January 9, 2008
GHQ: Separate Ways
By Nicole Spector
Through a special arrangement, what follows is an excerpt of a current article from Grocery Headquarters magazine, presented here for discussion.
Small grocers looking to keep themselves off the endangered species list this year will need to focus on community appeal, health and wellness, freshness and the qualities that make them unique.
“Escalating costs of food and energy are challenges with increased margin pressure,” said Christine Cunnick, director of communications for the National Grocers Association. “Another challenge is the rapid rate of change in technology. Staying abreast of these changes can be difficult, confusing and require resources that some retailers don’t have.”
Dr. Richard George, professor of food marketing at St. Joseph’s University in Philadelphia, said the industry today is made up of the “price guys” like Wal-Mart dominating one corner of the marketplace and the “cool guys” like Whole Foods and Wegmans dominating the other. The majority of supermarkets, he said, are falling somewhere in the middle, a place he characterizes as “nowhere” and “death’s alley.”
It’s imperative, Professor George said, for independents to find a point of differentiation and discover what it is about their approach that makes them stand out and developing it from there.
“When I stand outside many supermarkets and ask consumers who are walking out why they shop there, they usually say something like ‘Oh, it’s on my way home.’ And that just isn’t enough. Retailers need to find the category that they can own,” said Professor George, “and many still haven’t.”
Straub’s in St. Louis is a prime example of a small independent that is making strides, with a fifth store opening this summer. A quality meat department has always been the retailer’s claim to fame. Leveraging this reputation, about 12 years ago it started improving other specialty departments like the bakery and eventually upgraded its wine assortments to go with the premium steaks. “We wanted to develop our meat reputation in every category across the store,” said vice president Tripp Straub, great-grandson of the founder.
Sprouts Farmers Market, which has 25 stores in Arizona, California, Texas and Colorado, focuses intensively on health and wellness, primarily through produce, and a clean presentation.
“We’re like Trader Joe’s on steroids,” said Kevin Easler, co-founder of the Phoenix-based company. “Or maybe Whole Foods lite. We lean toward the healthier side, but with a price-sensitive offering.”
Professor George said the ultimate recipe for success lies in retailers asking themselves the right questions.
“How can we develop a sense of community? How can we become a wellness champion? What can we do to make an environment people like not just a little, but a lot?”
Discussion Questions: What should independents do when they find themselves between “price guys” (Wal-Mart) and “cool guys” (Whole Foods)? What do you see as the keys to creating a successful community appeal strategy? What questions should independents be asking themselves?
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Most local grocers don’t or can’t use unusual sourcing like Whole Foods or Trader Joe’s. And they probably can’t be the low price commodity leaders like Aldi or Wal-Mart. But they can treat their staff better, and focus on earning the lowest possible employee turnover. There’s no doubt that improves customer loyalty, even in a self-service store. Low staff turnover certainly reduces stress for everyone, both customers and store management. Even more important: if they can own their real estate outright, their chances of longevity are much greater. Retailers who aren’t subject to endless rent increases earn breathing room for themselves that compounds in value decade after decade.
The way toward thwarting those threats is thinking like a customer: convenience, speed and shopablility being on top of the list. And the best way to make those things happen is by focusing on the store experience; better merchandising, reduced clutter, simplified signage, focused lighting and much, much better foodservice (especially to-go). We actually see the foodservice industry as an emulator for grocers in this regard.
It’s not enough to think rote anymore; grocers need to get out of their comfy little box and look at the rest of the retail world…customer experience rules all!
Well, if you have four variables to work with: price, convenience, service, and quality, then the independent has to look at each one and decide how they can do better. Price is tough, unless you deal with a private label. Perhaps they can talk to local restaurants to offer local fare; brands the big guys would never carry and at a unique price.
Convenience is key and just being on the way home is not the only thing. How about a pick-up or maybe even a delivery option? If it is promoted correctly, as an emergency feature with a fee, the delivery option may even make money. Charge accounts might work too, but we know the issues there. Service is obvious, but it comes with a big cost.
We work very hard with frequent shopper programs to “know the customer” but I think it is even more important that the customer “know the retailer.” That butcher who got me the great roast for my successful New Year’s dinner will always be on my mind. That means fewer part time and more full time employees who can work a couple evening shifts to meet the evening shoppers.
