Monthly Labor Review February 2006 39

Supermarkets to Supercenters

From supermarkets to supercenters:

employment shifts to the one-stop shop

Warehouse clubs and supercenters have expanded

into market segments long dominated by department stores

and supermarkets, eroding employment and sales

in these giants of retail trade; the increasing dominance

of warehouse clubs and supercenters will force yet more

structural changes upon the industry

Michael H. Strople

Michael H. Strople

is an economist

formerly in the

Division of Current

Employment

Statistics and

currently in the

Electronic Data

Interchange

Center in the

Office of Field

Operations,

Chicago Regional

Office, Bureau of

Labor Statistics,

Chicago, Illinois.

E-mail:

strople.michael

@bls.gov

Dramatic changes in product delivery

channels are reshaping the landscape of

retail trade. Warehouse stores and supercenters are quickly moving into market segments

once dominated by department stores and supermarkets. The supercenter is seen as a one-stop,

low-price shop for many consumers’ needs—from

apple pie, to blue jeans, to tires. Over the past several years, this changing dynamic has become more

evident not only anecdotally, but also through

various Federal statistics. This article reviews recent trends in employment, sales, and establishment data for warehouse clubs and supercenters,

department stores, and food and beverage stores.

The analysis presented looks at the increasing

dominance of supercenters and its effect on employment in the more traditional retailers: food

stores and department stores.

Warehouse clubs and supercenters

Warehouse clubs originated in the United States

with the 1976 opening of Price Club in San Diego,

California.1 Initially, the clubs offered a wide selection of merchandise at discounted prices to other

establishments for resale; essentially, the clubs

functioned as a wholesaler. Eventually, the clubs

expanded into retail by opening their doors to

select “members,” or customers who had paid a

membership fee. While initially the concept was a

money loser, firms were turning a profit by the

early 1980s. With the success of Price Club, many

more firms joined this niche, making warehouse

clubs “the fastest growing format in U.S. retailing

during the decade of the 1980s.”2

The supercenter is an offshoot of the hypermarket concept, which has existed in Europe since

the 1960s. Indeed, the second-largest retailer in

the world, France’s Carrefour, is a large owner of

hypermarkets.3

 In 1984, through a partnership of

Euromarche and Super Value, hypermarkets first

found their way to the United States with the

opening of a Biggs in the Cincinnati suburbs.4

Today’s U.S. supercenters have evolved from the

European hypermarket model. Both are essentially the combination of a supermarket and a general merchandise store; however, the supercenter

has a greater selection of general merchandise

products.5

 Unlike warehouse clubs, supercenters

are open to the general public and have no special

eligibility requirements for customers to shop

there.
40 Monthly Labor Review February 2006

Supermarkets to Supercenters

Despite the relative newness of warehouse clubs and

supercenters in the United States, they are firmly entrenched

in the retail market. As warehouse stores and supercenters

continue to expand, they compete with retailers across almost

all retail markets. The increased competition forces chains to

adapt and can lead to downsizing, a phenomenon that has

drawn great media attention. The overall effect of the increased competition on employment and sales is examined in

the remainder of this article.

Shifts in employment

Employment in retail trade, as measured by the Current Employment Statistics (CES) survey, accounts for about 1 in 8

private payroll jobs.6 Retail trade and total private employment

shared similar characteristics leading into and coming out of

the 2001 recession. Both employment series peaked in December 2000 and then declined for approximately 30 months,

eventually reaching a trough in 2003 (retail trade in June and

total private employment in July). From peak to trough, the

private sector lost almost 3.5 million jobs, with retail trade

accounting for nearly half a million of them. Since reaching

their respective employment troughs, retail trade and the

private sector as a whole have experienced similarly mild

recoveries: private employment did not fully recover until

June 2005, nearly 2 years after reaching an employment

trough, and retail trade has yet to fully recover the jobs lost.

(See chart 1.)

Within retail trade, food and beverage stores and general

merchandise stores together account for more than 1 in 3

jobs, so employment trends in these two industries can have

profound effects on the industry as a whole.7

 Employment in

food and beverage stores has declined steadily since reaching

a peak in April 2000, falling by 164,600, or more than 5 percent.

