SOUTH PORTLAND – Stephanie Smart does most of her weekly grocery shopping at a supermarket near her home in North Windham. But on a recent trip to the Target store in South Portland, she took a few minutes to stock up on some basics in the store’s grocery section, which was significantly expanded a couple of years ago.

“I’m here anyway,” she explained, strolling past shelves packed with cereal, pasta and bread and coolers stocked with frozen food, milk and juice.

Smart’s shopping trip is representative of a major shift under way in the marketplace. The big, traditional supermarket chains that dominate the Maine market, such as Shaw’s and Hannaford, still draw plenty of shoppers, but competition for the dollars that were predominantly spent in those stores has heightened sharply in recent years. Today less than half of consumers’ food budgets are spent at supermarkets, down significantly from just a few years ago.

And now Shaw’s and Hannaford are facing another challenge: Market Basket, a Massachusetts-based chain known for its low prices, will open a store in Biddeford in a few weeks, its first in Maine and 72nd overall.

The grocery wars are on.

While Market Basket hasn’t announced plans for more stores in Maine, it has expanded rapidly when it has moved into other new markets, although there is turmoil among executives at the chain. A family dispute led to a boardroom fight this month over who will lead the company and, although no immediate change was made, further infighting could complicate expansion plans.


Market Basket plans to roll out some of its newest features at the Biddeford store, said David McLean, the chain’s operating manager.

McLean said the store will have more prepared meal takeout options and a cafe with flat-screen televisions for those who want to eat before they shop. He also said the store, which will be among Market Basket’s largest, will also have expanded healthy foods, gluten-free options and gourmet offerings.

But, he said, Market Basket will maintain its focus on keeping prices low and making “the shopping experience uncomplicated, with no gimmicks and no frequent shopper cards,” a swipe at Shaw’s now-defunct loyalty “Rewards” card, which customers had to sign up for to get the best price on sales items.

Market Basket’s entry into Maine could further change the supermarket landscape here, forcing supermarkets like Hannaford and Shaw’s to respond to the increased competition from other grocery chains as well as from other retailers and online sites all trying to grab a piece of consumers’ food budgets.

In response to the increasing competition, Hannaford and Shaw’s recently announced storewide price cuts, as well as the end of Shaw’s Rewards Card program.

Both moves are “pre-emptive strikes” because of the upcoming competition with Market Basket, said Mike Berger, senior editor of The Griffin Report of Food Marketing, a trade publication for the food marketing industry. “They won’t tell you that (the price cuts are in reaction to Market Basket), but they are.”


Both Shaw’s and Hannaford already compete with Market Basket in Massachusetts and New Hampshire, Berger said, and the chains are worried about expanding that competition geographically.

But it’s not just lower-priced competition that traditional grocery stores have to fend off. On the higher-priced end, Whole Foods and Trader Joe’s, for instance, attract customers focused on organic foods or those interested in particular house brands. And retailers Walmart and Target got into the grocery mix in the past decade, enlarging or even replacing existing stores to accommodate grocery sections that are as extensive as those in traditional supermarkets.

On the horizon is increasing competition from the Internet, likely to be heightened as Amazon Fresh expands beyond its introductory base in Los Angeles. Convenience stores and dollar stores are also angling for a piece of the consumer’s grocery budget and even drugstores are joining the fray, adding bread, fresh milk and other traditional supermarket goods a few aisles away from hair coloring, Band-Aids and antacids.


Grocery shopping outside the supermarket is a trend that started about 20 years ago and accelerated in the past few years, as the recession forced Americans to cut corners wherever they could, said Phil Lempert, the founder of the website SupermarketGuru and a contributing editor for Supermarket News, a trade publication.

For many, the savings come not only from prices but also from not having to burn gas going to several stores on the weekly shopping trip, and preserving some free time.


“I buy here regularly,” Heather Pendleton of Buxton said while loading her groceries and getting her children into her car outside the Target store in South Portland. “It’s close to where we have doctors and it has a little of everything that I want to have.”

