The everchanging marketplace: From the neighborhood grocery to the hyperstores of today
Tammy Swift
The Forum - 08/18/1999

Just think. We could be running to the local Keydoozle to pick up milk and eggs.

It might have happened, had Clarence Saunders had his way. The Keydoozle was his invention, a late '30s concept in which shoppers stuck keys in glass display cases to choose specific food products, which were then ferried via conveyer to the check-out line. His brainchild didn't fly. Instead, the nation took its cue from Saunders' better-known innovation, the self-service grocery store. And that set the stage for the modern supermarket.

Today's supermarket offers everything from fresh mangoes to muffin tins, from carnations to wedding cakes. Its configuration is based on people's demands; one-stop shopping for the time-starved consumer.

But the supermarket phenomenon has caused its share of casualties, including the neighborhood grocery stores where pantry staples were just a short bike ride away and you called the grocer by his first name. In retrospect, the independent store's decline seemed inevitable as society grew more mobile, fickle and deal-conscious, and less loyal to neighborhood businesses.

"The fittest is going to survive," says Roger Larson, second-generation owner of Larson's SuperValu in West Fargo. "I'm a small-town person at heart, and I hate to see that, but it's a matter of economics. The fact is you need volume to survive."

The 'self-serve' concept

It's hard to believe now, but there was a time when Americans didn't need to buy much food; we raised most of it ourselves. After the era of the trading post, the main grocery source was the general store. Whatever people couldn't produce themselves - items like tea, coffee or salt - was shipped from Europe and sold via the general store.

By the 1860s, the specialty store had emerged, producing bakeries, butcher shops, fruit and vegetable dealers and grocery outlets, according to the Journal of Food Products Marketing. When the Great Atlantic and Pacific Tea Co., known as A&P today, opened in 1859, it stocked only spices, tea and coffee.

Early grocery outlets were light years away from today's bright, sign-filled marketing havens. They were drab dwellings, where food was sold from bulk containers or piled high on shelves behind the clerk's counter. Groceries, meat and dairy products weren't sold together until after World War I, when the first "combination" stores opened.

In line with the chiefly agricultural economy, credit was granted for up to a year to accommodate the seasonal nature of the farm family's cash flow.

Although opinions differ on who truly launched the modern grocery store, the actual patent for it belonged to Clarence Saunders. The 1917 patent was issued to the Tennessee grocer for "certain new and useful improvements in Self-Serving Stores."

The premise seems startlingly simple, but it was revolutionary at the time: There would be turnstiles at the entrance, leading to a single, serpentine aisle lined with goods. Customers took what they needed and paid cash at the check-out counter by the exit. The name of his exotic new business: Piggly Wiggly.

Saunders' brainchild eliminated much of his overhead, including the need to pay multiple clerks. Accordingly, he slashed his prices and proceeded to build an empire. At its zenith, Piggly Wiggly had 3,000 stores nationwide. By the mid-'20s, the chain had come to Fargo, installing its first store at 714 Front St.

Plenty of other ambitious grocery chains also joined the fray, including Kroger, Safeway and A&P. Because the chains bought directly from the manufacturers, they could offer cheaper prices; consequently, they began edging out independently owned competitors.

The independents fought back. A rash of anti-chain store legislation ensued, culminating in 1936 with the passage of the Robinson-Patman Act, which mandated federal regulation of wholesale pricing and distribution. The independents also formed "voluntary chains" - including the widely recognized Independent Grocers Alliance of America - to better match the corporate chains' financial power.

Supermarkets hit stride

But another competitor, the modern supermarket, had entered the race.

While arguments linger about who really invented this modern shopping phenomenon, J. Tevere MacFadyen, author of "The Rise of the Supermarket," points to marketing genius Michael Cullen as the "grandfather of the supermarket." In 1929, when Cullen was a Kroger's manager, he fired off a Jerry Maguire-style manifesto to the company's president, seeking backing for five prototype supermarkets, "monstrous in size," to be opened in low-rent facilities several blocks from main arteries.