By contrast, employment in general merchandise stores has

expanded. From an employment trough in October 2002 to

May 2005, the industry added 78,700 workers, nearly a 3-

percent increase. Notably, the industry has fully recovered

the jobs lost during its previous employment downturn (December 2000 to October 2002), and employment is currently

expanding. (See chart 2.)

With the implementation of the North American Industry

Classification System (NAICS) in June 2003,8 the CES program

was able to begin publishing employment, hours, and earnings estimates for warehouse clubs and supercenters. These

estimates allow for a more detailed analysis of employment

trends within general merchandise stores. Under NAICS,

general merchandise stores are broken down into two main

categories: department stores and other general merchandise

stores. The category of other general merchandise stores

contains the warehouse clubs and supercenters industry

(supercenters) and a residual: all other general merchandise

stores.9

 Department stores are split into two detailed categories: department stores, except discount (that is, the category consists of traditional department stores); and discount

department stores (discounters).10

Since reaching an employment peak in March 2001, traditional department stores have shed over 19 percent of their

workforce, or about 170,000 jobs, while discount stores have

added just 21,000 jobs, a 2-percent increase. In contrast,

supercenters experienced robust growth, with employment

surging by 22 percent, or 164,000 jobs. This hiring nearly

offset the downsizing in traditional department stores. (See

chart 3.)

Diverging trends in establishments and sales

Much of the employment growth in supercenters results from

new stores opening, as retailers expand rapidly into the

supercenter market segment.11 According to the 2002

Economic Census, there were 2,915 establishments in the

supercenter industry, nearly double the 1,530 counted in the

1997 Economic Census. Supercenters accounted for sales

of almost $1.9 billion in 2002. Market share is densely

concentrated within the industry: the four largest firms

account for 84 percent of all establishments and 92 percent of

all sales.

Retailers with both discount stores and supercenters are

focusing greater attention on the latter segment, as reflected

in their company reports. According to its 2005 annual report,

Wal-Mart plans to open 365 establishments domestically in

fiscal year 2006. Of those new establishments, 290 fall into

the supercenter category, while only 45 will be discount

stores. The remaining 30 will be primarily grocery stores.12

Furthermore, of the 290 new establishments in the supercenter category, 160 will result from expansion or conversion

to the newer supercenter concept, thus transferring sales

and people to another NAICS category, yet within the same

company.13 Target, another major chain, is increasing its total

supercenter square footage by more than twice the rate of

that for discount stores.14 On the basis of the reports from

the two chains, it is not surprising to see rapid employment

growth concentrated in supercenters and relatively stagnant

employment in discount stores.

Data from the Economic Censuses also show a definite

shift in the number of old-line establishments and the proportion of sales they represent. From 1997 to 2002, the number

of supermarkets and grocery stores, except convenience

stores, declined by 3,369. Sales rose by almost $43 billion

dollars; however, as a percentage of all retail sales, the share

of sales at supermarkets and grocery stores declined by 1.4

percentage points. Department stores closed 738 establishments, the bulk of them discount stores. A small increase

in sales in discount stores offset a loss in traditional depart-
Monthly Labor Review February 2006 41

Chart 1 & 2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

85

90

95

100

105

85

90

95

100

105

Chart 1. Indexed total private and retail trade employment , 1995—2005

Index 

(January 2001 = 100)

Index 

(January 2001 = 100)

Total private

Retail trade

1999 2000 2001 2002 2003 2004 2005

90

95

100

105

110

90

95

100

105

110

Chart 2. Indexed employment in food and beverage stores and general merchandise stores,

 1999—2005

Index 

(January 2001 = 100)

Index 

(January 2001 = 100)

Food and beverage stores

General merchandise stores

0 0
42 Monthly Labor Review February 2006

Supermarkets to Supercenters

Chart 3& 4

1999 2000 2001 2002 2003 2004 2005

650

700

750

800

850

900

950

650

700

750

800

850

900

950

Chart 3. Employment in general merchandise stores, selected components, seasonally 

 adjusted,1999—2005

Thousands

Department stores, except discount

Warehouse stores and supercenters

Thousands

Discount department stores

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

0

50

100

150

200

250

300

350

400

450

500

0

50

100

150

200

250

300

350

400

450

500

Chart 4. Indexed real sales, selected retail trade industries, 1992—2004

Index 

(1992 = 100)

