Saint Paul, Minnesota — Location, location and location are often cited as the three most important determinants of retail success. So it was no surprise that, on average, the top stores in the 2001 Supermarket Panel were in locations with unusually high median household income. Nor is it surprising that the top chain stores in the Panel operate in more densely populated areas.
However location is not the only driver of supermarket success. Of the 563 stores in the 2001 Supermarket Panel, forty stores, almost equally divided between “independent” and “chain” stores,” reported above average weekly sales per square foot, sales per labor hour and annual percent sales growth. Of these, eleven were located in markets with below-average median household income. On the other hand, more than 100 stores in locations where median household income exceeds $50,000 did not achieve the same superior results.
“Clearly factors other than location are important,” according to Professor Robert King, the 2001 Supermarket Panel#;s principal researcher.
“Our analysis of top stores also shows that:
“Store level decisions about management practices are more closely linked to top performance for independent operators than for chain stores.
“The top chain stores have higher weekly sales per square foot and sales per labor hour and much lower payroll as a percent of sales than other chain stores.
“Top independents have lower employee turnover, higher gross profit and rate of sales growth than other independents.”
Conducted by The Food Industry Center, the Supermarket Panel gathers information on store characteristics, operations, and performance. “Tracking the operating practices and performance of individual stores over time enables us to determine the rate of adoption of new technologies and identify the most successful strategies in different operating environments,” according to Jean Kinsey and Ben Senauer, Professors of Applied Economics and Center Co-Directors.
Results from the 2001 Panel also show that:
Relative to conventional stores, stores in other formats have significantly higher sales per square foot.
Within a format, larger selling area is associated with lower sales per square foot.
Stores in the largest ownership groups are rapidly adopting use of scanning data for automatic inventory refill.
Stores in ownership groups with more than sixty stores are far ahead of other stores in adopting energy efficient lighting and refrigeration management programs.
Housed in the Applied Economics Department at the University of Minnesota, The Food Industry Center is one of seventeen industry study centers located in major universities around the country and funded initially by the Alfred P. Sloan Foundation. Each Center is studying a different industry, such as automobiles, steel, semiconductors and airlines. A goal of the Sloan Foundation is to foster an understanding of the basic forces contributing to American economic progress in an increasingly competitive world.
The University of Minnesota is the largest land grant university in the country with more than 65,000 students, 5,700 faculty, four campuses and a long history of excellence in research and education in the economics and sciences of agricultural, environmental and food distribution issues.
For more information on the Supermarket Panel please contact Jon Seltzer, Project Manager, (952) 926-4602 [email@example.com]. Additional information on the Center, full text versions of the Center’s working papers, the annual report for the 2000 Supermarket Panel and a summary of the 2001 Panel are available on the Web at [http:// trfic.umn.edu].