The key, he explained, was volume. By selling a great quantity of merchandise rapidly, Cullen said he would be able to show a profit with lower markups than ever before.

Concluded Cullen: "And then when the great crowd of American people came to buy all those low priced and 5 percent items, I would have them surrounded with 15 percent, 20 percent and ... 25 percent items. In other words, I could afford to sell a can of Milk at cost if I could sell a can of Peas and make 2 cents."

With the zeal of a carnival barker, Cullen brazenly predicted consumer reaction to such madness: "It would be a riot. I would have to call out the police and let the public in so many at a time. I would lead the public out of the high priced houses of bondage into the low prices of the house of the promised land!"

Unbelievably, Kroger's rejected Cullen's impassioned plea. He eventually left the company and, with aid of a new partner, opened the first King Kullen Grocery Co. in Queens, N.Y.

It was a resounding success, thanks to Cullen's ingenious concept and a newspaper advertising campaign that was a bit, er, brash. Ads ran across two full pages and flaunted screaming headlines: "Exposed! The Reason Why 150,0000 Housewives Crash The World's Biggest Food Market!"

Other King Kullen ads attacked the chain stores, portraying them as heartless corporations that cavalierly swindled the masses. "Chain Stores read these prices and weep," typical copy read. "You Wall Street Chain Stores have been making millions from the public for years with your outrageous prices. Chain Stores, drop your prices, give the poor buying public a chance."

When local papers refused to run Cullen's ads, he delivered them door to door.

The public ate it up. Although Cullen died in April 1936 from complications following an appendectomy, his brainchild spawned numerous knock-offs around the country. Many of them seemed to be named after characters in "The Jungle Book": Jitney Jungle, Giant Tiger, Big Bear, Great Leopard.

Even the major chains, once the target of King Kullen's fury, jumped on the cash wagon.

The growth was phenomenal. A 1934 survey counted 94 supermarkets. Two years later, the number had jumped to 1,200 in just 85 cities. By 1950, there were 15,000 "supers" in the United States, with most of the new ones building in the suburbs.

Locally, the trend was illustrated in city directories. A scan of the '38 directory showed 95 independent grocers and five chain stores in Fargo-Moorhead; the '98 directory of retail grocers lists just four independents, and 12 chain-owned supermarkets.

While Fargo-Moorhead also has small ethnic food stores, convenience stores and discount outlets like Cheep Foods, the local food market is dominated by six Sunmarts, five Hornbacher's stores, two Cash Wise Foods stores, Larson's SuperValu in West Fargo and Sam's Club in Fargo.

Too big to shop?

The supermarket's growth was bolstered by several other modern conveniences. The refrigerator allowed customers to buy larger quantities of perishable items, while eliminating the need for milk delivery or daily trips to the grocery store. Innovations like the automobile and suburbs made Americans more mobile, and less likely to stay in their small neighborhoods.

"Together, the refrigerator, the automobile, and the supermarket made possible once-a-week, one-stop shopping," write Frank Gambino, Edward Mayo and Paul Lane in the Journal of Food Products Marketing.

To keep overhead low, supermarkets had to find alternatives to employing dozens of clerks to cut and package meats and other products. The result was a demand for precut, prepackaged products, made all the more possible by improvements like Clarence Birdseye's flash-freezing technology in 1927.

The demand for processed foods only intensified as more women entered the workforce during and after World War II.

The conventional supermarket hit its peak in 1965, when its share of total grocery store sales reached 70 percent. After that, its market share fell, some say by as much as 40 percent by 1988, according to the Journal of Food Products Marketing.

Reasons vary. The number of grocery stores has fallen steadily for the last 50 years; some of the more current casualties have been supermarkets. To stay competitive, some "supers" converted to other formats, such as superstores (ranging in size between 35,000 and 50,000 square feet), combination stores (example: Sunmart-Osco), warehouse stores and wholesale clubs like Sam's Club.