Index 

(1992 = 100)

Department stores, except discount

Warehouse stores and supercenters

Discount department stores

Grocery stores

SOURCE: U.S. Census Bureau, Bureau of Labor Statistcs, and authors's calculations.
Monthly Labor Review February 2006 43

Table 1. Establishment and sales data, 1997 and 2002 Economic Censuses

 Establishments Sales (millions of dollars)

 Percent or

 percentage points1

 1997 Economic Census

Retail trade ..................................................................... 1,118,447 100.0 $2,460,886 100.0

Food and beverage stores ......................................... 145,528 13.0 401,764 16.3

 Supermarkets and other grocery stores,

except convenience stores ................................ 69,461 6.2 351,403 14.3

General merchandise stores ...................................... 36,171 3.2 330,444 13.4

 Department stores .................................................. 10,366 .9 223,232 9.1

 Department stores, except discount .................. 3,988 .4 95,018 3.9

 Discount department stores ............................... 6,378 .6 128,214 5.2

Other general merchandise stores ......................... 25,805 2.3 110,336 4.5

 Warehouse clubs and supercenters ................... 1,530 .1 81,919 3.3

 All other general merchandise stores ................. 24,275 2.2 28,418 1.2

 2002 Economic Census ......................

Retail trade ..................................................................... 1,116,506 100.0 3,066,811 100.0

Food and beverage stores ......................................... 148,901 13.3 456,136 14.9

 Supermarkets and other grocery stores,

 except convenience stores ............................... 66,092 5.9 394,274 12.9

 General merchandise stores ...................................... 40,907 3.7 444,664 14.5

Department stores .................................................. 9,628 .9 224,016 7.3

Department stores, except discount .................. 3,938 .4 89,850 2.9

Discount department stores ................................ 5,690 .5 134,166 4.4

Other general merchandise stores ......................... 31,279 2.8 220,648 7.2

 Warehouse clubs and supercenters ............... 2,915 .3 189,619 6.2

 All other general merchandise stores ............. 28,364 2.5 31,029 1.0

 Difference ..................................

Retail trade ..................................................................... –1,941 .0 605,925 .0

Food and beverage stores ......................................... 3,373 .3 54,372 –1.4

Supermarkets and other grocery stores,

except convenience stores .................................. –3,369 –.3 42,871 –1.4

General merchandise stores ...................................... 4,736 .5 114,220 1.1

Department stores .................................................. –738 .0 784 –1.8

Department stores, except discount .................. –50 .0 –5,168 –1.0

Discount department stores ................................ –688 –.1 5,952 –.8

Other general merchandise stores ......................... 5,474 .5 110,312 2.7

Warehouse clubs and supercenters ................... 1,385 .2 107,700 2.9

All other general merchandise stores ................. 4,089 .3 2,611 –.2

 Number Percent of total Total

 Industry

 1 Percent of total for 1997 and 2002 Economic Censuses; percentage

points for difference.

SOURCE: U.S. Census Bureau.

ment stores. Like supermarkets, department stores saw their

share of total retail sales slip. By contrast, supercenters flourished between 1997 and 2002. The number of establishments

nearly doubled, while sales grew by more than $100 billion,

accounting for about one-sixth of total growth in retail sales.

(See table 1.)

Employment, establishment, and total sales data indicate

a substantial shift from more traditional retailers to supercenters. The Census Bureau’s Annual Survey of Retail Sales

allows for a time series analysis of sales. Only supercenters

experienced consistent, robust growth in real retail sales from

1992 through 2004.15 Their sales grew by more than 350

percent and stand in stark contrast to a 20-percent decline in

traditional department stores and a 1-percent decline in

grocery stores.16 Although sales at discount stores increased

by 4 percent over the 1992–2004 period, they have edged

down since peaking in 1999. (See chart 4.)

Commodity data, available from the 1997 and 2002

Economic Censuses, allow for a detailed analysis of the

distribution of sales by industry. The data show not only the
44 Monthly Labor Review February 2006

Supermarkets to Supercenters

Table 2. Retail trade distribution of supermarket sales of commodities across selected industries, 1997 and 2002

 Economic Censuses1

 Beer, Total, Percent

 Industry Grocery Meals wine, and Tobacco supermarket of retail

liquor commodities trade

 1997 Economic Census

Retail trade ...................................................... 367,224 10,838 42,126 36,819 19,195 17,066 493,268 100.0

........................................................................

