August 22, 2013
What’s Next When Clean Stores and Fresh Produce Are Not Enough?
It’s become common in grocery retailing circles to hear a new CEO announce that he or she intends to get a business turned around by cleaning up stores, emphasizing fresh foods and staffing stores with friendly associates. The problem, as pointed out in many discussions on this site, is that those elements are the minimum requirement to open a store’s door for business these days.
Refreshingly, Beth Newlands Campbell, CEO of Food Lion since December, admitted in an interview with The Charlotte Observer that the supermarket chain will need to do a lot more than the basics to compete with rivals ranging from Aldi to Whole Foods.
"There’s an imperative to set us apart," she told the Observer. "You can’t be middle of the road."
One of Food Lion’s selling points, according to Ms. Newlands Campbell, is the size of its stores. At an average of around 35,000 square-feet, they are more easily navigated than the big boxes operated by many of Food Lion’s competitors. She said Walmart’s focus on smaller stores is proof that consumers are looking for a more manageable shopping experience.
She also believes Food Lion can gain fans by improving its checkout execution. The chain is not there yet, she said.
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Discussion Questions
What should Food Lion do to differentiate in the market today? What points of difference are easiest for most grocery chain stores to achieve today; which are more difficult?
Poll
Being in this business my whole life, the changes I’ve seen are mindboggling. But there are constants from the beginning of time consistent with success. You must know who your customers are, and that they demand great value for their food dollars. That being said, the relationship building with them can offset the big-box stores, as they can not duplicate the effort.
Keep innovating in the meat, deli, and bakery departments, as this separates you from the deli and bakery’s in bigger stores.
Sample your goods, and always use fresh ingredients, and make sure you follow up with your customers on all catering jobs to see if they were happy.
The other stuff we should all know by now is clean bathrooms, great service, well stocked aisles, and quick checkouts. Represent your local community through involvement in the schools and churches, and keep an eye on the competition to make sure that your pricing is not way out of line.
While I understand the intent, I still wonder about the emphasis on getting people out of the store faster. Might there be a way to make Food Lion (or any other brand) an actual destination—a big Starbucks around food? Let’s be more focused on getting people IN, not on getting them OUT. Some random ideas:
1. Engagement: people (children especially) able to pick vegetables directly out of the garden—hydroponic, greenhouse or patch. Let them wash them off right there so they understand the whole process better.
2. Education: a) classes on nutritional values, exotic vegetables; b) cooking classes, chef appearances; c) roll of science in food production; d) pet care; e) wellness issues such as hydration for seniors.
3. Community Meetings: the chance for community and political and admin leaders to meet citizens around specific issues.
4. Attached playgrounds for children like you find at McDonald’s. If the kids want to go there, parents will follow.
Beth Newlands Campbell is correct in her thinking. Shoppers are trending towards a manageable shopping experience. Size is key in that factor of consideration.
Improving the checkout experience is something that likely every customer from every supermarket would say is a requirement. They would likely say that, no matter how good or fast the experience.
Looking to Kroger’s results in this area would say that it is possible, yet it requires investment. Further, if you have the tools, you have to execute based on the information.
No matter what the points of differentiation chosen they will each challenge the ability to execute from decision level to the front lines. Deciding what to do may not be the problem. Gaining believers and deliverers at the execution points through out the organization, especially at store level, will be the challenge.
Small gains create big opportunities.
If she’s trying to compete against a whole host of rivals, from Aldi to Whole Foods, she should get her resume ready now—the strategy for beating off an Aldi is very different from a strategy to stave off Whole Foods. Moreover, if she thinks Walmart went to smaller stores because shoppers want a more navigable store, her board of directors should be reconsidering her position.
The question ought to be, “What points of difference are easiest for most grocery chain stores to achieve AND SUSTAIN today; which are more difficult?”
As George correctly points out, clean stores, good service, low prices, outstanding perishables, etc., are table stakes today. If you don’t do those things you fail, but doing them is no guarantee of success.
Whole Foods, Aldi and, yes, Walmart have mastered branding, i.e., they have established themselves as the dominant retail force in a very specific retail niche. Aldi and Trader Joe’s, for example, have leveraged retailer-controlled brands in unique ways.
Whole Foods has obviously established itself as the voice of the environmentally concerned.
So … what can Food Lion do? At this point, that’s a tough one. “We’re the same, just smaller (with fewer consumer options)” isn’t really one of the great brand platforms of all times.
