January 4, 2007
GHQ Cover Story: Independent Streak
By Richard Turcsik
Through special arrangement, what follows is an excerpt
of a current story from Grocery Headquarters magazine, presented here
for discussion.
Don’t call them independents. Today’s family-owned grocers prefer a new, more comprehensive description.
“Our members today have a greater flexibility and knowledge than ever before,” said Tom Zaucha, president of the National Grocers Association. “That’s why we have gotten away from the term ‘independent’ to ‘community-focused.’”
And they’re now “lifestyle centers,” as opposed to plain old grocery stores. “The more you can meet lifestyle needs by being community-focused, the more successful you are going to be,” he said.
Across the country a large number of retailers are dedicated to proving the truth of Mr. Zaucha’s words. Among them is ValuMarket, a five-unit operation in Louisville, Ky. “We set up each of our stores for the neighborhood, and not just as a cookie cutter,” said James Neumann, vice president.
To illustrate, the Mid City Mall ValuMarket in the upscale Highlands neighborhood is stocked with aisles of organic groceries, entrees from local restaurants, $3.99 half-gallons of non-homogenized milk in glass bottles, and $10 cans of coffee from a local upstart roaster. On the other hand, the Iroquois Manor store, in a low-income area filled with recent immigrants from war-torn countries in Europe, Africa and Asia, features aisles filled with imported produce and groceries from their homelands.
“An independent should never be out-freshed; never be out-serviced and never be out-communityized. They ought to be able to get closer and stay closer to their customers than the larger folks just because of their size dimension,” said Dr. Richard George, professor of food marketing at St. Joseph’s University in Philadelphia.
“I’m very optimistic about the opportunity that independents have,” said Edward McLaughlin, Robert Tobin professor of marketing and director of the food industry management program at Cornell University. “We’re starting to see a crack in the veneer and strategy of many of the conventional retailers, including a behemoth like Wal-Mart and their inability to react locally to changing market conditions and new consumer preferences.”
“As an independent, one of our real advantages is that we can move very quickly in an individual store,” said Tim Metcalfe, co-owner of Metcalfe Sentry Foods in Madison, Wis., an operator of three stores. “As a chain, when they make a move they are thinking of five, 10 or 20 stores, and it is harder to implement things because that implementation is so much broader.”
The biggest challenge facing independents is there aren’t enough strong voluntary wholesalers, said Burt P. Flickinger III, managing director of Strategic Resources Group. “On the other hand, the co-ops have never been stronger or better,” he said. “There is a real renaissance of independents going through the co-op.”
Independents have been switching to co-ops because they often feel voluntaries are giving them short shrift, he said. “It seems like too many voluntary wholesalers go for the short-term gain at the risk of long-term pain by taking pages out of the Fleming playbook,” Mr. Flickinger said, citing the bankruptcy of what was once the nation’s second-largest voluntary wholesaler. “They’ll only reflect the manufacturers’ discounted prices for one or two weeks, instead of for the full 30, 60 or 90 days,” he said.
Discussion Questions: What do you see as the biggest challenges facing independent grocers today? Is there one challenge that is important but is often overlooked in coverage of independents? Where do independents have the greatest opportunities for success?
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Reader, he did not pick me up. I was browsing, and musing aloud to my companion, in a small grocery shop in southern California yesterday when a man hovering in the aisle behind us came over and joined the conversation. Turns out he was the owner of the store we were in and its sister in the next town. He doesn’t work there but does frequently wander the aisles checking everything that needs to be checked. So far, so good. Even better, he was friendly, polite, interested and informative. He and the store were generally impressive by my nitpicking, extra-fussy standards. Several of their fresh food department offerings were unique to the area and to be commended.
There were faults and problems, however, only one of which I pointed out. His verbal response was as it should be. The action he took may or may not have been sufficient but soon afterwards I checked the problem that I’d told him about and found that it had been compounded rather than solved (it was too soon for him to have taken much action although I would have liked to see him confronting the person who was allegedly dealing with it). Mrs. Owner was also wandering around so I told her about the compounded problem and she, too, commiserated and vowed to solve it. I hope for their sake that they did because my companion (my mother) is a regular customer and was on the phone to her friends spreading the tale within hours. Being an even stroppier sort of shopper than I am, I have no doubt that she will now be watching them like a hawk and will be sure to spread the word about her satisfaction levels whether they go up or down.
