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