There's a chain of supermarkets around here that are the size of a Super Walmart, but all groceries. They carry for example 15 flavors or more of PopTarts, just to give one example. And they have low prices, and have seemed to figure it out (they were even apparently mostly immune from the TP shortages earlier this summer). I wonder how they manage, yet other chains don't (not that they have a lot of stores in their chain, they are spread out to no more than 1 or 2 stores in any county).
They even have other customer-service oriented niceties, such as the fact that you don't have to put your groceries on a belt at checkout -- instead their carts are designed so that the cashier pulls directly from the cart, they go into bags that then get put into another cart for you to take out of the store. Little things like that make me wonder why these concepts haven't caught on. (Same with Aldi's letting their cashiers sit on a stool -- employee friendly, and doesn't interfere with the customer).