 Food and beverage stores .......................... 285,309 3,862 32,540 13,224 10,411 10,349 355,695 72.1

 Health and personal care stores ................ 5,253 87 2,020 1,873 527 782 10,542 2.1

 Gasoline stations ........................................ 21,264 3,555 5,676 13,607 301 355 44,758 9.1

 General merchandise stores ....................... 44,521 1,540 1,678 4,767 7,818 5,100 65,424 13.3

 Warehouse clubs and supercenters ....... 33,496 647 1,373 3,534 1,787 2,361 43,198 8.8

 Miscellaneous store retailers ...................... 364 120 125 2,789 43 351 3,792 .8

 Nonstore retailers ........................................ 9,862 1,413 72 433 89 117 11,986 2.4

........................................................................

 2002 Economic Census ...............

 Retail trade .................................................... 439,641 18,393 53,556 51,733 24,678 24,138 612,139 100.0

 Food and beverage stores .......................... 311,813 9,008 40,583 13,972 10,087 10,344 395,807 64.7

 Health and personal care stores ................ 6,412 124 1,876 1,926 899 712 11,949 2.0

 Gasoline stations ........................................ 24,063 5,094 7,415 22,283 275 338 59,468 9.7

 General merchandise stores ....................... 82,677 2,172 3,125 6,897 12,023 9,614 116,508 19.0

 Warehouse clubs and supercenters ....... 68,352 1,554 3,015 6,276 5,342 4,808 89,347 14.6

 Miscellaneous store retailers ...................... 665 107 242 5,875 137 2,250 9,276 1.5

 Nonstore retailers ........................................ 13,366 1,665 297 694 186 873 17,081 2.8

 Difference ...........................

 Retail trade .................................................... 72,417 7,555 11,430 14,914 5,483 7,072 118,871 .0

 Food and beverage stores .......................... 26,504 5,146 8,043 748 –324 –5 40,112 –7.5

 Health and personal care stores ................ 1,159 37 –144 53 372 –70 1,407 –.2

 Gasoline stations ........................................ 2,799 1,539 1,739 8,676 –26 –17 14,710 .6

 General merchandise stores ....................... 38,156 632 1,447 2,130 4,205 4,514 51,084 5.8

 Warehouse clubs and supercenters ....... 34,856 907 1,642 2,742 3,555 2,447 46,149 5.8

 Miscellaneous store retailers ...................... 301 –13 117 3,086 94 1,899 5,484 .8

 Nonstore retailers ........................................ 3,504 252 225 261 97 756 5,095 .4

 1 Industries selected are those which represented at least 1 percent of

all supermarket commodity sales in either 1997 or 2002.

 2 Sales by warehouse clubs and supercenters represent a significant

share of commodity sales by general merchandise stores.

SOURCE: U.S. Census Bureau.

 Cleaning

supplies

Paper

products

2

2

2

[In millions of dollars]

encroachment of supercenters upon supermarkets’ domain,

but also the diversity of products sold at supercenters. The

proportion of supermarket commodities sold in food and

beverage stores declined by 7.5 percentage points, while

supercenters increased their proportion of supermarket

commodities sales by 5.8 percentage points.17 This apparent

shift of traditional grocery store items away from food stores

and toward supercenters illustrates the changing product

delivery channels consumers are choosing. (See table 2.)

Among supermarket commodities, the shift is most dramatic in cleaning supplies and paper products, whose sales

at supermarkets fell between 1997 and 2002. Sales of groceries

and tobacco rose in food stores, but rose faster in supercenters. Supercenters, however, did not keep pace with food

stores in their sales of prepared meals and of beer, wine, and

liquor.

More recent data on total retail sales (across all commodities) make it apparent that food stores have continued

to lose market share, likely in part to supercenters. In 2004,

total retail sales, in constant dollars, increased by almost 9

percent. Supercenters exceeded that pace, with sales

increasing by 11 percent; yet, sales at food stores were little

changed.

