Apr 1, 2008
ARLINGTON, VA — March 31, 2008 — Food retailers are embracing sustainability to reduce energy costs and protect the environment in building new supermarkets, according to the Food Marketing Institute (FMI) Facts About Store Development 2007 report.

     As many as 34.0 percent of the respondents to the survey are pursuing sustainability initiatives related to new buildings or remodels and another 40.0 percent plan to do so in the next five years. Many food retailers are focusing on reducing their impact on the environment by adding refrigeration management programs and making changes in store design, landscaping or transportation.

     Green building is an important part of retailer sustainability plans with 21.6 percent of the respondents reporting it is a goal for their company and 58.5 percent said they are looking into green building options. Two in 10 retailers already use recycled building materials such as concrete and steel, equipment and appliances in remodels or new construction.

     Also contributing to sustainability, retailers are retrofitting existing buildings in developing new stores. In fact, retrofits accounted for 60.6 percent of all new stores opened in 2006, exceeding the number of new buildings for the first time since 2001.

     Retailers recognize that by designing and constructing stores that promote the well-being of the environment, they can improve customer and community relations and reduce energy costs, according to the report. To learn more about sustainable business practices and FMI’s Food Industry Sustainability Summit in Minneapolis, MN, June 16-18, 2008 visit http://www.fmi.org/sustainability/.

Retailers Focus on Reducing Energy Costs


The dramatic increase in energy prices has prompted retailers to find ways to minimize the additional costs. Retailers are increasingly hiring energy management personnel to help them reduce these costs in store operations, transportation and warehousing. They are decreasing energy use with LED lighting, skylights, light-motion detectors and energy-efficient HVAC systems, as well reclaiming heat output, driving energy use to off-peak hours and, most of all, minimizing leaks in refrigeration systems.

Food Retailers Continue to Adapt to Demographic Changes

As demographic and lifestyle changes continue to sweep the country, several emerging population trends are shaping new store construction and remodeling strategies. Retailers are tailoring their services to meet consumer demand for greater convenience, higher quality, more variety and better nutrition. Many supermarkets report they are incorporating health and wellness features such as:


  • Medical clinics
    •      
  • Natural and organic food sections

Retailers also report they are designing areas for ethnically diverse or gourmet food items such as:


  • Coffee islands/espresso bars

  • Specialty cheeses

  • Shrimp bars

  • Crêperies

  • Modular ovens for artisan bread

  • Specialty wine and tasting area

Some of the new store formats focus on convenience as well. For example:


  • Soup bars

  • Sandwich express/sandwich carving stations

  • Expanded foodservice

  • Recipe kiosks

New Store Construction and Remodeling Benchmarks

Fewer new store buildings (39.4 percent) were constructed due in part to the shortage and cost of prime real estate. The average store size increased slightly to 48,750 square feet. For the second year in a row, the number of stores closed increased and store remodels and openings were relatively flat.

     The median new store cost more than $6.5 million to build in 2006 and increased slightly in size to 46,000 square feet, up from 44,753 in 2005. The median decor costs in 2006 added $7.42 per square foot, up from $4.25 in 2005. Over the last two years, many stores were faced with higher equipment and decor costs as a result of including and expanding meal solutions and prepared food areas.

     Slightly more than half of all companies surveyed (50.1 percent) remodeled at least one store in 2006. Nearly a third of the respondents (32.4 percent) said they remodeled because they anticipated or had a competitor enter the market. An additional 32.4 percent remodeled to meet the needs of changing customer demographics.

Methodology

This report is based on a survey of food retailers operating a total of 6,982 stores. The companies surveyed included single-store operators (11.8 percent), retailers operating 2-10 stores (21.6 percent), 11-30 stores (29.4 percent), 31-100 stores (11.8 percent) and more than 100 stores (25.5 percent).

     To purchase Facts About Store Development 2007 ($95 for FMI retailer/wholesaler members, $145 for FMI associate members and $195 for nonmembers), visit the FMI Store at www.fmi.org/store/ or call 202.220.0723.