As Ryan says, and so many of us have said so often here, good retailing is about passion. This is an opportunity greater for independents than big chains because of their size. There is no good reason for a small company not to inspire and encourage participation, knowledge, consideration, passion from their staff and customers. If they don’t then they are missing an opportunity and do not deserve to succeed. Call it a lifestyle store or a community store or what you will, do the best you can to deal with wholesalers, co-ops or manufacturers to get the best products and the best brands for your customers but unless you can make them love you, you simply aren’t in the right business.
Ms. Scholl mentions the importance of category management and data analysis and the difficulties smaller companies have in doing this.
I was reading a copy of Home Channel News (for the hardware-home improvement industry) a few months back and there was a feature on Orgill, one of the major wholesalers to independents. The article discussed how Orgill provides as much support to its customers as they want, from none to a whole lot, including promotional circulars just like those from Ace and True Value.
But another service they offer is a price competitiveness/ analysis service (I don’t remember the exact name for the program) where, based on the amount and type of competition the store faces, each product is price coded (eight levels) based on price sensitivity and margin. Some products were priced to break even to bring people in the store, others where the store didn’t have as much competition on the sales of that particular product, could be priced more favorably to the store.
Certainly, an independent, especially one with a handful of stores (even one), would not be able to do this on their own. It’s an incredible service to have access to.
I don’t know the grocery industry well enough to know if wholesalers and the cooperatives provide similar kinds of operational and marketing support.
I can’t see how Supervalu would do this (although maybe they do), given that they own so many supermarkets themselves…
Let’s look at this subject from a different angle. I grew in a small town. My best friend’s family operated one of the two local grocery stores (both of which were branded; one a stable name and the other flip-flopping with every new ownership). We were also the first recipients of Wal-Mart’s Supercenter. Long story short, my friend’s family bought out the other grocery store and moved into that location; then focused on freshness, quality and personal attention. That same store is still around today.
Sure, the market changed on them but the basics of retailing never changed and that is how they survived.
On a side note… The biggest challenge I see for them today is keeping the physical attributes of the store up to par. Small businesses have to remodel or, in some cases, build new in order to stay competitive in today’s market. This is not an easy task for most family operations as it has to be plotted almost perfectly. The reason is because trends are expensive to follow.
Earlier today, other panelists have provided a comprehensive perspective on the challenges facing independent grocery operators — namely, owning their property, wholesaler/co-op supply chain, succession, technology and operational scale. These are all very important elements.
I’d like to add an observation on the opportunity side of the discussion. I see many independents doing very well in my travels. Many of these stores are catering to ethnic shoppers (one of the areas that chains have not done especially well). Here, as for independents generally, the key is a differentiation from the chain store down the street. The successful ethnic independent is delivering freshness, outstanding selection, great service and closeness to the local community all packaged in a culturally-friendly store environment. When one looks at the expected growth for Hispanic and Asian populations through 2030 and beyond, I feel a major opportunity for the independent grocery trade lies in targeting ethnic shoppers.
It seems that these independent operators are starting to capitalize on something convenience store owners have realized for some time and that is, niche marketing is effective. The best c-store retailers, Sheetz, Wawa, Thornton’s, etc., have for some time empowered store managers to make decisions at the local level to attract members of the surrounding communities based on its needs. These companies realize that site location (i.e. in a commercial, residential or commuter area) and demographics can vary widely so taking cookie-cutter approach offers a poor value proposition. Instead, committing to quality and value, and staying focused on meeting the immediate demands of core consumers has become an enormously successful business model and has helped drive business for c-store chains, even when they are not the best value on the block. It will be interesting to monitor the competition between independent grocers and c-stores going forward.
Lifestyle center is nice generic name for a category of stores, but what does it mean to consumers? Health food store, organic food, upscale items, gourmet shopping, fitness, nutrition? All of these are lifestyle concepts and any one of them would make a great independent store in a specific community. Calling independents lifestyle stores is great. The challenge for a specific store is to determine what lifestyle means in that community to either the consumers you have, or the consumers you want and what you can do to keep them loyal.
From a category management perspective, I see two issues facing independent retailers:
1. DATA ANALYSIS. Larger retailers have departments that can complete ongoing and breakthrough category and total store analysis (including planogram development). Also, larger retailers tend to have resources available from the suppliers to help complete some of the work. Most independents do not have access (or the time or resources) to get to the level of depth that these larger retailers do. The opportunity is to go for the “80/20” rule — how to get 80% of the learnings through 20% of the work.