The rapid growth of sales during the 5 years between the

two censuses is telling. (See table 3.) Total sales at supercenters have increased by 131.5 percent, towering over the

13.5-percent rise at food and beverage stores and the 6.4-

percent increase exhibited by discount stores, the “growing”

portion of department stores. The data also demonstrate that

supercenters are expanding across retail segments. From 1997

to 2002, census data show that sales increased across all

categories of commodities; the same cannot be said about

overall sales at food stores or at discount stores. However,

as a percentage of total sales, some of the more traditional

supercenter products—specifically, food and beverages, and

clothing—suffered declines, perhaps an indication that
Monthly Labor Review February 2006 45

Table 3. Distribution of sales by industry and type of store, 1997 and 2002 Economic Censuses

[In millions of dollars]

Supercenters Food stores Discount stores

Percent of total or Percent of total or Percent of total or

percentage points1 percentage points1 percentage points1

 1997 Economic Census

 Total ................................................ 81,919 100.0 401,763 100.0 126,120 100.0

...............................................................

Food and beverage ................................ 43,198 52.7 355,696 88.5 17,198 13.6

Clothing and clothing accessories ........ 9,507 11.6 208 .1 34,926 27.7

Miscellaneous ........................................ 8,302 10.1 14,494 3.6 10,347 8.2

Health and personal care ...................... 5,212 6.4 25,974 6.5 17,408 13.8

Sporting goods, hobby .......................... 4,923 6.0 496 .1 13,314 10.6

Furniture and home furnishings ............. 3,141 3.8 1,327 .3 13,212 10.5

Building material and garden supply ..... 2,952 3.6 2,290 .6 7,513 6.0

Electronic and appliances ..................... 2,137 2.6 352 .1 10,513 8.3

Automotive and fuels ............................. 2,546 3.1 925 .2 1,691 1.3

 2002 Economic Census

 Total ................................................ 189,619 100.00 456,136 100.0 134,166 100.0

...............................................................

Food and beverage ................................ 89,348 47.1 395,808 86.8 17,803 14.1

Clothing and clothing accessories ........ 17,856 9.4 352 .1 34,569 27.4

Miscellaneous ........................................ 15,051 7.9 13,611 3.0 11,447 9.1

Health and personal care ...................... 17,874 9.4 36,743 8.1 19,472 15.4

Sporting goods, hobby .......................... 12,117 6.4 1,163 .3 13,500 10.7

Furniture and home furnishings ............. 8,787 4.6 1,426 .3 12,817 10.2

Building material and garden supply ..... 7,785 4.1 3,495 .8 5,926 4.7

Electronic and appliances ..................... 16,892 8.9 811 .2 16,123 12.8

Automotive and fuels ............................. 3,909 2.1 2,726 .6 2,510 2.0

 Difference

 Total ................................................ 107,701 .0 54,373 .0 8,046 .0

...............................................................

Food and beverage ................................ 46,150 –5.6 40,113 –1.7 605 .5

Clothing and clothing accessories ........ 8,350 –2.2 144 .0 –357 –.3

Miscellaneous ........................................ 6,749 –2.2 –883 –.6 1,100 .9

Health and personal care ...................... 12,661 3.0 10,769 1.6 2,063 1.6

Sporting goods, hobby .......................... 7,194 .4 667 .2 186 .1

Furniture and home furnishings ............. 5,646 .8 98 .0 –395 –.3

Building material and garden supply ..... 4,832 .5 1,205 .2 –1,587 –1.3

Electronic and appliances ..................... 14,755 6.3 459 .1 5,610 4.5

Automotive and fuels ............................. 1,364 –1.0 1,801 .4 820 .7

 1 Percent of total for 1997 and 2002 Economic Censuses, percentage

points for difference.

 NOTE: Commodities were organized into major groups so that they

would align closely with the retail industry in which they are commonly sold.

 SOURCES: U.S. Census Bureau, 1997 and 2002 Economic Censuses;

and author’s calculations.

 Industry

Sales Sales Sales

supercenters are becoming more diverse. This product diversity becomes more apparent when two particular commodity

lines—electronics and accessories, and health and personal

care—are examined. Essentially, sales in the two groups rose

dramatically from 1997 to 2002, resulting in the largest

increases relative to total sales. These relative increases further illustrate the infiltration of supercenters into broad retail

trade markets, because two of the fastest-growing product

lines are in direct competition with specialty stores and not

with traditional food stores or department stores. Yet, as sales

of traditional supercenter product lines, such as clothing,

decline relative to other products, it is interesting to note

that, in monetary terms, increases in clothing sales at supercenters have outstripped the entirety of sales increases at

discount stores.

