Mass-merchandise (e.g., Wal-Mart) and club-store (e.g., Sam's Club) retailers supplied a
limited assortment of P&G and other grocery-channel products at low margins, enabling them to
offer attractive prices to consumers. These formats grew rapidly during the 1980s. Even though club
stores offered a limited product selection and provided less service than traditional grocery
retailers, a significant segment of consumers was willing to replace grocery-store shopping with
club-store purchases, with the attraction of lower prices at the club stores more than offsetting the
inconveniences involved. A McKinsey study of alternative distribution channels for grocery
products, published by the Food Marketing Institute in 1992, demonstrated that the more efficient
distribution and merchandising of these alternative formats enabled them to offer lower prices to
consumers than traditional grocery retailers. This study served as a wakeup call to the grocery
industry, suggesting that existing processes needed to be improved to enable it to meet the challenge
of these rapidly growing alternative formats.