2. CATEGORY MANAGEMENT TRAINING. Retailers need to understanding basic merchandising concepts, and have sales fundamentals strategies in place for their stores. Independents need to ensure that they have strategies in place, including overall merchandising principles, to guide their store(s). Training on some of these basics is essential, whether it is through reading literature, or some of the new online video training available in the industry.
The church, the school, the grocery store – what could be more at the heart of and more essential to the community than those organizations? There are the economic issues of supply, margins and so on, but once again it gets down to the ‘spirit’ — the Zen — employees display to the customers. Hopefully there are fewer disabling bureaucratic policies and practices in these shops meaning employees are free to create a Total Customer Experience. The key is to get managers, baggers, cashiers, butchers and stockers to take advantage of that freedom.
We have seen the enemy and he is us.
True, there should be some stronger wholesale distributors out there for the independents. But they are there. People like Bozzutos and AG Florida are very much in tune with the needs of independents. They and others like them are in it for the long haul.
I’ve found that one of the biggest problems is that independents have a tendency to think of themselves as small. It’s a self fulfilling prophecy. Last week, one independent told me that he has trouble finding good sites because the chains have real estate departments looking into it and he can’t find out where potential sites are. Please! Any good commercial r.e. broker is going to have a good bead on new sites or store closings.
It’s been said many times, but succession is still a key issue. Many second and third generation grocers don’t want to put in the hours their predecessors did to build the business. And if they do own the property, as has been suggested, they are often more interested in making money by selling the site. It’s just easier. Furthermore, we need more younger people willing to get into the business and get their hands dirty.
There also needs to be the emphasis on innovation. The old attitude that “we’ve always done it that way” or “we never stocked that before” doesn’t cut it. No one can be more flexible than the independent. There are lots of things to be done that don’t require a huge investment in inventory or equipment.
Stephan is right in that the distinction between “lifestyle” and “neighborhood” or “community” can, and may, be fairly significant. REI is a lifestyle retailer as is Whole Foods. Lifestyle retailers don’t necessarily have to reflect their immediate surroundings since their offering is more narrowly focused and their trading area automatically extended. Again, I think this demonstrates the linguistic difficulty of attempting to put so many diverse eggs into one inflexible categorical basket. If independents were more easily labeled maybe they wouldn’t still be quite so independent.
Taking a parochial perspective, I feel the effective use of technology is a big challenge for independents.
On one hand I feel independents are the “heart and soul of retailing,” truly depending on the success of their operation and wanting to satisfy the needs of their customers. On the other hand, they are challenged by larger organizations who maintain teams of support personnel to implement automation tools that enable them to reduce waste in inventory and labor costs. The larger organizations are able to spread the costs of these specialists across many locations. The independent is forced to make the technology decisions themselves and then rely on the technology vendor to support their product.
Technology also carries a certain amount of ongoing “operating overhead.” Whether it is statistical profiles for forecasting modules, item masters for scanning systems, or ingredient files for deli scales, it is a burden for each individual retailer to maintain this fundamental data. These costs are also spread across multiple outlets by larger organizations.
The major reason the iPod has been a success is that it “packaged the whole solution.” It includes the hardware, software, interfaces, and the content. Retail application vendors need to start looking at their solutions the same way. They need to deliver results to the retailer instead of just the tools.
This will help the independent retailer make effective use of technology and it will enable a new renaissance for independents. After all, eBay has proven there is a little bit of retailing in all of us.
Independent operators — by that or any other name — face two major challenges; one internal the other external.
The internal challenge is to stay true to the principles which are responsible for their growth. I can remember trade press discussions of 25 years ago centering around the “death of the independent.” When the National Grocers Association was formed through the merger of NARGUS (an association of independent operators) and CFDA (a cooperative wholesaler association) many “pundits” didn’t give the association — or its constituency — even an even chance for survival.
Well, the pundits were wrong and those of us who understood that true innovation begins on the fringe of retailing, not at its center, have been vindicated. But, the success of the independent must be footnoted with this caveat: There’s a big danger in reaching the top rung of any ladder and that’s the danger of complacency. Independents have succeeded through constant redefinition and a willingness — often born out of necessity — to explore and exploit niches in the market. They’ve battled scale with skill and a willingness to embrace risk and change. That’s always easier to do when you have more to gain than you have to lose. Once you have more to lose than you have to gain it becomes easier and easier to hide behind entrenched practice.