WAREHOUSE CLUBS AND SUPERCENTERS HAVE GROWN IN POPULARITY

over the last several decades. Companies have continued to

expand the reach of these two concepts, driving increases in

employment and sales. This expansion has had a negative

impact on two traditional powerhouses of retail trade: the

food and beverage store and the department store, each of

which has seen employment and sales decline steadily. As

warehouse stores and supercenters continue to expand, their

increasing dominance will likely force more structural changes in the retail trade industry. 
46 Monthly Labor Review February 2006

Supermarkets to Supercenters

Notes

1

 Richard S. Bragaw, “Pioneering the Wholesale Club Concept,”

Discount Merchandiser, November 1990, pp. 42, 44, 48.

2 Ibid., p. 42.

3

 Information about Carrefour and its corporate holdings is available on

the Internet at http://www.carrefour.com/english/groupecarrefour/

ouverturesMagasins.jsp. See also “Carrefour SA: Retailer’s Revenue Rises

3.9 percent on Growth at Hypermarkets,” The Wall Street Journal (eastern

edition), Apr. 13, 2005, p. 1. The largest retailer in the world is Wal-Mart.

4

 Daniel J. Sweeney, “Warehouse Clubs! Hypermarkets! Supercenters!” Retail Business Review, November 1992, p. 18.

5

 Jay L. Johnson, “Hypermarkets and Supercenters: Where Are They

Heading? “Discount Merchandiser, November 1989, pp. 60–63.

6

 Data on employment presented in this article are from the Current Employment Statistics (CES) program, which surveys 160,000

nonfarm businesses representing about 400,000 establishments

monthly. All data are through June 2005. For more information on

the program’s concepts and methodology, visit http://www.bls.gov/

opub/hom/pdf/homch2.pdf on the Internet.

7

 For industry definitions, see North American Industry Classification System: United States, 2002 (Executive Office of the President, Office of Management and Budget, 2002); on the Internet at

http://www.census.gov/epcd/www/naics.html.

8

 For an explanation of NAICS and the methodologies used by the CES

program to reconstruct historic estimates, see Teresa L. Morisi, “Recent changes in the national Current Employment Statistics survey,”

Monthly Labor Review, June 2003, pp. 3–13; on the Internet at http://

www.bls.gov/opub/mlr/2003/06/art1full.pdf.

9

 The detailed category of all other general merchandise stores

was excluded from the analysis because it represents no single identifiable retail market. Furthermore, employment in all other general

merchandise stores represents a much smaller portion of employment in general merchandise stores than does any of the other three

detailed categories: department stores, except discount; discount department stores; and warehouse clubs and supercenters.

10 For the analysis presented in this article, data have been reconciled to match NAICS 2002 definitions. Definitions of department

stores, except discount, and of discount department stores differ

slightly from the NAICS 1997 definition. The category of warehouse

clubs and supercenters (NAICS 452910) is shortened to supercenters;

that of department stores, except discount (NAICS 452111), is shortened to traditional department stores; and that of discount department

stores (NAICS 452112) is shortened to discounters.

11 Economic Census 2002 (U.S. Census Bureau, 2002), on the

Internet at http://www.census.gov/econ/census02/.

12 Wal-Mart 2005 Annual Report, on the Internet at http://

www.walmartstores.com/Files/2005AnnualReport.pdf.

13 Ibid.

14 Target Corporation Annual Report 2004, on the Internet at

http://media.corporate-ir.net/media_files/irol/65/65828/

reports/2004_TGT_annual.pdf.

15 The most current data available in the Annual Survey of Retail

Sales are for 2004. Data from the survey were deflated with the BLS

CPI-U series for 1982–84 = 100.

16 Grocery stores account for more than 90 percent of sales in the

food and beverage industry.

17 For the purposes of this article, supermarket commodities include

groceries, meals, beer, wine, liquor, tobacco, cleaning supplies, and paper

products.