Supermarkets shop for upscale niche

A customer browses the fruit and vegetable section at Safeway's "Lifestyle" store in Livermore, Calif.

TEXT OF STORY

KAI RYSSDAL: Have you noticed how your neighborhood grocery store isn't really just a grocery store any more? All the big chains seem to have gone upscale, with premium this and specialty that -- and woe to the competitor who doesn't keep up.

Which is why the Dutch supermarket conglomerate Royal Ahold announced today it's going to renovate 100 of its Giant Food stores here in the states.

Marketplace's Steve Henn reports the facelifts are long overdue.


Steve Henn: Ask shoppers streaming into a Whole Foods near downtown Washington, D.C., what they think of a nearby Giant Supermarket:

Shopper #1: Not much.

Shopper #2: I have not shopped there in years.

Shopper #3: Quality of the food? It's not good...

...and you see why Giant's market share has taken a beating in the last few years. Mark Hamstra at Supermarket News says Giant, which operates in the mid-Atlantic, and other, older chains like Safeway are all feeling the pinch.

Mark Hamstra: Chains came in that were a little bit more upscale, a little bit smarter in their marketing.

Now mid-market chains like Giant are caught in an intense two-front war for market share. They're trying to compete for Yuppie dollars by adding gourmet cheese counters, while at the same time competing with discounters like Wal-Mart and Costco.

To make matters worse, Hamstra says in 2003 a billion-dollar accounting scandal consumed Royal Ahold's executives.

Hamstra: The Enron of the Netherlands.

For years they didn't invest in spiffing up their American stores.

Hamstra: Giant, I think, got caught with its feet in the sand.

Today, the company's books are back in order and new leaders are trying to right the ship at Giant Food. The biggest move to date is a decision to spend unspecified millions upgrading Giant's shop-worn stores. Jamie Miller is Giant's public affairs manager.

Jamie Miller: It's actually the largest investment Ahold's made in Giant stores.

Hamstra at Supermarket News says this move may help stop the bleeding at Giant -- but the company still has a long way to go.

In Washington, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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