January 14, 1995 in Washington Voices

Tough Market With Growth Of Valley Supermarkets Making Competition Fierce - Convenience Is What Most Shoppers Consider First

Rachel Konrad Staff Writer
 

If the supermarket industry here continues to grow at its current pace, Valley shoppers may soon have almost as many choices of stores as there are cereals on the supermarket shelves.

Pending a decision next month by county commissioners, Tidyman’s hopes to open its second Valley store late this year on Argonne Road, north of Interstate 90. Construction on the 50,000-square-foot store may start as early as April.

The proposed store has many consumers wondering whether grocery retailers have long since saturated the Valley market, which is already home to at least 13 full-service, multipurpose supermarkets.

More than 500,000 square feet of supermarkets bombard shoppers from Havana Street to the Idaho state line - not including the proposed Tidyman’s or the new Safeway under construction at Sprague and Evergreen.

“I think we’re pretty well inundated with stores,” said Linda Ladwig, a Valley resident shopping at the Rosauers at Sprague and Sullivan. “There are already so many to choose from.”

Supermarkets - defined as retail grocery stores with sales volume of $2 million or more annually - typically survive on profits of less than one cent on the dollar. Gross margins are low because stores depend on increasing sales volume for profitability, according to the Washington, D.C.-based Food Marketing Institute.

“To compete, you have to have more stores that are just as nice as the last one built, including delis, produce and other specialty sections,” said Bill Haraldson, executive vice president of Spokane-based Rosauers.

Traditionally, supermarkets have depended on increasing volume to compensate for low margins. Because population in the Valley is expected to continue to grow in the next decade, the area is rife with supermarket retailers who hope to cash in on the boom.

“No matter what you hear, it’s location, location, location in the supermarket industry,” said Haraldson, who started at Rosauers as a box boy 33 years ago. “Those who make it most convenient for the customers win.”

The last supermarket boom in the Valley increased retail space by 170,000 square feet. Five years ago, residents watched the construction of a 50,000-square-foot Rosauers at E10920 Sprague; a 65,000-squarefoot Tidyman’s at Sprague and McDonald; a 49,000-square-foot Safeway at N1441 Argonne; and an expanded Yoke’s Pac ‘n Save at E15111 Sprague.

More recently, Valley residents have seen construction of two Albertson’s stores, one at E8851 Trent and the other at N1304 Liberty Lake Road. Last year, construction began on the new Safeway at Sprague at Evergreen.

Barring new limits resulting from Washington’s Growth Management Act, the Valley’s customer base will grow rapidly enough to support the current explosion of new stores, according to supermarket spokespeople and area business leaders.

“Undoubtedly, there still are gaps in where stores are located,” said Ray Murphy, executive director for the Spokane Valley Chamber of Commerce.

“There is a market for the stores here, and it’s very active. But only the most efficient operation will survive,” Murphy said. “There’s not a science to surviving competition, but rather an art.”

Apparently, the art of supermarket success is a minefield. High interest rates, overregulation, rising operating costs and low food costs plague the industry, according to the January edition of Supermarket News, a New York-based trade magazine. And the onslaught of “supercenters” such as the Valley’s new Fred Meyer store are making supermarkets compete savagely among themselves and against the giant centers, the magazine reported.

“Competition is very, very, very fierce in the Valley,” said Jack Heuston, president of Greenacresbased Tidyman’s. “And it could get worse before it gets better.”

Safeway is constructing a new store at Evergreen and Sprague, but a company spokesperson would not comment on how competition has affected sales.

“We have no other plans for the Valley aside from the current construction project, but that doesn’t mean we’re not still looking for more opportunities in the Valley,” said Cherie Myers. “We’ve been pleased with the results of our stores there.”

Consumers can’t help but notice the competition. Although they are the ultimate winners of supermarket competition - price checkers from each store monitor sales and ensure that one chain’s prices are as low or lower than the others’ - the construction boom overwhelms many shoppers.

“The new stores are confusing,” said Tidyman’s shopper Anita Bell, a Valley resident. “You have to adjust to changes, and you end up spending too long just looking around for a gallon of milk.”

Back at Rosauers, Ladwig agreed.

“It seems like each new one has to get a little bigger than the last one,” Ladwig said as she propped up her grandson, Austin, in her cart’s child seat.

She’s right. Fifteen years ago, the average size of a grocery store was 22,000 to 32,000 square feet. The 1990s average is more than 38,000.

But Heuston said the trend for the next century is downsizing. “Right now, it takes too much time for consumers to shop the big stores.”

The proposed Tidyman’s, which will be several thousand square feet smaller than the store at Sprague and McDonald, will use “category management” to decrease the total volume of products without sacrificing customers’ potential selection of brand names.

“Category management means that we study which brands are locally suited to customers on a store-bystore basis, and we stock only those popular brands,” Heuston said.

Weary shoppers say the smaller stores would be more convenient, and most are opposed to construction of new supermarkets and supercenters: Valley consumers have enough stores in convenient locations already, they said.

Bell has been shopping at Tidyman’s “almost all the time” for the past 27 years. She said that competitive prices were a factor in choosing Tidyman’s, but location was key.

Bell can choose from at least 6 different stores within 5 miles of her home, so her decision to shop at Tidyman’s comes down to a matter of a few hundred yards.

“The Albertson’s store is just across Sprague, but if I go to Tidyman’s, I don’t have to cross the street,” she said. “I do have store loyalty, but the convenience is nice.”


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