Now, as to the external challenge, Burt Flickinger is directionally correct — the issue is one of supply. While Burt is right in pointing out the value of wholesalers like Associated Food Stores in Salt Lake City, not every geography has a reliable source of innovative, cost efficient wholesale supply. Of course, at a certain scale the problem can be involved by becoming self-distributing as is the case with K-V-A-T. But, self-distribution clearly isn’t the answer for everyone.
One last thought on this issue. There still seems to be a bit a sense of what Thomas Aquinas once called Apologia Pro Vita Sua (An apology for my life) whenever it comes to talking about independent operators. For as long as I have been associated with food retailing I’ve been troubled by the rather arbitrary lines theoretically separating chains from independents. For years certain trade magazines and trade associations have championed archaic distinctions between companies which, in truth, never made much sense. Today it’s fashionable to speak of community-based retailing, lifestyle stores, family-owned enterprises — but none of these labels really conveys the essence of what separates one class of retailers from another.
It isn’t about size or scale. It never was. It isn’t necessarily about financing (publicly held versus privately held). It’s all about having a passion; demonstrating a commitment to employees and community; possessing a spirit of restless innovation; and beyond everything else having an unassailable sense of self and destiny. That’s why people have such a hard time “defining” what it means to be independent. “Independents” aren’t worried about conforming to any arbitrary standard or definition. They’re all too busy reinventing an industry — every hour of every day.
The issue, or point in this article is getting closer to the consumer/shopper, and better addressing the independents’ shoppers. This should be the key point for independent retailers to focus on; and be included in this article’s list of needs!
I question the loose use of lifestyle destination, for the appropriate meaning is different than neighborhood customizing, market segmentation, and/or community focus.
To NGA’s credit and forward thinking, it has initiated its membership to begin community focusing! And it works, through marketing a brand name and ongoing program support!
Note: this isn’t to say lifestyle destination can’t be accomplished; but it is a different approach than current independent actions.
Hmmmmmmmmmmmmmmmm
I have some areas where independents can excel. One of the first places I look is where the weakest chain operators have their most successful stores. If a weak chain store can do OK, then a good independent should do better. For example, if Winn-Dixie, Safeway, or A&P is over-performing compared to their typical performance, then there could be opportunities nearby.
Another thing to look for is when one chain has recently purchased another. While the new chain goes through its learning curve, they usually drop about 15% in sales. This is a good time to move in. An independent can usually lure experienced employees as well who might not like their new employer.
Burt is correct about needing a good stable wholesaler. The Fleming bankruptcy ruined a lot of independents. Small regional co-ops are more controlled by the retailers rather than Wall Street. This benefits the independent.
The greatest tool for retailer longevity: own your location. Even if your merchandising is outstanding and your customer service renowned, when lease renewal arrives, the landlord will look for the highest possible bid. Retailers who last 50 years own their real estate. Yesterday, RetailWire had an article about Bloomingdale’s success. If Bloomingdale’s had to pay the going rate for leasing its 59th Street Manhattan store, Federated would’ve sold it along with David’s Bridal.
“Lifestyle” is overused and misunderstood. More importantly, the word has zero relevance and meaning to consumers. In order to really think like a consumer and to really respond to them, retailers should start out by talking the same language (or languages) that their customers do. An independent “grocer” (another word consumers do no use) will do well ,assuming they are properly located, by seeking out merchandise that will clearly be perceived as “special” by their target customers; also, this merchandise is more likely to work if it is locally produced and it is not found in the major supermarkets and Wal-Mart.
Consumers will buy good food in well merchandised markets; they will not buy “lifestyles” in grocers!!!!
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Reader, he did not pick me up. I was browsing, and musing aloud to my companion, in a small grocery shop in southern California yesterday when a man hovering in the aisle behind us came over and joined the conversation. Turns out he was the owner of the store we were in and its sister in the next town. He doesn’t work there but does frequently wander the aisles checking everything that needs to be checked. So far, so good. Even better, he was friendly, polite, interested and informative. He and the store were generally impressive by my nitpicking, extra-fussy standards. Several of their fresh food department offerings were unique to the area and to be commended.