Perhaps Food Lion ought to take a clue from social media. Rather than establishing a temporary point of difference that can be easily cloned by its competitors, perhaps the chain ought to build a new brand image in cooperation with its customers, allowing shoppers to essentially co-design a new brand positioning in real time.
The idea of being a chain of localized markets hyper-responsive to micro-customer groups could be combined with a locavore procurement and merchandising scheme, ties with popular neighborhood restaurants, etc.
Bottom Line: Food Lion might want to think about being the first interactive physical chain. Of course, that would require massive organizational changes, radical new approaches to data collection and analysis, a revamped service profile, etc., but my bet is, it could work and if I’m right, it would be almost impossible to copy.
Any advice I offer with a caveat, the fact that I am not privy to their market research, nor their store trading area demographics, which would be very telling.
With that said, Food Lion, the 800 pound “head of lettuce in the mind of the room” is that many of their locations are nested in discount-oriented shopping centers sharing tenancy with the likes of Big Lots, the dollar store of your choice, and an Aarons Rent-Own Store. Couple that with the fact that the associated trading areas of these stores are dominated by price-sensitive shoppers from lower socio-economic groups, rebranding the stores with clean floors and shelves, better service and fresher produce is likely not going to be a viable substitute for really low prices.
When many of these Food Lions opened, they were indeed just that, the cheapest place to shop, given that Walmart, Target, Aldi, and the other “price” players were not as dominant and as prolific as they are today. That is no longer the case.
My advice to Food Lion is to review their stores, location by location. Retain and build the Food Lion brand (as they are doing today) in those locations where the trading area will support and appreciate the upgrades. In those locations were “price” is more dominant, the choice is to either re-banner those stores to Bottom Dollar or other, or close them.
Tony is the resident expert on this subject, and his response is right on target for me. I also like to be recognized or acknowledged in some way when I am returning to a store I have frequented for years.
Store size shouldn’t be an impediment to grocery success…see Trader Joe’s and ALDI. Food Lion’s smaller footprint could provide some advantage, but like any traditional supermarket operator, the key point of distinction over the alternative channel competitors is a convenient location. Then, it needs to find a point of differentiation; e.g, Kroger combines its convenience store locations with value pricing, Publix does it with slightly upscaled service and merchandise.
Food Lion needs to take advantage of its built-in advantage—convenient locations—by distinguishing itself with a compelling order winner like low prices or slightly more attractive format/merchandise offerings. If its wants to do the former, scale is key and it will need to grow, and the latter requires capital investment and significant overhaul of its culture. Either way, it’s a tough climb up.
Boy, she’s right about that. With Amazon and Walmart both diving into online grocery and same day delivery, chains like Food Lion HAVE to re-invent to be successful. Which will really be a challenge for most.
I’d start with service. Hiring practices is probably a better way to look at it. Grocery needs to do what Starbucks and Apple have done before them: hire people that actually like people and then take care of them so that they can then hire more people like that. If they could focus on that element alone, the other change initiatives would be much easier to tackle.
Food Lion may want to consider another board of directors. This new board would be composed of a limited group of their best and most loyal shoppers in a given region. Meet with them monthly to get their feedback about what’s working for Food Lion and what isn’t (DON’T TRY TO DO THIS STEP WITH A SURVEY). Pay them with a discount on purchases for 12 months in return for a year of their service (twelve meetings). Charge them with the task of generating ideas to improve the store and shopping experience. Find out what is driving leakage to other retailers. Let them tell you how to make THEIR stores different and better. Encourage them to do your homework and treat their every idea with respect.
Food Lion should abandon cities and concentrate on towns. Don’t worry about competing up—you can’t get there fast enough. Compete down, wade further into IGA, Red & White, and Piggly Wiggly territory. The public in Food Lion’s marketing area is hurting economically and their distribution system and buying power should position them well against independents and franchises.
Even look at going into vacant properties and smaller formats. It’s easy to downsize against weak competition. Out serve your competition in the small market. When 70% of the market is buying with food stamps, you don’t have to worry about marketing Angus beef. Ralph Ketner never intended to compete against Kroger and Harris Teeter or Publix. He built these stores to compete against Winn-Dixie and A&P and put both of them out of business. Go back to your roots and you will thrive.
Have employees that care. Have a full in-stock position, clean stores, fresh merchandise in all perishable departments, alert checkout, and efficient care of consumers. Have competitive pricing throughout. Without all of these basics to start with, you have no chance of surviving and making a profit. I think most retailers forgot what Peter Drucker said: “Satisfy the customer and you will make a profit.”
