Supermarket Strategic Alert: Alternate Channels

Alternate channels continue to encroach on supermarket sales from all sides. Convenience stores have been watching grocery stores carefully--now they are adopting technology and inventory controls finetuned by grocers. C-stores are also finetuning their assortment to ensure they are the first choice among shoppers for quick fill-ins. They have recognized the importance of perishables and foodservice by daypart. More than anything, c-stores are focusing on their primary advantage: location. To capitalize on their neighborhood locations, they are adding kiosks, Web access and serving as delivery and pick-up depots— always trying to hang on to their gasoline sales.

Drug chains are feeling the pinch as the leading chains increasingly find themselves across the intersection from each other and down the street from a Wal-Mart. Wal-Mart is encroaching on their non-foods business. Walgreens is fighting back by testing foodservice—suggesting that specific channels are difficult to define.