There were faults and problems, however, only one of which I pointed out. His verbal response was as it should be. The action he took may or may not have been sufficient but soon afterwards I checked the problem that I’d told him about and found that it had been compounded rather than solved (it was too soon for him to have taken much action although I would have liked to see him confronting the person who was allegedly dealing with it). Mrs. Owner was also wandering around so I told her about the compounded problem and she, too, commiserated and vowed to solve it. I hope for their sake that they did because my companion (my mother) is a regular customer and was on the phone to her friends spreading the tale within hours. Being an even stroppier sort of shopper than I am, I have no doubt that she will now be watching them like a hawk and will be sure to spread the word about her satisfaction levels whether they go up or down.
As Ryan says, and so many of us have said so often here, good retailing is about passion. This is an opportunity greater for independents than big chains because of their size. There is no good reason for a small company not to inspire and encourage participation, knowledge, consideration, passion from their staff and customers. If they don’t then they are missing an opportunity and do not deserve to succeed. Call it a lifestyle store or a community store or what you will, do the best you can to deal with wholesalers, co-ops or manufacturers to get the best products and the best brands for your customers but unless you can make them love you, you simply aren’t in the right business.
Ms. Scholl mentions the importance of category management and data analysis and the difficulties smaller companies have in doing this.
I was reading a copy of Home Channel News (for the hardware-home improvement industry) a few months back and there was a feature on Orgill, one of the major wholesalers to independents. The article discussed how Orgill provides as much support to its customers as they want, from none to a whole lot, including promotional circulars just like those from Ace and True Value.
But another service they offer is a price competitiveness/ analysis service (I don’t remember the exact name for the program) where, based on the amount and type of competition the store faces, each product is price coded (eight levels) based on price sensitivity and margin. Some products were priced to break even to bring people in the store, others where the store didn’t have as much competition on the sales of that particular product, could be priced more favorably to the store.
Certainly, an independent, especially one with a handful of stores (even one), would not be able to do this on their own. It’s an incredible service to have access to.
I don’t know the grocery industry well enough to know if wholesalers and the cooperatives provide similar kinds of operational and marketing support.
I can’t see how Supervalu would do this (although maybe they do), given that they own so many supermarkets themselves…
Let’s look at this subject from a different angle. I grew in a small town. My best friend’s family operated one of the two local grocery stores (both of which were branded; one a stable name and the other flip-flopping with every new ownership). We were also the first recipients of Wal-Mart’s Supercenter. Long story short, my friend’s family bought out the other grocery store and moved into that location; then focused on freshness, quality and personal attention. That same store is still around today.
Sure, the market changed on them but the basics of retailing never changed and that is how they survived.
On a side note… The biggest challenge I see for them today is keeping the physical attributes of the store up to par. Small businesses have to remodel or, in some cases, build new in order to stay competitive in today’s market. This is not an easy task for most family operations as it has to be plotted almost perfectly. The reason is because trends are expensive to follow.
Earlier today, other panelists have provided a comprehensive perspective on the challenges facing independent grocery operators — namely, owning their property, wholesaler/co-op supply chain, succession, technology and operational scale. These are all very important elements.
I’d like to add an observation on the opportunity side of the discussion. I see many independents doing very well in my travels. Many of these stores are catering to ethnic shoppers (one of the areas that chains have not done especially well). Here, as for independents generally, the key is a differentiation from the chain store down the street. The successful ethnic independent is delivering freshness, outstanding selection, great service and closeness to the local community all packaged in a culturally-friendly store environment. When one looks at the expected growth for Hispanic and Asian populations through 2030 and beyond, I feel a major opportunity for the independent grocery trade lies in targeting ethnic shoppers.
It seems that these independent operators are starting to capitalize on something convenience store owners have realized for some time and that is, niche marketing is effective. The best c-store retailers, Sheetz, Wawa, Thornton’s, etc., have for some time empowered store managers to make decisions at the local level to attract members of the surrounding communities based on its needs. These companies realize that site location (i.e. in a commercial, residential or commuter area) and demographics can vary widely so taking cookie-cutter approach offers a poor value proposition. Instead, committing to quality and value, and staying focused on meeting the immediate demands of core consumers has become an enormously successful business model and has helped drive business for c-store chains, even when they are not the best value on the block. It will be interesting to monitor the competition between independent grocers and c-stores going forward.
