How the Supermarket Business Became So Cutthroat

Who knew selling food would be so cutthroat?

Food rounds out the Top 3 household expenditures, after transportation and housing.

And the landscape is littered with those that have been put out of business (Pathmark and Super Fresh), or bought out recently. Acme Markets' scooping up some Pathmark stores after its parent, A&P, went bankrupt over the summer is the latest.

Experts say more alternative grocery options exist now than ever before, and grocers face immense pressure to keep prices low.

"The recession caused a huge shift in focus toward value shopping in all sectors, and grocery was no exception," said James Cook, Americas director of research for retail at the consulting firm Jones Lang LaSalle. "Dollar stores expanded aggressively, offering limited grocery items, including staples like milk and bread.

"Walmart has continued to push into the grocery sector with its expansion of the smaller-footprint Neighborhood Markets," he said. More strong competition is coming from supercenters and wholesale clubs such as Trader Joe's and BJ's. "And now, there are more online grocery delivery options every day."

Cook says the food market is now more fragmented as shoppers split their shopping across as many as five stores.

"These are the same kinds of families that in past generations did all of their grocery shopping during one weekly trip to the local grocer," he said.

So how does a grocer make money when the margins are so low?

"You make up for it in volume," Cook said. "Smaller regional players have less volume than the big nationals. Continued mergers are at least in part based on an understanding that higher volume and other economies of scale are a path to profit."

And there are the value gimmicks - bonus card discounts, gas points, online coupons - all geared toward keeping the consumer.

Wegmans thinks customer service is the way to stand out.

"We know that customers shop with us, first and foremost, because of our employees and the incredible service they deliver," said company spokeswoman Jo Natale. "We hear that over and over from customers."

Shop Rite has sushi chefs in most stores to slice up sushi daily into ready-to-eat platters. The supermarket offers outdoor tables and chairs in some locations, including the store in Yardley. There are also 115 registered dietitians and in-store health clinics in certain locations.

Giant has 10 nutritionists stationed companywide and has invested heavily in upgrading its produce and prepared-food sections.

"We all work with razor-thin margins," said Erik Keptner, senior vice president of sales, merchandising, and marketing for Giant. "There are a lot of different competitors going after the [retail] space.

"Convenience stores, primarily gas stations, like Wawa and Sheetz, are now competing aggressively," he said.

Giant customers can sign up for a Bonus Card to get special discounts and discounted items, and to earn gas points, which allows them to buy cheaper gas at nearby Giant-owned stations.

"There is this race to keep up with the ever-changing customer," Keptner said.

Nutritionist Courtney Schoepe was added on Labor Day 2014 at the Havertown Giant. Among the tips Schoepe, 34, a registered dietitian, shares is how to better read food labels.

For customer Candace Coduto, 25, of Drexel Hill, that helps her family eat healthier food.

"This store has a great selection," she added, as she grabbed grapes in the produce section of the 86,000-square-foot market with her 5-year-old son, Dracen, sitting in her cart.

Ironically, Coduto works the deli counter at a Wawa Super Store in Springfield, Delaware County, that competes in part with the Havertown Giant for shoppers.

That day she spent $96.62 on food. After using her Giant bonus card at checkout, the tab was $89.89.

ALDI boasts of having "better-for-you alternatives," including nearly 70 varieties of fresh produce; its exclusive Fit & Active brand of products with less fat and sodium; a SimplyNature product line that includes several organic items; and a liveGfree line of gluten-free products.

"We welcome the competition," said ALDI Center Valley division vice president Bob Grammer. "We believe the traditional supermarket shopper is looking for a high-value alternative, and ALDI is the answer. The demand from consumers is what's fueling our expansion."

Grammer said ALDI was in the midst of a five-year plan to open 650 new stores by the end of 2018, taking its store count to nearly 2,000 coast-to-coast and serving more than 45 million customers per month.

As she loaded eight shopping bags into her trunk last week outside the one-year-old Shop Rite in Yardley, Eileen Steinberg, 74, said a Giant was actually closer to her home.

"But I come here because I'm Jewish, and they sell a lot of kosher products," she said.

Steinberg stocked up on such items that day for a gathering at her Yardley home to break the fast after Yom Kippur.

sparmley@phillynews.com215-854-4184