To combat Wal-Mart in areas like St. Louis, traditional supermarket operators are sprucing up their offerings of fresh fruits and meats and emphasizing service. Mr. Schnuck said his company was also exploring ways to make its operations more efficient.

Some food executives are worried that Wal-Mart will become so powerful that it will demand special prices on big wholesale orders. "There are a lot of manufacturers that are concerned about special deals," said Charles McCarthy, president of the sales division of the Campbell Soup Company. "There is always pressure from the power buyers like Wal-Mart once they have a lot of your business."

Wal-Mart is also building a line of its own "Sam's American Choice" food products in crisp, attractive packaging. The company is selling its own version of cola, cookies and juice in some stores. Last year, the company acquired the McLane Company, a grocery distributor.

"I believe that it is their intention to be one of the largest food retailers in the country by the end of the century," said Ryan Mathews, editor of Grocery Marketing, published by Gorman Publishing in Chicago.

Wal-Mart executives declined to discuss their plans to expand food and grocery sales.

But Robert F. Buchanan, a retail analyst with Alex. Brown & Sons in Baltimore, said there was little doubt that Wal-Mart was "moving big into food." Food retailing accounted for $362 billion in sales last year, according to Alex. Brown, compared with $84.6 billion in discount department store sales last year. Mr. Buchanan said that building up grocery sales will play an increasingly large role in the company's stated goal of reaching $100 billion in sales by the end of the decade.

Last summer, Wal-Mart struck a deal with Mexico's biggest retailer, Cifra S.A., to open warehouse-style stores in Mexico that would sell a range of products, including stationery, electronics and food. Uneasy Ripples

Some in the food industry are concerned that Wal-Mart will gain too much power as it expands into an important new area of food retailing. In Canada and Europe, where there is a far greater degree of consolidation in food retailing, a few large retailers wield tremendous influence over the food industry. "It makes negotiating more difficult," said Mr. McCarthy of Campbell.

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Already, some of Wal-Mart's recent moves are sending uneasy ripples through the food industry. In November, Wal-Mart told manufacturers that it would no longer deal with the brokers who act as middlemen between manufacturers and retailers.

Wal-Mart says cutting out the brokers will improve communications and allow the company to react quicker in ordering. The company argues that the sheer volume of its business -- it had sales of $32.6 billion last year -- mandates that it has direct ties to its suppliers. 'This Is Not Passive'

Some food retailing executives have a different interpretation. "It's Wal-Mart flexing its muscles and saying we are a national, dominant retailer and we decide the rules of a game, and not you," said Brian Sharoff, president of the Private Label Manufacturers Association in New York. "At one time retailers were viewed as passive. This is not passive."

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Grocers are also worried that Wal-Mart's decision to stop working with brokers will give it a price advantage. Food processors pay brokers small commissions for selling their products. Grocers say that manufacturers dealing directly with Wal-Mart could pass the savings on to the chain in the form of discounts.

Federal law bars food makers from cutting out middlemen simply to avoid paying a commission and then passing along the savings to a supermarket in the form of additional discounts.

"We are concerned that people might find a way to get around that," Mr. Schnuck said. "I just want to be given the same opportunity that the other guy is given."

The supermarket industry has commissioned a study, due out early next year, on whether discounters are getting special prices not available to other retailers. Selling Through 'Super Centers'

Some retailing experts say they think Wal-Mart's primary food-retailing efforts will be done through its Super Centers, which range from 97,000 square feet to 211,000 square feet.

Half of each center is a supermarket. The other half is a typical Wal-Mart, selling underwear, brooms, diapers, toys and myriad other apparel and household items. Wal-Mart has just six of the giant centers, all in the Midwest, but plans to open another 14 in rural areas next year.

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Analysts said the stores are more effective than the huge Hypermart stores that Wal-Mart tested but decided not to expand after a poor response from consumers. The Hypermarts were too unwieldy for consumers, who were also put off by the difficulty of consistently finding the same product at the stores. Regular Wal-Mart stores already do a brisk business in supermarket-type snacks and other small items, like peanuts, candy, potato chips, napkins and paper towels. K Mart's Food Strategy

Wal-Mart's chief rival, the K Mart Corporation, is also looking at selling more food. The company is testing a complete grocery store as part of a Super K Mart Center in Medina, Ohio, near Cleveland. The store opened in August and devotes nearly one-third of its 147,000 square feet to selling groceries. The combination stores are designed to appeal to time-pressed families that are increasingly accustomed to shopping at discounters.

K Mart also sells groceries through its Pace membership warehouses. These, along with the Costco and Price Club warehouse chains, are taking a bigger share of the food retailing pie each year.

Still, supermarket executives said that the discounters will find supermarket chains to be more formidable competition than the small hardware stores and five-and-dimes that Wal-Mart and K Mart overran to start the discount industry 20 years ago.

"Food stores are much more complex than discount stores," said Michael W. Wright, chairman and chief executive of Super Valu Stores Inc., a supermarket operator and food wholesaler based in Minneapolis. After the Recession

Also, some supermarket operators assert that the success of Wal-Mart and others that sell groceries in no-frills warehouses has been built on a bad economy. "This recession is made to order for discount operations," said Michael J. Rourke, a spokesman for the Great Atlantic and Pacific Tea Company Inc., which operates supermarkets in 26 states. "As the economy improves, their appeal will not be as great."

But Wal-Mart's expertise in logistics and distribution will be an enormous benefit in the grocery business, where efficient shipping and warehousing are crucial to profits. Mr. Buchanan, the Alex. Brown analyst, recently shopped at Wal-Mart grocery stores in Missouri and said that prices were 11 to 14 percent lower than at competing local grocery stores.

"Traditional supermarkets have left their flanks exposed," said Mr. Mathews, the editor of Grocery Marketing. "They didn't understand that people were willing to trade off some amenities for cost. If you have a family of four and you are making $35,000 a year, you really don't care if there is classical music on the Muzak system."