Like many other shoppers, however, Pendleton said she still goes to a supermarket for fresh meat and produce, saying she felt more comfortable buying those items at a Hannaford near her home.

Deb Baginski of Scarborough said she also mixes in trips to the supermarket with trips to Target.

“I’m here every couple of weeks or so, so I’ll get groceries also,” she said. “It saves me a trip to the grocery store today.”

Pendleton and Baginksi are part of a trend that has established itself in recent years.

National figures indicate that most of the family grocery budget — about 85 percent — was spent at supermarkets two decades ago, but now less than half goes into cashiers’ tills at those stores. Supermarket chains added essentially no additional space from 2005 to 2011, but non-grocery stores added 150 million square feet devoted to food during the same period, according to the Food Marketing Institute.


Supermarket chains are, in some cases, scaling back their presence in the face of competitors almost literally on every corner.

Hannaford laid off 350 workers in February and its corporate parent, the Belgian conglomerate Delhaize, last year closed nearly 150 stores, mostly in the South, that it operated under the Food Lion and Sweetbay banners. In late May, the company sold another 155 of its stores in the South to a rival chain.

Shaw’s has gone through several owners over the past decade and in recent years has shrunk its footprint: While there used to be Shaw’s stores in all six New England states, the chain no longer operates in Connecticut. It also announced that it would close four stores in Massachusetts and two in Rhode Island in August. The chain still has 22 stores in Maine.

“We are focused on executing our plan and winning New Englanders over again,” said Shane Sampson, president of Shaw’s and Star Market. “We are competing with anyone who sells food.”

The stores that were closed recently, he said, haven’t been profitable for some time, but there are no plans to close any of the Maine locations.

Sampson said Shaw’s ended the rewards program and is giving local managers more authority as part of its response to heightened competition — and the company is aware that its competitors are not only fellow supermarkets.


“Stores that offer everything from trash bags to tea bags to tires are always going to be a draw for customers, just as the corner drugstore will be — we understand the appeal,” he said. “However, those customer trips are different than a trip to Shaw’s and Star Market for local produce and seafood. We continue to strive to offer the best in fresh, and that’s something a superstore or drugstore is challenged to compete with.”

But the erosion of supermarkets’ hold on the grocery dollar has even had an impact on the real estate market.

For years, the space around a supermarket was golden for other retailers, said Mark Malone, a commercial real estate broker in southern Maine. The regular foot traffic the supermarkets pulled in made other retailers practically line up to get a space next to them, Malone said.

If there was an opening in a shopping center with a supermarket, he said, “I had a list of a few people who I could call and they would take the space right away.”

But now, it can take up to a year to fill a vacant space in a supermarket-anchored shopping center, he said. Some of that is due to the sluggish economy, Malone said, but it also reflects the fact that supermarkets are no longer the automatic draw for many communities.

Malone reflected on his own family’s shopping habits, prompting him and his wife to put together a list of the different places they had bought groceries in the previous few weeks. They came up with 12 different stores, he said.


Those competitors “are just picking away at the edges of the grocery stores,” Malone said. “It’s definitely changing.”


Amid that corporate weakness in the supermarket industry, department stores began eyeing the food market more than two decades ago. Walmart was among the first to jump in, converting some of its department stores to “Supercenters,” with full grocery stores — including butcher shops, bakeries and seafood departments — alongside the televisions, clothing and kitchen appliances.

Locally, Walmart closed a relatively new store in Scarborough four years ago and moved a few hundred feet away to open a Supercenter, more than twice as large as the original store, primarily to add a full-size grocery store.

Although some items in their grocery sections sell on slim markups compared to their other goods, Walmart and supermarkets’ other competitors saw a way to wring a few more dollars out of consumers before they headed back to the parking lot. With gas prices rising, consumers were eager to combine shopping trips to save a few dollars at the pump.