Quality is pretty even when you are dealing with brands, so the place to wow them is in the commodity areas such as meat and produce. By offering more varieties and better quality commodities to meet the local clientele’s preferences, you have a good drawing card.
One unique thing, and I don’t remember what they were called now, that Farmer Jack did in the Detroit area many years ago was to introduce their own special donut that could only be bought in their stores. They associated the donut with a local festivity so that Farmer Jack got a lot of free advertising during the event. Seems like a neat trick if you can do it. (Later on they gave away “new mother bags” in hospitals that contained gift certificates and manufacturer coupons, another neat trick.)
The survival and “thrival” of independents…always an interesting subject. As it was said in a couple of instances, not many independents can support being a Stew Leonard or some other specialty assortment or service provider.
There is an operator in Northwest Indiana who has four stores. One, Amelia’s, is very upscale with terrific specialty assortment, a cooking school, a bistro, a specialty cosmetics and skin care store and a variety of other very distinctive sections. The other three stores are fairly plain Jane grocery stores. Reason? The areas that those other stores serve don’t have sufficient clientele to support the upscale model AND they are located in areas that are not over-stored with chain grocery or other outlets.
So we end up with one of my three keys for avoiding the middle. Location. If you exist in an area that is not a target (yet) for additional retail doors you can do well. The other two keys?
2. Be where the big guys cannot be. Independent drugstores figured this out some years back when they had their big shakeout. Many of them do specialized services (podiatry, compounding, infusion therapy) that the chains cannot do, or handle products (Home Medical Equipment) that the chains cannot afford to handle or cannot provide expertise on. This obviously is consumer facing, and is similar to some of the specialty service and products comments above.
3. Service and or convenience is often discussed as an area where Independents can compete effectively. A different view of this is providing service/convenience that that customer actually values. For instance, an independent can take extraordinary pains to make sure they are NEVER out of stock on items. This is something a chain cannot do. With consumers spending on average 20% of their shopping time dealing with out of stocks and substitutions, this “convenience” would TRULY be of value and should translate into loyalty. There are 4 of these type of blocking and tackling “conveniences” that would truly provide this type of value.
Segment, segment, segment.
The long term solution for every retailer not based on the “low price” format will be their ability to segment their consumer base and offer products and services not found in the supercenters.
Nothing succeeds like excess. Therein lies today’s opportunity for the independent grocer as Wal-Mart hustles the price crowd and chains such as Whole Foods serve the “Cool Hand Lukes.”
Independents already exceed chains as hard working, reliable citizens who continually display their devotion to serve the local public better than anyone else could serve them. That’s a great advantage and they should continue to exceed the chains in community participation and customer service. They should seize opportunities to modify their assortments by adding more locally-unique contemporary offerings not found elsewhere.
The current group of surviving independents has never been in a strong position to compete successfully in the vast middle of the marketplace.
Service and Selection. I repeat: Service and Selection.
Small business owners can do this better than the big guys. Make consumers feel wanted, helped and happy with the product they stock that they can get other places but KNOW you stock them because they want it.
Another way to create a positive shopping experience in small business is to organize your store the way your shopper’s shop. Make it easy for them to find what they want and they can get in and out quickly–which will create more frequent trips and therefore, more spending.
Independents can easily out-service everyone else. This niche has to be exploited to maximize success. I don’t know of one chain grocer that offers a custom butcher. An independent can also take advantage of local suppliers and identify them to shoppers (Transylvania County Strawberries).
Another tactic is to hire the local high school celebrities as Saturday employees or put them on an advisory board. This will get their friends wanting to be involved and will introduce you to their parents. Invite any civic organizations to use your location as a location to dispense information (this will introduce all the “do gooders” to your store and services).
Is the above easy? no! Just ask Stew Leonard. He’s been kicking chains around for years and invented the “cool” grocery store. There’s nothing new here, just learning from history!
The independent near me, Southdown Market, is doing just great. With each renovation, they get busier, even though a full range of retail options exists within a 5-10 minute drive. Why? They are built around service (they bag your groceries, even put them on the belt for you), comfortable feeling (I’m sure people feel “at home” there), with an emphasis on fresh and deli (tasting stations). However, they DO carry national brands, so you can buy the brands you want there.
I have less expensive alternatives, healthier alternatives, snootier alternatives, but I really like going there, as do many others.
