use. Further research and testssometimes result in alterations or reversals of earlierdecisions. If all additives were removed, the foodcosts would be expected to increase.Nutrition labeling is required on all foods towhich nutrients have been added or those makinga nutritional claim. Nutrition labeling presents theconsumer a list and amount of major nutrientsfound in a serving of that particular food. Further,some labels give specific information on the kindand amount of fat and amounts of cholesterol andsodium. This is helpful to persons on special diets.Major negative arguments are based on the fact thatmost people do not know what nutrients are neededin what amounts. However, educational effortscould result in consumers learning to make wise de-cisions for nutritious food.Educational programs conducted by the Texas Agricultural Extension Service serve people of all ages regardless of socio-economiclevels, race, color, sex, religion or national origin.Cooperative Extension Work in Agriculture and Home Economics. The Texas A&M University System and the United StatesDepartment of Agriculture cooperating. Distributed in furtherance of the Acts of Congress of May 8, 1914, as amended, andJune 30, 1914.50M 1-76, Revised F&N

Your Guide to Food Stores.

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Your Guide to Food Stores.

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Your Guide to Food Stores.

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