Lifestyle center is nice generic name for a category of stores, but what does it mean to consumers? Health food store, organic food, upscale items, gourmet shopping, fitness, nutrition? All of these are lifestyle concepts and any one of them would make a great independent store in a specific community. Calling independents lifestyle stores is great. The challenge for a specific store is to determine what lifestyle means in that community to either the consumers you have, or the consumers you want and what you can do to keep them loyal.
From a category management perspective, I see two issues facing independent retailers:
1. DATA ANALYSIS. Larger retailers have departments that can complete ongoing and breakthrough category and total store analysis (including planogram development). Also, larger retailers tend to have resources available from the suppliers to help complete some of the work. Most independents do not have access (or the time or resources) to get to the level of depth that these larger retailers do. The opportunity is to go for the “80/20” rule — how to get 80% of the learnings through 20% of the work.
2. CATEGORY MANAGEMENT TRAINING. Retailers need to understanding basic merchandising concepts, and have sales fundamentals strategies in place for their stores. Independents need to ensure that they have strategies in place, including overall merchandising principles, to guide their store(s). Training on some of these basics is essential, whether it is through reading literature, or some of the new online video training available in the industry.
The church, the school, the grocery store – what could be more at the heart of and more essential to the community than those organizations? There are the economic issues of supply, margins and so on, but once again it gets down to the ‘spirit’ — the Zen — employees display to the customers. Hopefully there are fewer disabling bureaucratic policies and practices in these shops meaning employees are free to create a Total Customer Experience. The key is to get managers, baggers, cashiers, butchers and stockers to take advantage of that freedom.
We have seen the enemy and he is us.
True, there should be some stronger wholesale distributors out there for the independents. But they are there. People like Bozzutos and AG Florida are very much in tune with the needs of independents. They and others like them are in it for the long haul.
I’ve found that one of the biggest problems is that independents have a tendency to think of themselves as small. It’s a self fulfilling prophecy. Last week, one independent told me that he has trouble finding good sites because the chains have real estate departments looking into it and he can’t find out where potential sites are. Please! Any good commercial r.e. broker is going to have a good bead on new sites or store closings.
It’s been said many times, but succession is still a key issue. Many second and third generation grocers don’t want to put in the hours their predecessors did to build the business. And if they do own the property, as has been suggested, they are often more interested in making money by selling the site. It’s just easier. Furthermore, we need more younger people willing to get into the business and get their hands dirty.
There also needs to be the emphasis on innovation. The old attitude that “we’ve always done it that way” or “we never stocked that before” doesn’t cut it. No one can be more flexible than the independent. There are lots of things to be done that don’t require a huge investment in inventory or equipment.
Stephan is right in that the distinction between “lifestyle” and “neighborhood” or “community” can, and may, be fairly significant. REI is a lifestyle retailer as is Whole Foods. Lifestyle retailers don’t necessarily have to reflect their immediate surroundings since their offering is more narrowly focused and their trading area automatically extended. Again, I think this demonstrates the linguistic difficulty of attempting to put so many diverse eggs into one inflexible categorical basket. If independents were more easily labeled maybe they wouldn’t still be quite so independent.
Taking a parochial perspective, I feel the effective use of technology is a big challenge for independents.
On one hand I feel independents are the “heart and soul of retailing,” truly depending on the success of their operation and wanting to satisfy the needs of their customers. On the other hand, they are challenged by larger organizations who maintain teams of support personnel to implement automation tools that enable them to reduce waste in inventory and labor costs. The larger organizations are able to spread the costs of these specialists across many locations. The independent is forced to make the technology decisions themselves and then rely on the technology vendor to support their product.
Technology also carries a certain amount of ongoing “operating overhead.” Whether it is statistical profiles for forecasting modules, item masters for scanning systems, or ingredient files for deli scales, it is a burden for each individual retailer to maintain this fundamental data. These costs are also spread across multiple outlets by larger organizations.
The major reason the iPod has been a success is that it “packaged the whole solution.” It includes the hardware, software, interfaces, and the content. Retail application vendors need to start looking at their solutions the same way. They need to deliver results to the retailer instead of just the tools.
This will help the independent retailer make effective use of technology and it will enable a new renaissance for independents. After all, eBay has proven there is a little bit of retailing in all of us.
Independent operators — by that or any other name — face two major challenges; one internal the other external.
