that grocery stores are classed as SIC 5411 (See page 274 reproduced in Exhibit
<br />"M; however, they are not correct when they state that category 5411 is
<br />synonymous with supermarkets. The four digit category has four components:
<br />convenience food stores/no gas (SIC 541120), convenience food stores with gas
<br />(SIC 541130), delicatessens (SIC 541140) and grocery stores (SIC 541110). Thus
<br />the four digit industry "grocery stores" has a six digit store type with exactly the
<br />same name: "grocery stores". Those six digit grocery stores are mutually exclusive
<br />from delicatessens and convenience stores. Just as all grocery stores are not
<br />warehouse stores, all grocery stores are not supermarkets. Moreover the
<br />definition of the six digit "grocery store" given in the industry and product
<br />classification manual, as reproduced in Exhibit "C" is:
<br />These are retail stores commonly known as supermarkets, food stores, grocery
<br />stores and warehouse stores, which are primarily engaged in the sale of all kinds
<br />of canned foods and dry good, other packages or in bulk, such as tea, coffee,
<br />spices, sugar, flour, fresh fruits and vegetables. They may also sell fresh
<br />and/or frozen meats, fish, poultry, eggs, and bakery and dairy products.
<br />Grocery stores, with or Supermarkets
<br />without fresh meat -retail Warehouse stores
<br />Food market -retail
<br />One can see that even at the six digit level where one has winnowed convenience
<br />stores and delis out, the "grocery store" category still includes separate store types,
<br />e.g. grocery stores, with or without fresh meat, supermarkets and warehouse
<br />stores. Moreover the Census definition strictly speaking contains an error. The
<br />first sentence should read "... grocery stores or warehouse stores." In fact if one
<br />examines the 1992 Census of Retail Trade - Food Survey Instrument (Exhibit
<br />"C' , item 7 asks the retailer to identify an exact six digit SIC store type and
<br />among the choices are "Grocery Store - SIC 541111" and "Food Supermarket -
<br />SIC 541112". So the SIC Code in its most detailed form defines supermarkets
<br />and grocery stores as mutually exclusive and distinct use categories. I conclude
<br />that the SIC classification system at no level of aggregation, considers grocery
<br />stores to be synonymous with supermarkets.
<br />7. Note that the Bureau of Census does not define a supermarket. The accepted
<br />industry definition is a store that carries at least fresh meat, fresh produce and
<br />fresh dairy products as well as dry grocery products and is above a specified sales
<br />volume. Progressive Grocer requires annual sales of more than 2 million, but has
<br />not adjusted this cutoff for inflation over the past 15 years. USDA has done the
<br />adjustment and uses a 3.3 million (1992 Dollars) cutoff.' A.C. Neilsen, a leading
<br />Market Research Group, uses a 4.0 million dollar cut off. More than scale is
<br />involved when a supermarket increases in size, product mix changes Analysts
<br />commonly identify sit different supermarket formats: the conventional
<br />supermarket (less than 30,000 square feet), the superstore (more than 30,000
<br />square feet, with substantial nonfood and specialty departments), the combination
<br />store (a superstore with a complete drug store in it, 60,000 - 80,000 square feet), a
<br />warehouseAimited assortment supermarket (less than 30,000 square feet), a super
<br />warehouse supermarket (over 30,000 square feet) and a hypermarket
<br />(supermarket with over 40% nonfood over 100,000 square feet and often over
<br />200,000 square feet).`
<br />'Doris J. Newton, "Nontraditional Retailers Challenge the Supermarket Industry", Fob
<br />Review, Vol. 16, No. 1, USDA, Washington D.C., Jan. - April 1993, p. 3.
<br />°Ronald W. Cotterill, "Food Retailing: Mergers, Leveraged Buyouts and Performance" in L.
<br />Duestch,lndustry Studies, Prentice Hall; Englewood Cliffs, 1993, p. 467-168.
<br />411
<br />July 12, 1994
<br />MY
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