K-Mart tried the all-in-one concept nearly 40 years ago when its larger stores had K-Mart foods. In fact Sam Walton got his idea for expanding variety stores using K-Mart as a model.
By the early seventies, K-Mart decided to spin off the grocery business, for whatever reason. I lived in Missouri at the time and in Kansas City, the three largest food chains in the U.S., Safeway, A&P and Kroger were very prominent. National Foods was in St. Louis. Today, the big players are gone from those markets, as smaller regional chains dominate. Wal-Mart moved in as the national player.
Now look at Chicago. How many Wal-Mart stores do you see in the city? Who dominates the grocery market: Safeway (aka Dominick's).
Wal-Mart reached critical mass when it took the grocery market. Keep the large food chains healthy and you keep Wal-Mart out of the market.
Wal-Mart would remain a variety discount store, like K-Mart, Woolco and TG&Y, the latter two being extinct.