FD Buyer: Going Solo

Discussion
Apr 09, 2012

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.

Between being ignored by the big vendors and being nitpicked to death by the government, it’s getting much more difficult to survive as an independent retailer. So how are we supposed to compete?

Well, I may be angry, but it doesn’t do any good complaining that the playing field isn’t level. You can win and pick your spots. So I work with a lot of smaller regional suppliers, and I buy deal to deal. Then I’ll discount with lots of signage. I don’t make 35 percent or 40 percent margin like some of the larger stores do, but my father always said that you don’t take percentages to the bank — you take profit dollars.

Over the past three years, I’ve cut 2,000 SKUs, mostly from household items that the big box stores sell for cheaper than I can buy. What’s the point of stocking them? I run a strong perishables department and put in new Zero Zone cases with LED lighting, so our frozen department looks attractive and we’re energy-efficient.

All of our deli products are 100 percent homemade, and we offer foods that are healthy, diabetic-friendly and gluten-free. I’m also a broker and work with a supplier out of Cleveland to get incredible deals.

A few other things I do: I buy eggs early in March because they’ll last through Easter when the prices go up and you can look like a king with lower retails, while maintaining a good margin. You have to be faster and smarter than the big retailers — they set their advertising months in advance, but I’m like the little speedboat that can jump on a deal and put it in my ad tomorrow. I also buy perishables closeouts as often as I can. Once I got a deal on 12-ounce Johnsonville sausages and I sold 320 cases of them in just three days, because I could sell them at 99 cents.

Of course to be in the best position for deals like that, you have to really work with the regional suppliers and support them. Pay them on time.

It’s also important to monitor pricing. If your sign says "two for $5" and the customer finds you’re charging $3.29, make it right for them by offering a $2 gift certificate and apologize.

Service is also an important thing for you to have when you’re competing with the big box stores. Their service is terrible, so this isn’t hard to do. Don’t tolerate a poor attitude from your workers.

Finally, it’s really important for independents to network constantly, to get the best deals. I go to the annual National Grocers Association convention, several food shows, and stay active as a panelist on RetailWire.com. It’s also good to keep pointing out the unfairness in the system, whether people like it or not.

Discussion questions: What other steps can independents take to stay competitive besides the ones mentioned in the article? Of those mentioned in the article, which ones provide the biggest differentiator against larger competitors?

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13 Comments on "FD Buyer: Going Solo"

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Dr. Stephen Needel
Guest
5 years 8 months ago

I’m thinking service is the biggest differentiator, and I include in that a selection that targets the shoppers in the trading area, the atmosphere of the store, and the people interacting with customers. As Tony says, competing on price will be hard for an independent — the shopper needs another reason to frequent his stores. “I like shopping there” is a great reason.

David Biernbaum
Guest
5 years 8 months ago
You know what? Independent retailers will still do well, even today, if they either learn, or associate themselves with people that know how to market their brand to the customers, and by providing a boutique style of attention and service to their customers. There is no justification anymore for an independent business to survive strictly on the basis that the business is small and independent. Consumers will shop where they want to shop and there are as many benefits today for being small and independent as there are disadvantages. Make it work for you and your customers and you will… Read more »
Cathy Hotka
Guest
5 years 8 months ago

An independent grocer in DC has staked out a niche as the ethnic food purveyor of choice. While the store carries most items that other grocers do (dish-washing liquid, dairy products) it also carries an eye-popping array of Indian seasonings, German cookies and exotic jams customers won’t find elsewhere. A unique product selection makes it stand out.

