While grocery stores have been battered by the proliferation of huge warehouse clubs such as Costco and Wal-Mart's Sam's Club, the pint-size warehouses of Smart & Final have flourished in their shadow, siphoning away business from customers who have become disenchanted by the long lines and parking lot congestion.
Its nondescript stores have no tire centers, snack bars or electronics departments, just unglamorous items such as 25-pound bags of pinto beans, gallons of private-label barbecue sauce and 200-count packages of plastic cups. But the 220 stores have one key advantage their huge competitors don't: convenience.
"I come here because I don't have to wait in huge lines or deal with the traffic at Costco," said Janice Bustos, who shops at the Covina Smart & Final for cleaning supplies for her business and picks up coffee and other groceries for her home.
The Commerce-based company seems to have finally righted itself after a poorly executed expansion in Florida helped depress earnings in the late-1990s. In the first three quarters of last year, Smart & Final's total store sales were up 6% to $1.1 billion from a year earlier, and earnings more than doubled to $7.9 million from $3 million in the 1999 period.
Much of the sales bump can be attributed to small-business owners like Bustos, who can't spare the time or can't find the cleaning supplies or food items they need at Costco.
Part supermarket, part warehouse store, part food distributor, Smart & Final's no-frills concept defies easy description and has for years befuddled analysts, manufacturers and competitors alike.
Even if the food industry doesn't know quite what to make of the 130-year-old chain, which trades as SMF on the New York Stock Exchange, its concept finally seems to be clicking with consumers, especially after the introduction of its new ad campaign, which entices consumers to "shop where the pros shop and save."
Consumers have become increasingly comfortable with warehouse shopping in recent years. Fifty percent of all households surveyed by ACNielsen in 1999 shopped at a warehouse club at least once that year, up from 48% in 1997.
Meanwhile, the number of trips to the supermarket have been declining, slipping to 90 annual trips from 94 just three years earlier.
With the company back in the black, Smart & Final's expansion plans have been revived. More than 15 new stores will open this year in its existing markets such as California, Florida, Nevada and the Pacific Northwest, where it bought the Cash & Carry wholesale grocery chain in 1998.