First of all, while there are probably “price guys” in most markets, there are a lot fewer “cool guys” to go around. Max is on target here. The key is community responsiveness–the ability to understand who you are, who your customer is and what you need to do to move from a series of serial transactions to a sustainable relationship. In some cases that may mean operating a very conventional store with highly unconventional service. In other cases it may mean deep community involvement. In still other cases it may mean operating hours or one specialty department.
Our problem is that we are always searching for the magic wand or one-explanation-fits-all hypothesis to explain retail success. In the process we overlook thousands of talented operators who survive year-in and year-out by showing up every day and doing the unheroic or non-newsworthy to the best of their ability.
For over 20 years now I’ve been reading about why independents have to change or perish and the truth is they’ve never been stronger. It’s time we spent a little less time obsessed with the sizzle and a little more time analyzing the true value of the steak.
Customer service should be a key area of focus. With turnover high at Wal-Mart and the other major chains, having a knowledgeable staff that truly cares about its customers is an important point of differentiation.
Driving down the California coast through the city of Eureka, I stopped at the North Coast Co-op, which was a large, beautiful independent grocer with a high end, organic ambiance. They have 2 locations and have been around since 1973. Membership costs $25. I was impressed that a community the size of Eureka could support such an enterprise and would like to learn more about them.
Today’s Independents are continuously improving themselves in order to survive and prosper. However there needs to be a plan that will maximize opportunities and insure growth and prosperity.
Analyze the competition and look for opportunities not being offered or not done particularly well by competition. Develop those offerings that can make a difference whether it be perishables, wellness, etc.
Find a local charity or cause and integrate that into your business plan so that the community and your customers benefit and support your efforts.
Train employees to deliver superior customer service.
Easy to say…but it takes time, money and effort to develop!
A community grocery store should be just that…involved in the community. Some events that would draw loyalty are health fairs, Easter egg contest drawings and focus groups on special topics. Send out birthday cards for free coffee! If you make the community feel as if it is their store, they will certainly shop there and be your word of mouth marketing. Many grocers get so wrapped up in day to day operations that they forget about the soft side. This is how to win.
Eureka, there is a way for the small guy to compete with the price guys and the cool guys!
It is critical that the grocer/owner understand the pulse of the community they serve. Small guys can react to demographic changes and wants much faster than corporate behemoths with a small suggestion box at the front entrance. Owners and managers need to get out on the sales floor and talk to their customers as well as their associates.
I love taking on a new client that is small because there are so many creative ways that they can compete with the ‘machines’. Bringing in products and creating services that cater specifically to the community is the hot trend now. As wacky as it may seem, serving your customers in ways they want will bring in the dollars that would otherwise go to the big guns (grudgingly against the customer’s will).
Independents need to ask themselves a simple question, “Why would shoppers come here rather than go elsewhere?” That means they need to understand better than the cheap guys and the cool guys what shoppers in their area want. They need to have a better-refined assortment at prices supportable in their trading area. Their biggest potential advantage–that elusive “shopper experience.” A small local retailer is in the best position to provide that, unbound by corporate processes.
I think independents can be both cool and price guys in their own unique ways.
Examples of this are two independents in the Greater Pittsburgh area, McGinnis Sisters and Kuhn’s.
Both serve a niche in the gasoline “fuel perks” crazed marketplace there dominated by Giant Eagle and to a lesser extent by the Supervalu entries, Shop ‘n Save and Foodland.
Both offer competitive pricing, fresh and organic produce, fine meats, and friendly service. And both are thriving.
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Most local grocers don’t or can’t use unusual sourcing like Whole Foods or Trader Joe’s. And they probably can’t be the low price commodity leaders like Aldi or Wal-Mart. But they can treat their staff better, and focus on earning the lowest possible employee turnover. There’s no doubt that improves customer loyalty, even in a self-service store. Low staff turnover certainly reduces stress for everyone, both customers and store management. Even more important: if they can own their real estate outright, their chances of longevity are much greater. Retailers who aren’t subject to endless rent increases earn breathing room for themselves that compounds in value decade after decade.
The way toward thwarting those threats is thinking like a customer: convenience, speed and shopablility being on top of the list. And the best way to make those things happen is by focusing on the store experience; better merchandising, reduced clutter, simplified signage, focused lighting and much, much better foodservice (especially to-go). We actually see the foodservice industry as an emulator for grocers in this regard.