David Livingston
Guest
5 years 8 months ago
Well-run independents are usually all about making people feel good about shopping in their store. Sure, have good quality products, unique home-made offerings, and friendly service is just part of the equation; getting into the minds of shoppers and touching their innermost desires and basic needs. It’s important that a retailer know customers’ names, who his best shoppers are, and something personal about them. Women shoppers especially like to be made to feel admired without it coming across as patronizing. If you have a manager who gets lots of hugs from the female shoppers, you have a manager who is… Read more »
Richard J. George, Ph.D.
Guest
5 years 8 months ago
The key point of differentiation is for the independent retailer to think like a brand and act like a retailer. Tony O’s has done a terrific job of running a food retail operation with a real merchant mentality. His secret is to never act like the “big box” competitors who have some important price advantages but too little knowledge of the real needs of their customers. No one should ever out know, out fresh or out customer delight a focused independent retailer. These three characteristics provide life to independents and keep the big boys stuck in the middle. Are there… Read more »
Jason Goldberg
Guest
5 years 8 months ago
Best in class independent operators can survive and thrive in any environment. As Mr. Orlando has pointed out, they simply have to be better at “one thing” that your customers value, and that “one thing” doesn’t have to be price or assortment. There are any number of elements that can be your “one thing.” It sounds like Mr. Orlando, runs a clean, well maintained store that might have much stronger appeal to young mothers who are suddenly much more concerned about the safety of their new families. How many shoppers in Mr. Orlando’s store know him personally? How many know… Read more »
Roy White
Guest
Roy White
5 years 8 months ago
An independent does have some strong market advantages on his side, and Tony Orlando references one of the most important in the story above: “Service is also an important thing for you to have when you’re competing with the big box stores. Their service is terrible, so this isn’t hard to do. Don’t tolerate a poor attitude from your workers.” The secret strength of the independent is that owner and employees can more effectively reach out to the shopper base than a major chain can do. That’s what makes all the hard work in managing, finding deals, deploying the technology… Read more »
Fabien Tiburce
Guest
Fabien Tiburce
5 years 8 months ago

There are “pockets” where independents still thrive: bike shops and restaurants come to mind. Customer service and a commitment to catering to the demographics of one’s neighborhood/community are key to thriving as an independent. With the right focus and the right service, I think independents have a bright future in many verticals.

Dan Raftery
Guest
5 years 8 months ago
Tony’s attitude toward suppliers and shoppers is the core advantage that independents have over chains. He treats vendors as business partners and respects their business needs. He treats shoppers as his greatest asset and works to satisfy their needs. This entrepreneurial approach to running a grocery store will keep Tony and others like him around for as long as they retain this edge. One more thing which Tony probably does, but is not mentioned here, is local community involvement. When people actually know the store owner, their word-of-mouth advertising takes on a whole new level. And there is no greater… Read more »
Roger Saunders
Guest
5 years 8 months ago
Tony points out an important and tough-minded perspective that all of us — no matter what industry we’re in — have to do. It comes down to start, stop, sustain. We’re all, especially entrepreneurs, interested in innovating and “starting something new.” And, we are all probably smart enough to know that we have to sustain the business or “place the eggs in a basket, and guard the basket” to paraphrase Andrew Carnegie. Too often, many of us, through stubbornness, lack of vision, or paralysis, refuse to stop something that isn’t working. Kudos to Tony for having the wisdom and courage… Read more »
Christopher P. Ramey
Guest
5 years 8 months ago
I like Mr. Orlando’s philosophy, and I always enjoy his comments on http://www.retailwire.com. His article is consistent with most successful independent retailers, regardless of category. Regarding the tactics; dumping unprofitable SKUs makes sense as long as you aren’t using them to drive traffic. For example, Choice NY Strip Steaks at $5.99 pound may not make money; but it will drive people into your store to buy more profitable products. This is a tactic that few retailers can use outside a couple categories. I tell my clients that service is a cost of entry; your competitors service isn’t as bad as… Read more »
Mark Price
Guest
5 years 8 months ago
While it is important to take advantage of pricing opportunities in order to make margin as a small independent retailer, it is also important to gain and maintain consumer trust at the same time. The best way to do that is to develop and market extensively to a list of “loyal” customers, driving them back into the store repeatedly, leveraging them to refer other customers and asking their opinion and engaging them on everything from product selection to merchandising. Only in this way can you be sure that you have been marketing to the right customers instead of marketing to… Read more »
Ted Hurlbut
Guest
Ted Hurlbut
5 years 8 months ago
Here’s a quick checklist: 1. Lead with your passion, and pass it on to all of your employees. 2. Focus on building enduring relationships with your customers, around that animating passion. Think of yourself as building a community of interest. 3. Stay away from highly-recognizable commodities. Focus on those discretionary items that excite your customers. 4. Create a warm, distinctive, inviting store around your shared passion that engages customers in a visceral way. 5. Keep your inventories lean and your presentations clean to let your assortments breathe. 6. Maintain lean inventories with frequent deliveries to keep your assortments fresh and… Read more »
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