The '70S Show

Spiraling energy costs, new formats and the long-awaited arrival of scanning technology were just a few of the stars of this often contradictory decade.

The 1970s can best be defined as a decade of contradictions for the supermarket industry.

On the one hand, grocers were opening lower-priced warehouse formats and ratcheting up discount strategies, while on the other, they were building beautiful new stores sporting upscale décor and more expensive gourmet products.

Consumers were in the midst of contradiction, too. Americans began to focus in earnest on healthier eating, as evidenced by the appeal of fresh produce and natural, even organic, foods, while the first discernible signs of a forthcoming national obesity epidemic began to materialize in the form of processed "diet" foods and the growing appeal of takeout food.

In addition to retail experimentation, this was the decade that saw the long-awaited arrival of the UPC code and scanning technology, which speeded up checkout and made life easier and more efficient for the supermarket industry.

Inflation Nation

At the top of grocers' minds, particularly as the decade began, was high inflation. When OPEC took firmer control of global oil prices, the era of "cheap" food and energy came to an abrupt end, which brought about great challenges for supermarkets. Energy had to be conserved, so store hours were shortened, stores and parking lots were dimmed and thermostats were lowered. Meanwhile, warehouse and trucking expenses climbed, and food processors and farmers added higher operating costs to their prices. Such a rise in the retail cost of food hadn't been experienced since the end of World War II. To add to retailers' misery, land costs were soaring, and high interest rates made it difficult to build or modernize stores.

Smart operators responded by making the most of their current real estate. To adjust to 1970s retailing, they realized they had to close down stores or exit markets in some instances, update the stores that were worth saving to address more discriminating consumer tastes, and test new formats to win over shoppers in what was becoming an increasingly competitive field.

Progressive Grocer predicted in February 1970: "The key words for the supermarket of the future are bigger and better. Consumers want big, beautiful, comfortable stores. They want more selection in all categories, yet they're confused by the wide selection. They also want the lowest prices possible, in spite of record highs in family income and record lows in percent of income spent for foods. ... Operators of older supermarkets must develop an expansion point of view."

One way to make the most use of space was to use multiple levels. Green Street Supermarket in Bensenville, Ill., profiled in a 1970 issue of PG, featured a multilevel layout as a way to combat the real estate shortage.

A dramatic example of a bigger, better store was showcased in PG's signature Store of the Month feature in August 1972. At a whopping 72,600 square feet, this so-called "mini mall" featured expanded nonfoods and broad foodservice. Operated by Walter A. Churchill and based in Toledo, Ohio, it included a drug/ hardware store, a flower and gift shop, a coffee shop, a restaurant and even a sporting goods store.

While Churchill's mini mall was a novelty at the time (and would remain so today), plenty of other retailers were getting in on the "newer is better" mindset.

National Tea rolled out a "Supermarkets of the Seventies" program. In New Orleans, the chain was building "a high-styled 1970 generation of stores, with a heavy orientation toward general merchandise lines." H-E-B's "red carpet store," which opened at the end of 1969, featured a prestigious design, wall-to-wall carpeting, redwood wall decoration and a "tasteful use of color." It was more than 30,000 square feet, with nearly 50 percent of selling space that included expanded nonfoods, a broader merchandise assortment, separate imported and fancy food sections, and stronger customer service, including service cosmetics.

In a similar vein, Stop & Shop in Boston opened a "boutique" supermarket in Short Hills, N.J., and "found the concept very much to its liking," reported PG, prompting the company to open a similar 30,000-square-foot store in the affluent New York suburb ofWycoff, N.J.

Superstores of the '70s

Indeed, 30,000 square feet was an impressive space for the time, but Kroger took the whole idea a step further when it launched its superstore concept in 1972. It certainly wasn't the first retailer to test a larger format with a major focus on nonfoods; Mejier had debuted its Thrifty Acres store at 180,000 square feet a decade earlier.

Following an exhaustive internal review, Kroger executives decided they should exit the markets where their stores weren't as competitive and significantly upgrade stores in other core markets to keep up with industry standards, giving rise to the superstore prototype, which was often 60,000 square feet, up to 50 percent larger than traditional Kroger units, and had a colorful new look.

The supercenters were an immediate success for the company and ultimately ensured Kroger's long-term growth. By the end of 1974, Kroger had opened 300 new stores and converted 250 existing ones into superstores.

Another format that gained a lot of attention during the '70s was the warehouse supermarket, which was a direct response to cutting operating costs and providing lower prices. PG's August 1972 issue included a special report on warehouse markets. "Once a rural phenomenon, warehouse supermarkets are now scoring increasing success in urban and suburban areas," the article noted. "Offering little service and few of the frills traditionally found in supermarkets, their one and only selling point is price."

Time in a Bottle

■ 1970: Kroger announced plans to combine the buying tasks of its 14,000 supermarkets and 50 Family Center discount stores into a single procurement organization.