It’s not enough to think rote anymore; grocers need to get out of their comfy little box and look at the rest of the retail world…customer experience rules all!
Well, if you have four variables to work with: price, convenience, service, and quality, then the independent has to look at each one and decide how they can do better. Price is tough, unless you deal with a private label. Perhaps they can talk to local restaurants to offer local fare; brands the big guys would never carry and at a unique price.
Convenience is key and just being on the way home is not the only thing. How about a pick-up or maybe even a delivery option? If it is promoted correctly, as an emergency feature with a fee, the delivery option may even make money. Charge accounts might work too, but we know the issues there. Service is obvious, but it comes with a big cost.
We work very hard with frequent shopper programs to “know the customer” but I think it is even more important that the customer “know the retailer.” That butcher who got me the great roast for my successful New Year’s dinner will always be on my mind. That means fewer part time and more full time employees who can work a couple evening shifts to meet the evening shoppers.
Quality is pretty even when you are dealing with brands, so the place to wow them is in the commodity areas such as meat and produce. By offering more varieties and better quality commodities to meet the local clientele’s preferences, you have a good drawing card.
One unique thing, and I don’t remember what they were called now, that Farmer Jack did in the Detroit area many years ago was to introduce their own special donut that could only be bought in their stores. They associated the donut with a local festivity so that Farmer Jack got a lot of free advertising during the event. Seems like a neat trick if you can do it. (Later on they gave away “new mother bags” in hospitals that contained gift certificates and manufacturer coupons, another neat trick.)
The survival and “thrival” of independents…always an interesting subject. As it was said in a couple of instances, not many independents can support being a Stew Leonard or some other specialty assortment or service provider.
There is an operator in Northwest Indiana who has four stores. One, Amelia’s, is very upscale with terrific specialty assortment, a cooking school, a bistro, a specialty cosmetics and skin care store and a variety of other very distinctive sections. The other three stores are fairly plain Jane grocery stores. Reason? The areas that those other stores serve don’t have sufficient clientele to support the upscale model AND they are located in areas that are not over-stored with chain grocery or other outlets.
So we end up with one of my three keys for avoiding the middle. Location. If you exist in an area that is not a target (yet) for additional retail doors you can do well. The other two keys?
2. Be where the big guys cannot be. Independent drugstores figured this out some years back when they had their big shakeout. Many of them do specialized services (podiatry, compounding, infusion therapy) that the chains cannot do, or handle products (Home Medical Equipment) that the chains cannot afford to handle or cannot provide expertise on. This obviously is consumer facing, and is similar to some of the specialty service and products comments above.
3. Service and or convenience is often discussed as an area where Independents can compete effectively. A different view of this is providing service/convenience that that customer actually values. For instance, an independent can take extraordinary pains to make sure they are NEVER out of stock on items. This is something a chain cannot do. With consumers spending on average 20% of their shopping time dealing with out of stocks and substitutions, this “convenience” would TRULY be of value and should translate into loyalty. There are 4 of these type of blocking and tackling “conveniences” that would truly provide this type of value.
Segment, segment, segment.
The long term solution for every retailer not based on the “low price” format will be their ability to segment their consumer base and offer products and services not found in the supercenters.
Nothing succeeds like excess. Therein lies today’s opportunity for the independent grocer as Wal-Mart hustles the price crowd and chains such as Whole Foods serve the “Cool Hand Lukes.”
Independents already exceed chains as hard working, reliable citizens who continually display their devotion to serve the local public better than anyone else could serve them. That’s a great advantage and they should continue to exceed the chains in community participation and customer service. They should seize opportunities to modify their assortments by adding more locally-unique contemporary offerings not found elsewhere.
The current group of surviving independents has never been in a strong position to compete successfully in the vast middle of the marketplace.
Service and Selection. I repeat: Service and Selection.
Small business owners can do this better than the big guys. Make consumers feel wanted, helped and happy with the product they stock that they can get other places but KNOW you stock them because they want it.
Another way to create a positive shopping experience in small business is to organize your store the way your shopper’s shop. Make it easy for them to find what they want and they can get in and out quickly–which will create more frequent trips and therefore, more spending.
Independents can easily out-service everyone else. This niche has to be exploited to maximize success. I don’t know of one chain grocer that offers a custom butcher. An independent can also take advantage of local suppliers and identify them to shoppers (Transylvania County Strawberries).