For consumers, the idea of even small savings accelerated the shift away from supermarkets during the recession, Lempert said.


“When the economy went south, people started shopping around and going to different locations and that’s when the trend really took off,” Lempert said. “It’s ingrained now. It’s never going to change.”

Lempert said it’s natural for department stores and other retailers to try to offer a wider selection of goods to consumers, but selling food takes the connection with the consumer to a different level than simply adding a new line of clothes or expanding the electronics department.

“Foods are very primal and if you become someone’s source of food, you build a much stronger relationship,” he said.

Shelley Doak, executive director of the Maine Grocers Association, said the erosion in supermarkets’ hold on consumer food spending is a natural outgrowth of heightened competition.

She said that in addition to a wider range of stores selling groceries, Maine has also experienced a sharp increase in the number of farmers’ markets, selling fruit, vegetables, meats and other products and eating into supermarkets’ natural customer base.

The increased competition and greater number of options are good for shoppers, she said, because they keep prices down.


“From a consumer’s perspective, wow!” she said.

But Doak said she thinks consumers still maintain a strong allegiance to Maine’s leading supermarket chains, which are members of her association, amid all the other choices. And, she said, smaller communities have independent grocers, with family ownership that goes back several generations, and they attract plenty of local shoppers.

“They’re really part of the fabric of Maine,” she said.

The businesses, whether a large chain or single independent store, recognize the need to evolve to adapt to changing markets and consumer tastes, Doak said.

“They need to sharpen their pencils,” she said. “They’re always having to reinvent themselves and make it (shopping) an experience.”



Lempert said supermarkets are trying a range of approaches, from adding dietitians to a store’s staff to answer questions about healthy food choices, to adding in-store cafes that allow people to have a bite to eat before they shop.

Both Shaw’s and Hannaford are launching their own efforts to draw back customers. Shaw’s is asking its customers to take “a fresh look” at its stores and offering sales that run for months, rather than just a week at a time.

Hannaford has similar deals and has rolled out other initiatives, such as a “Hannaford to Go” service that allows customers to order online and then pick up groceries — already bagged — in front of the store without ever leaving their car. So far, that service is available at just two stores — and only the North Windham store in Maine — but company spokesman Mike Norton said the chain is ready to offer it at other locations if the demand is there.

Hannaford, he said, also touts its “Close to Home” program, which focuses on locally sourced produce and fish and allows store managers to arrange deals with local farmers for some produce.

“This (competition) has been going on for us for 25 years and your response to it is to make your strategy very compelling to the consumer,” he said.

Norton noted that many Hannaford stores have pharmacies and said the recently announced price cuts are aimed at maintaining competitiveness, “but we’re not looking to be a discounter.”


Norton said the chain expects customers to try other stores for their groceries, but he thinks they’ll return.

“We often find that they may sample elsewhere and then come back,” he said. “We really think we can price with most of those players and we think we can serve them better than most of those players.”

Lempert said that among the other challenges, supermarkets have a difficult demographic balance to strike.

Baby boomers, he said, are getting older and are more concerned about their health, so they might be attracted to a store that focuses on organic and natural products. That naturally encourages them to become fairly set in their food choices.

But their children, he said, are more adventurous and favor more exotic offerings.

“They never want to eat the same food twice,” he said.


Lempert said he thinks that supermarkets can survive, but only if they adapt, perhaps by creating stores that cater more directly to key customer groups.

More services are also likely, he said, in an attempt to differentiate what they offer with what customers can get from department stores or drugstores.

“They’re bringing back the butcher and many supermarkets are putting in sit-down restaurants,” he said. “If they know their customer base and they make the stores smaller and more personal, it can bring people back.

“The supermarket is really the center of the community,” he said. “It’s where you see your neighbor. I don’t think the supermarket will ever completely disappear.”

Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]

This story was updated at 2:20 p.m. July 28 to correct the location of Walmart.


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