Food for thought.

• Author: Rundles, Jeff
• Position: Supermarkets face change - Industry Overview

OVER THE YEARS, WE'VE SEEN THE DEMISE OF THE traditional department store as big-box, category killers stepped in and chipped away at the department store's most lucrative product segments.

We've seen the near-complete collapse of the "service station," as we used to call the place to get gasoline, replaced by the mass-market "self-service" pumps of today.

And we've even seen the tradition of the purely local restaurant get eaten alive by the proliferation of restaurant chains.

The one bastion of the traditional that still survives these modern times has been the venerable grocery supermarket, a concept introduced in the 1950s.

But that, too, is changing quickly.

The assault on the basic grocery-store concept, and its primary purveyors Safeway, Kroger (King Soopers) and Albertson's, has begun, and there is no way that the end result will be good for the supermarket.

Ultimately, it may not be good for consumers either.

It's easy to point the finger at Wal-Mart, and indeed that retail behemoth is the main change agent here. But the assault on the grocery-store status quo is coming from every direction. Wal-Mart is ramping up its Supercenters concept, the one that combines a huge, fairly traditional supermarket with a standard Wal-Mart department store. In this model, people visit the store more often than the typical supermarket because there is so much more to buy than groceries. The popularity of the concept is amazing, and Target stores are heading in the same direction.

But Wal-Mart also is embarking on a Neighborhood Market concept, building smaller food markets closer to where people live, a la Safeway and King Soopers. The key to this strategy is Wal-Mart's propensity for prospering in areas basically abandoned by the competition; first it was rural areas, and now I suppose we'll see Neighborhood Markets in the inner city. In addition, Wal-Mart owns Sam's Club and, along with rival Costco, those two stores are bringing the warehouse concept to...