The internal challenge is to stay true to the principles which are responsible for their growth. I can remember trade press discussions of 25 years ago centering around the “death of the independent.” When the National Grocers Association was formed through the merger of NARGUS (an association of independent operators) and CFDA (a cooperative wholesaler association) many “pundits” didn’t give the association — or its constituency — even an even chance for survival.
Well, the pundits were wrong and those of us who understood that true innovation begins on the fringe of retailing, not at its center, have been vindicated. But, the success of the independent must be footnoted with this caveat: There’s a big danger in reaching the top rung of any ladder and that’s the danger of complacency. Independents have succeeded through constant redefinition and a willingness — often born out of necessity — to explore and exploit niches in the market. They’ve battled scale with skill and a willingness to embrace risk and change. That’s always easier to do when you have more to gain than you have to lose. Once you have more to lose than you have to gain it becomes easier and easier to hide behind entrenched practice.
Now, as to the external challenge, Burt Flickinger is directionally correct — the issue is one of supply. While Burt is right in pointing out the value of wholesalers like Associated Food Stores in Salt Lake City, not every geography has a reliable source of innovative, cost efficient wholesale supply. Of course, at a certain scale the problem can be involved by becoming self-distributing as is the case with K-V-A-T. But, self-distribution clearly isn’t the answer for everyone.
One last thought on this issue. There still seems to be a bit a sense of what Thomas Aquinas once called Apologia Pro Vita Sua (An apology for my life) whenever it comes to talking about independent operators. For as long as I have been associated with food retailing I’ve been troubled by the rather arbitrary lines theoretically separating chains from independents. For years certain trade magazines and trade associations have championed archaic distinctions between companies which, in truth, never made much sense. Today it’s fashionable to speak of community-based retailing, lifestyle stores, family-owned enterprises — but none of these labels really conveys the essence of what separates one class of retailers from another.
It isn’t about size or scale. It never was. It isn’t necessarily about financing (publicly held versus privately held). It’s all about having a passion; demonstrating a commitment to employees and community; possessing a spirit of restless innovation; and beyond everything else having an unassailable sense of self and destiny. That’s why people have such a hard time “defining” what it means to be independent. “Independents” aren’t worried about conforming to any arbitrary standard or definition. They’re all too busy reinventing an industry — every hour of every day.
The issue, or point in this article is getting closer to the consumer/shopper, and better addressing the independents’ shoppers. This should be the key point for independent retailers to focus on; and be included in this article’s list of needs!
I question the loose use of lifestyle destination, for the appropriate meaning is different than neighborhood customizing, market segmentation, and/or community focus.
To NGA’s credit and forward thinking, it has initiated its membership to begin community focusing! And it works, through marketing a brand name and ongoing program support!
Note: this isn’t to say lifestyle destination can’t be accomplished; but it is a different approach than current independent actions.
Hmmmmmmmmmmmmmmmm
I have some areas where independents can excel. One of the first places I look is where the weakest chain operators have their most successful stores. If a weak chain store can do OK, then a good independent should do better. For example, if Winn-Dixie, Safeway, or A&P is over-performing compared to their typical performance, then there could be opportunities nearby.
Another thing to look for is when one chain has recently purchased another. While the new chain goes through its learning curve, they usually drop about 15% in sales. This is a good time to move in. An independent can usually lure experienced employees as well who might not like their new employer.
Burt is correct about needing a good stable wholesaler. The Fleming bankruptcy ruined a lot of independents. Small regional co-ops are more controlled by the retailers rather than Wall Street. This benefits the independent.
The greatest tool for retailer longevity: own your location. Even if your merchandising is outstanding and your customer service renowned, when lease renewal arrives, the landlord will look for the highest possible bid. Retailers who last 50 years own their real estate. Yesterday, RetailWire had an article about Bloomingdale’s success. If Bloomingdale’s had to pay the going rate for leasing its 59th Street Manhattan store, Federated would’ve sold it along with David’s Bridal.
“Lifestyle” is overused and misunderstood. More importantly, the word has zero relevance and meaning to consumers. In order to really think like a consumer and to really respond to them, retailers should start out by talking the same language (or languages) that their customers do. An independent “grocer” (another word consumers do no use) will do well ,assuming they are properly located, by seeking out merchandise that will clearly be perceived as “special” by their target customers; also, this merchandise is more likely to work if it is locally produced and it is not found in the major supermarkets and Wal-Mart.
Consumers will buy good food in well merchandised markets; they will not buy “lifestyles” in grocers!!!!