■ 1972: WIC (Women, Infants and Children) was formally authorized by an amendment to the Child Nutrition Act of 1966.

■ 1973: FDA published the first regulations that required the nutrition labeling of certain foods: those with added nutrients and those for which a nutrition claim was made on the label, or in labeling or advertising.

■ 1977: Ahold acquired Bi-Lo Stores.

■ 1977: Food Marketing Institute was formed with the merger of Super Market Institute and the National Association of Food Chains (NAFC). Robert Aders, former U.S. undersecretary of labor, became its first president and CEO.

■ 1978: Generic private label products started appearing. Star Market debuted generic frozen french fries, with plans to introduce generic frozen peas, corn and orange juice concentrate.

■ 1979: The Tengelmann Group of Germany bought 42 percent of A&P stock for $78.6 million.

A&P helped bring national attention to the warehouse trend with its WEO (Warehouse Economy Outlet) format. Described by PG as "a mid-course between an all-out warehouse store and a conventional supermarket," WEO was A&P's answer — at least at that time — to discounting. But in trying to make it work, the company faced distribution issues, and its smaller and older stores couldn't produce the volume required to make discounting successful.

Meanwhile, the first membership warehouse club store — Price Club — opened in San Diego in 1976. Sol and Robert Price raised $2.5 million from friends and family to open it, but in the beginning, it catered to business customers only. (Price Club went on to merge with Costco in the 1990s.)

By the end of the decade, another important format, the limited-assortment store, was gaining steam. In just one example, Les Jablonski in Oakville, Mo., turned to the more bare-bones format for his independent operation after trying to compete with impressive new stores from his main competitors, Schnucks and Dierbergs.

Scanning the Future

As retailers were exploring new formats for all to see, behind the scenes, technology was about to change the grocery industry in a major way. In PG's April 1970 issue, the editor wrote about planning for a "dream" that many operators had entertained for years: universal codes for products. Then on June 26, 1974, at a Marsh supermarket in Troy, Ohio, bar code scanning officially began with a pack of Wrigley's chewing gum.

During the decade, optical scanning operations were installed in thousands of supermarkets. This exciting new technology eliminated punching the keys of a cash register and accelerated the checkout process greatly.

By 1970, another tech tool — data processing — had been a part of the grocery business for 15 years or so. While the computer was commonly used for accounting and record-keeping, and was becoming more common as a way to manage inventory at store and warehouse level, its purpose in "decision-making" was still "around the corner," according to a 1970PG article.

While the decade started out on an uneven footing for retailers, by the late '70s, business was looking up. PG's 1976Annual Report of the Grocery Industry reported that sales were $143.25 billion, a 9.5 percent gain. "The worst recession since the advent of supermarkets battered the industry in 1975, forcing management to cope with problems they'd never before encountered," including energy costs that were up a staggering 30 percent at the typical store. But the industry was now back on a path of "real" growth, thanks in part to more abundant agricultural production and a slowing in the general inflation rate back to single digits. Thankfully for the industry, the optimism seemed to be on the money; in 1979, retail grocery sales climbed to $19.8 billion — the largest 12-month advance ever recorded. PG

Quick Takes

■ A report by Continental Coffee Co. in Chicago predicted that takeout food value would double by 1980 (from a value of $40 billion in 1970 to $75 billion by the end of decade). Chains such as Pathmark tested fast-food takeout operations in or adjacent to their stores.

■ By early 1974,service delis were still regionally developed, according to Progressive Grocer. They were found in at least 17 percent of supermarkets on a national basis, and were estimated to account for 29 percent of the grocery business.

■ Foodarama (ShopRite) Supermarkets of Freehold, N.J., entered the motor fuel business when it opened its first gasoline station, under the ShopRite name, in Neptune, N.J. The shop provided gas, oil and specialty products, and was geared toward busy women who were already shopping in the supermarket.

■ Hinky Dinky in Iowa and Nebraska tied one of its in-store terminals into a First Federal Savings & Loan Association of Lincoln computer. Customers could make deposits and withdrawals in their own accounts.

■ At the beginning of the decade, supermarkets had become the fourth-leading outlet for the retail sale of housewares. According to the National Housewares Manufacturers Association, supermarkets accounted for 4 percent — or $250 million — of total dollar sales in housewares in the United States.

■ Training programs for employees became a disciplined and responsible operation. There were nearly 1.3 million full-time and part-time employees in 33,600 supermarkets.

■ Julia Child appeared on the cover of the February 1978 PG. In an interview with the magazine, she said she liked shopping at supermarkets.

■ By end of 1970, 46 percent of families had incomes of $10,000 or more, and 29 million women were working. The birth rate slowed down noticeably during the decade.

■ Frozen foods promised to be the fastest-growing of all food lines. By 1972, they accounted for 5.5 percent of total sales in supermarkets.