So Ms. Campbell wants Food Lion to be different…like everyone else. My question to her—or any exec worshiping at the reinvention altar—”what are you going to do differently (than before) and why weren’t you doing it already?”
After the basics of clean stores and fresh perishables, what I see lacking is the touch of a merchant. Too many chains are numbers driven and have no flare at retail. It has often been quoted that shopping a supermarket is the most boring shopping experience.
There are some retailers that have merchants, Whole Foods and Fairway, for example. The shopping experience should be fun and different, not the same old thing. Get creative in making displays. Have a theme. Any time retailers allow themselves to become tired or stale, all they are saying to the consumer is maybe you should shop elsewhere.
Personality counts. I’m not talkin’ ’bout Joe’s Crab Shack waiters standing on the bar singing “YMCA” personality. Instead, I’m referring to the butcher’s personality. Tony O. will know about this.
Back in the day, when I worked for Fleming Foods and SuperValu, I served independent supermarket retailers. In fact, it was inaccurate to refer to their stores as “super.” They were grocery stores, and were nearly always smaller than their chain competitors. B-b-but, without exception, they had butchers with personality. They knew every female customer’s name and preferences and, to an extent, even romanced them—separated only by the meat counter. Yes, those were the days of carcass beef and before primals, sub-primals, and Cryovac, so more consultation between butcher and customer was necessary. It was a time to bond with shoppers while helping them select the proper cut of meat for dinner. (Little-known factoid: More times than not, the applicants seeking to open a franchised store of their own were butchers from other stores. They had the following needed to kickstart their new store.)
Why can’t some of that personality be transmogrified (?) into today’s meat departments? “How did that roast turn out, Mrs. Jones?” “If you liked the fresh tilapia, you might try some of this Dover Sole we just received. Here’s how to prepare it.” Etc. The same dynamic could be applied in the deli, bakery, and produce departments. Personality counts.
Savvy grocery chains will recognize an opportunity to differentiate themselves from competitors via their loyalty programs.
While consumer membership in loyalty programs is growing in nearly every sector, the 2013 COLLOQUY Loyalty Census showed membership in grocery programs declined one percent to 172.4 million in 2012, versus 173.7 million in 2010. In this well-penetrated and highly competitive sector, grocery chains can create points of difference by shifting their overall focus from acquiring new memberships to better engaging the customer base and driving repeat purchase behaviors.
The addition of soft benefits, such as general manager meet-and greets and member-only events, will drive engagement and differentiation.
Food Lion is a redundant format and no longer relevant in 2013. So far, all I hear are all the cliches on how to improve a store, but putting them all in place would be an impossible task. It would be like telling me what I need to do to qualify for the Olympic Decathlon. It’s not going to happen. So let’s go the opposite way and keep on managing on the expense side, operate as long as profitable. Perhaps following the BI-LO/Winn-Dixie path.
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Being in this business my whole life, the changes I’ve seen are mindboggling. But there are constants from the beginning of time consistent with success. You must know who your customers are, and that they demand great value for their food dollars. That being said, the relationship building with them can offset the big-box stores, as they can not duplicate the effort.
Keep innovating in the meat, deli, and bakery departments, as this separates you from the deli and bakery’s in bigger stores.
Sample your goods, and always use fresh ingredients, and make sure you follow up with your customers on all catering jobs to see if they were happy.
The other stuff we should all know by now is clean bathrooms, great service, well stocked aisles, and quick checkouts. Represent your local community through involvement in the schools and churches, and keep an eye on the competition to make sure that your pricing is not way out of line.
While I understand the intent, I still wonder about the emphasis on getting people out of the store faster. Might there be a way to make Food Lion (or any other brand) an actual destination—a big Starbucks around food? Let’s be more focused on getting people IN, not on getting them OUT. Some random ideas:
1. Engagement: people (children especially) able to pick vegetables directly out of the garden—hydroponic, greenhouse or patch. Let them wash them off right there so they understand the whole process better.
2. Education: a) classes on nutritional values, exotic vegetables; b) cooking classes, chef appearances; c) roll of science in food production; d) pet care; e) wellness issues such as hydration for seniors.
3. Community Meetings: the chance for community and political and admin leaders to meet citizens around specific issues.
4. Attached playgrounds for children like you find at McDonald’s. If the kids want to go there, parents will follow.
Beth Newlands Campbell is correct in her thinking. Shoppers are trending towards a manageable shopping experience. Size is key in that factor of consideration.
