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Tension - Will superstores continue to grow and eliminate small, specialized retailers? Or will people tire of the one-stop shopping bit, resulting in a slowdown or halt of superstore growth?
Why we care - These superstores have transformed shopping from a potentially time-consuming process involving trips to various stores into a convenient, one-stop experience. They offer a wide range of products, each superstore competing for a larger percentage of the customers' wallets. They can render smaller retailers with less extensive offerings obsolete. Large chains of superstores often account for a sizable percentage of their suppliers' sales, giving the retailers significant bargaining leverage over manufacturers' prices. This can result in lower prices for the customers, which puts superstores at even more of an advantage relative to smaller competitors.
The Impact of Superstores
As these stores offer a wider and wider variety of products, it has become possible for customers to buy nearly all of their everyday items at supermarkets.
As such, retailers are competing for a larger percentage of their customers' disposable income, raising the stakes and causing intense competition.
Who benefits from more superstores?
Superstores
- Wal-Mart Stores (WMT), Target (TGT), and Sears Holdings (SHLD) are the largest chains of supercenters in the U.S. Internationally, Carrefour and Tesco are also significant supercenter chains.
- Kroger Company (KR) has made significant moves to expand into the supercenter segment using its Fred Meyer supercenter format. The impact of this move on Kroger is unclear, especially considering the company's concentration in traditional supermarkets.
Who benefits from fewer superstores?
Traditional Retailers
- Safeway (SWY) and SuperValu (SVU) are all traditional supermarket chains, which could lose business to superstores.
- Best Buy (BBY), Circuit City Stores (CC), and other electronics retailers could be negatively impacted as superstores such as Wal-Mart and Target expand their offerings in the consumer electronics segment.
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