Another tactic is to hire the local high school celebrities as Saturday employees or put them on an advisory board. This will get their friends wanting to be involved and will introduce you to their parents. Invite any civic organizations to use your location as a location to dispense information (this will introduce all the “do gooders” to your store and services).
Is the above easy? no! Just ask Stew Leonard. He’s been kicking chains around for years and invented the “cool” grocery store. There’s nothing new here, just learning from history!
The independent near me, Southdown Market, is doing just great. With each renovation, they get busier, even though a full range of retail options exists within a 5-10 minute drive. Why? They are built around service (they bag your groceries, even put them on the belt for you), comfortable feeling (I’m sure people feel “at home” there), with an emphasis on fresh and deli (tasting stations). However, they DO carry national brands, so you can buy the brands you want there.
I have less expensive alternatives, healthier alternatives, snootier alternatives, but I really like going there, as do many others.
First of all, while there are probably “price guys” in most markets, there are a lot fewer “cool guys” to go around. Max is on target here. The key is community responsiveness–the ability to understand who you are, who your customer is and what you need to do to move from a series of serial transactions to a sustainable relationship. In some cases that may mean operating a very conventional store with highly unconventional service. In other cases it may mean deep community involvement. In still other cases it may mean operating hours or one specialty department.
Our problem is that we are always searching for the magic wand or one-explanation-fits-all hypothesis to explain retail success. In the process we overlook thousands of talented operators who survive year-in and year-out by showing up every day and doing the unheroic or non-newsworthy to the best of their ability.
For over 20 years now I’ve been reading about why independents have to change or perish and the truth is they’ve never been stronger. It’s time we spent a little less time obsessed with the sizzle and a little more time analyzing the true value of the steak.
Customer service should be a key area of focus. With turnover high at Wal-Mart and the other major chains, having a knowledgeable staff that truly cares about its customers is an important point of differentiation.
Driving down the California coast through the city of Eureka, I stopped at the North Coast Co-op, which was a large, beautiful independent grocer with a high end, organic ambiance. They have 2 locations and have been around since 1973. Membership costs $25. I was impressed that a community the size of Eureka could support such an enterprise and would like to learn more about them.
Today’s Independents are continuously improving themselves in order to survive and prosper. However there needs to be a plan that will maximize opportunities and insure growth and prosperity.
Analyze the competition and look for opportunities not being offered or not done particularly well by competition. Develop those offerings that can make a difference whether it be perishables, wellness, etc.
Find a local charity or cause and integrate that into your business plan so that the community and your customers benefit and support your efforts.
Train employees to deliver superior customer service.
Easy to say…but it takes time, money and effort to develop!
A community grocery store should be just that…involved in the community. Some events that would draw loyalty are health fairs, Easter egg contest drawings and focus groups on special topics. Send out birthday cards for free coffee! If you make the community feel as if it is their store, they will certainly shop there and be your word of mouth marketing. Many grocers get so wrapped up in day to day operations that they forget about the soft side. This is how to win.
Eureka, there is a way for the small guy to compete with the price guys and the cool guys!
It is critical that the grocer/owner understand the pulse of the community they serve. Small guys can react to demographic changes and wants much faster than corporate behemoths with a small suggestion box at the front entrance. Owners and managers need to get out on the sales floor and talk to their customers as well as their associates.
I love taking on a new client that is small because there are so many creative ways that they can compete with the ‘machines’. Bringing in products and creating services that cater specifically to the community is the hot trend now. As wacky as it may seem, serving your customers in ways they want will bring in the dollars that would otherwise go to the big guns (grudgingly against the customer’s will).
Independents need to ask themselves a simple question, “Why would shoppers come here rather than go elsewhere?” That means they need to understand better than the cheap guys and the cool guys what shoppers in their area want. They need to have a better-refined assortment at prices supportable in their trading area. Their biggest potential advantage–that elusive “shopper experience.” A small local retailer is in the best position to provide that, unbound by corporate processes.
I think independents can be both cool and price guys in their own unique ways.
Examples of this are two independents in the Greater Pittsburgh area, McGinnis Sisters and Kuhn’s.
Both serve a niche in the gasoline “fuel perks” crazed marketplace there dominated by Giant Eagle and to a lesser extent by the Supervalu entries, Shop ‘n Save and Foodland.
Both offer competitive pricing, fresh and organic produce, fine meats, and friendly service. And both are thriving.