Even "super" isn't a big-enough word to define the new mega-stores. The hypermarkets, also known as "malls without walls," buy directly from the manufacturer and make half of their sales from non-food items. A classic example of a hypermarket: Kmart's expansion into the grocery business.

The influx of discount retail giants in the already competitive grocery business is tough to ignore. It brings a whole new level of convenience to the concept of one-stop shopping.

"We're concerned about it, yes," says Dean Hornbacher, president of Hornbacher's Foods. "We'll probably have a Wal-Mart Supercenter here in a few years. The world doesn't end, but it does have an impact on business. I guess competition is what makes the world go 'round."

On the other hand, there's already been some backlash against the monolithic store. Compare the first King Kullen, which was a humble 6,000 square feet and carried a thousand items, to some of today's giants, which sprawl across 100,000 square feet and carry 30,000 to 40,000 varieties of products.

"There has been some resistance to the really large market," Hornbacher says. "It takes too much time to shop. Time is really the driver to what goes on today."

Time has also motivated many people to shop at nearby convenience stores - in some cases, the contemporary equivalent to the neighborhood market.

Yet another beneficiary from this mega-store backlash is the limited assortment store, or box store. Another European import, the box store has a limited inventory (800 to 1,000 items), specializes in cheaper private labels and carries just a handful of perishable items.

Places like Larson's SuperValu also benefit. As the only independently owned supermarket in Fargo-Moorhead, Larson's is still a manageable 26,000 square feet. Larson, active in the West Fargo community, is known to many of his customers. And he offers services that hearken back to simpler times, such as home delivery to elderly customers, and a conservative approach to rearranging shelving so as not to alienate long-time patrons.

What tomorrow brings

As American lifestyles change, supermarkets continue evolving to reflect them. Nowadays, more than half of the typical American's food budget is spent on meals eaten outside of the home, according to the Food Marketing Institute. In order to better compete with restaurants, supermarkets have added ready-to-eat meals as well as meal kits that take just minutes to prepare.

Hornbacher has been in the grocery business since he was a teen helping out his dad, Ted Hornbacher. "We used to be an ingredient store," he says. "We're still an ingredient place, but we also provide meals."

And supermarkets have tried to meet the demands. Delis, bakeries, sit-down cafes, pizza kiosks and drive-through windows are all geared toward the customer who lacks the time or inclination to cook. Produce sections teem with pre-washed and peeled baby carrots and bagged salads. And entire freezer sections are devoted to low-labor "meal solutions."

"People don't have time to do a lot of planning," Hornbacher says. "Oftentimes they'll come in here at 4:30 or 5 p.m., and they're in hunting mode for dinner that night. People don't have time to prepare a pot roast."

In addition, today's supermarkets offer many non-food services: banking, floral, pharmacy, video rental. The new Sunmart supermarket at 2605 8th St. S. in Moorhead even has a children's play area dubbed Kid's Corner.

All these services and product varieties need to be maintained while still keeping grocery prices affordable. After all, there's always a competitor around the corner. Hornbacher points out that when his father first got into the business in the '40s, people spent 20 percent of their incomes on food. Now we spend just 10 percent of our incomes on it.

Stores continue to make strides in check-out efficiency. The electronic scanner has been a major advance in the check-out process: It moves customers through faster, reduces labor costs and provides the store with instant information on sales trends.

And technology is already here for self-checking, which allows customers to scan and pay for foods themselves. Rainbow Foods in Minneapolis was the first store in the region to add self-scanning aisles. In an era of basement-level unemployment, it also alleviates staffing shortages. Self-scanning is especially appealing to young shoppers, who loathe standing in line with a carton of milk behind the person with 400 items and 397 coupons.

After all, despite the innovations, marketing and history behind it, grocery shopping is still just a household chore. "Generally, people do not like to buy groceries," Larson says. "Once you realize that, you know you have to make it as painless as possible."