Improving the checkout experience is something that likely every customer from every supermarket would say is a requirement. They would likely say that, no matter how good or fast the experience.
Looking to Kroger’s results in this area would say that it is possible, yet it requires investment. Further, if you have the tools, you have to execute based on the information.
No matter what the points of differentiation chosen they will each challenge the ability to execute from decision level to the front lines. Deciding what to do may not be the problem. Gaining believers and deliverers at the execution points through out the organization, especially at store level, will be the challenge.
Small gains create big opportunities.
If she’s trying to compete against a whole host of rivals, from Aldi to Whole Foods, she should get her resume ready now—the strategy for beating off an Aldi is very different from a strategy to stave off Whole Foods. Moreover, if she thinks Walmart went to smaller stores because shoppers want a more navigable store, her board of directors should be reconsidering her position.
The question ought to be, “What points of difference are easiest for most grocery chain stores to achieve AND SUSTAIN today; which are more difficult?”
As George correctly points out, clean stores, good service, low prices, outstanding perishables, etc., are table stakes today. If you don’t do those things you fail, but doing them is no guarantee of success.
Whole Foods, Aldi and, yes, Walmart have mastered branding, i.e., they have established themselves as the dominant retail force in a very specific retail niche. Aldi and Trader Joe’s, for example, have leveraged retailer-controlled brands in unique ways.
Whole Foods has obviously established itself as the voice of the environmentally concerned.
So … what can Food Lion do? At this point, that’s a tough one. “We’re the same, just smaller (with fewer consumer options)” isn’t really one of the great brand platforms of all times.
Perhaps Food Lion ought to take a clue from social media. Rather than establishing a temporary point of difference that can be easily cloned by its competitors, perhaps the chain ought to build a new brand image in cooperation with its customers, allowing shoppers to essentially co-design a new brand positioning in real time.
The idea of being a chain of localized markets hyper-responsive to micro-customer groups could be combined with a locavore procurement and merchandising scheme, ties with popular neighborhood restaurants, etc.
Bottom Line: Food Lion might want to think about being the first interactive physical chain. Of course, that would require massive organizational changes, radical new approaches to data collection and analysis, a revamped service profile, etc., but my bet is, it could work and if I’m right, it would be almost impossible to copy.
Any advice I offer with a caveat, the fact that I am not privy to their market research, nor their store trading area demographics, which would be very telling.
With that said, Food Lion, the 800 pound “head of lettuce in the mind of the room” is that many of their locations are nested in discount-oriented shopping centers sharing tenancy with the likes of Big Lots, the dollar store of your choice, and an Aarons Rent-Own Store. Couple that with the fact that the associated trading areas of these stores are dominated by price-sensitive shoppers from lower socio-economic groups, rebranding the stores with clean floors and shelves, better service and fresher produce is likely not going to be a viable substitute for really low prices.
When many of these Food Lions opened, they were indeed just that, the cheapest place to shop, given that Walmart, Target, Aldi, and the other “price” players were not as dominant and as prolific as they are today. That is no longer the case.
My advice to Food Lion is to review their stores, location by location. Retain and build the Food Lion brand (as they are doing today) in those locations where the trading area will support and appreciate the upgrades. In those locations were “price” is more dominant, the choice is to either re-banner those stores to Bottom Dollar or other, or close them.
Tony is the resident expert on this subject, and his response is right on target for me. I also like to be recognized or acknowledged in some way when I am returning to a store I have frequented for years.
Store size shouldn’t be an impediment to grocery success…see Trader Joe’s and ALDI. Food Lion’s smaller footprint could provide some advantage, but like any traditional supermarket operator, the key point of distinction over the alternative channel competitors is a convenient location. Then, it needs to find a point of differentiation; e.g, Kroger combines its convenience store locations with value pricing, Publix does it with slightly upscaled service and merchandise.
Food Lion needs to take advantage of its built-in advantage—convenient locations—by distinguishing itself with a compelling order winner like low prices or slightly more attractive format/merchandise offerings. If its wants to do the former, scale is key and it will need to grow, and the latter requires capital investment and significant overhaul of its culture. Either way, it’s a tough climb up.
Boy, she’s right about that. With Amazon and Walmart both diving into online grocery and same day delivery, chains like Food Lion HAVE to re-invent to be successful. Which will really be a challenge for most.
I’d start with service. Hiring practices is probably a better way to look at it. Grocery needs to do what Starbucks and Apple have done before them: hire people that actually like people and then take care of them so that they can then hire more people like that. If they could focus on that element alone, the other change initiatives would be much easier to tackle.
Food Lion may want to consider another board of directors. This new board would be composed of a limited group of their best and most loyal shoppers in a given region. Meet with them monthly to get their feedback about what’s working for Food Lion and what isn’t (DON’T TRY TO DO THIS STEP WITH A SURVEY). Pay them with a discount on purchases for 12 months in return for a year of their service (twelve meetings). Charge them with the task of generating ideas to improve the store and shopping experience. Find out what is driving leakage to other retailers. Let them tell you how to make THEIR stores different and better. Encourage them to do your homework and treat their every idea with respect.
Food Lion should abandon cities and concentrate on towns. Don’t worry about competing up—you can’t get there fast enough. Compete down, wade further into IGA, Red & White, and Piggly Wiggly territory. The public in Food Lion’s marketing area is hurting economically and their distribution system and buying power should position them well against independents and franchises.
Even look at going into vacant properties and smaller formats. It’s easy to downsize against weak competition. Out serve your competition in the small market. When 70% of the market is buying with food stamps, you don’t have to worry about marketing Angus beef. Ralph Ketner never intended to compete against Kroger and Harris Teeter or Publix. He built these stores to compete against Winn-Dixie and A&P and put both of them out of business. Go back to your roots and you will thrive.
Have employees that care. Have a full in-stock position, clean stores, fresh merchandise in all perishable departments, alert checkout, and efficient care of consumers. Have competitive pricing throughout. Without all of these basics to start with, you have no chance of surviving and making a profit. I think most retailers forgot what Peter Drucker said: “Satisfy the customer and you will make a profit.”
So Ms. Campbell wants Food Lion to be different…like everyone else. My question to her—or any exec worshiping at the reinvention altar—”what are you going to do differently (than before) and why weren’t you doing it already?”
After the basics of clean stores and fresh perishables, what I see lacking is the touch of a merchant. Too many chains are numbers driven and have no flare at retail. It has often been quoted that shopping a supermarket is the most boring shopping experience.
There are some retailers that have merchants, Whole Foods and Fairway, for example. The shopping experience should be fun and different, not the same old thing. Get creative in making displays. Have a theme. Any time retailers allow themselves to become tired or stale, all they are saying to the consumer is maybe you should shop elsewhere.
Personality counts. I’m not talkin’ ’bout Joe’s Crab Shack waiters standing on the bar singing “YMCA” personality. Instead, I’m referring to the butcher’s personality. Tony O. will know about this.
Back in the day, when I worked for Fleming Foods and SuperValu, I served independent supermarket retailers. In fact, it was inaccurate to refer to their stores as “super.” They were grocery stores, and were nearly always smaller than their chain competitors. B-b-but, without exception, they had butchers with personality. They knew every female customer’s name and preferences and, to an extent, even romanced them—separated only by the meat counter. Yes, those were the days of carcass beef and before primals, sub-primals, and Cryovac, so more consultation between butcher and customer was necessary. It was a time to bond with shoppers while helping them select the proper cut of meat for dinner. (Little-known factoid: More times than not, the applicants seeking to open a franchised store of their own were butchers from other stores. They had the following needed to kickstart their new store.)
Why can’t some of that personality be transmogrified (?) into today’s meat departments? “How did that roast turn out, Mrs. Jones?” “If you liked the fresh tilapia, you might try some of this Dover Sole we just received. Here’s how to prepare it.” Etc. The same dynamic could be applied in the deli, bakery, and produce departments. Personality counts.
Savvy grocery chains will recognize an opportunity to differentiate themselves from competitors via their loyalty programs.
While consumer membership in loyalty programs is growing in nearly every sector, the 2013 COLLOQUY Loyalty Census showed membership in grocery programs declined one percent to 172.4 million in 2012, versus 173.7 million in 2010. In this well-penetrated and highly competitive sector, grocery chains can create points of difference by shifting their overall focus from acquiring new memberships to better engaging the customer base and driving repeat purchase behaviors.
The addition of soft benefits, such as general manager meet-and greets and member-only events, will drive engagement and differentiation.
Food Lion is a redundant format and no longer relevant in 2013. So far, all I hear are all the cliches on how to improve a store, but putting them all in place would be an impossible task. It would be like telling me what I need to do to qualify for the Olympic Decathlon. It’s not going to happen. So let’s go the opposite way and keep on managing on the expense side, operate as long as profitable. Perhaps following the BI-LO/Winn-Dixie path.