CSD: Fresh from the Farm
By Erin Rigik
Through a special arrangement, presented here for discussion
is a summary of an article from Convenience Store Decisions magazine.
What
makes Swiss Farms truly unique is it has been a drive-through grocer since
inception. Now, Swiss Farms Stores is sporting a new look and bursting onto
the franchise scene, expanding its business from 13 stores in the Pennsylvania
market to an anticipated 100 franchise locations over the next five years,
while simultaneously growing its fleet of corporate-owned stores.
The stores
have always offered a double drive-through concept, allowing customers to shop
without leaving their cars. Swiss Farms fills an important niche, skewing toward
take-home packages, such as gallons of milk, cases of water and two liter bottles
of soda — the kind of items customers would buy in the express lane
of their local supermarket.
"Customers drive up to our sliding glass doors,
and we’re like the
local milk concierge," said Paul Friel, Swiss Farms’ chief executive. "Our
employees come out and take the order, fill it, put it in a bag, take it to
the customer’s car, and put it in their back seat or trunk if they like —
it’s a very convenient service."
About two years ago, Swiss Farms began to set
the wheels in motion for expansion through franchising, starting with a new
store design. "We always recognized
these stores were built in the late 60s and early 70s, and are small dairy
stores that really defined themselves with just milk and basic dairy items.
As our consumers and our business evolved, that smaller format was somewhat
limiting, so we set out to solve that by designing a new store prototype," Mr.
Friel said.
The finished prototype store was constructed in Milmont Park, Pa.
and opened in November 2009. At 1,800 square-feet its footprint is larger than
the legacy stores by 700 square-feet. The new design includes 270 degrees of
glass so customers can better view the offering inside the store, plus four
service doors and two bypass lanes for faster service. Eight 42-inch LCD monitors
were also added to alert customers to deals inside the store, as well as a
new LED sign on the front of the store that senses the temperature and posts
ads for hot or cold products depending on the weather outside.
The chain also
adopted a new tagline for both new and legacy stores: "America’s
Drive-Thru Grocer."
In addition to the usual fare, the prototype offers
a foodservice menu featuring rotisserie chicken, fresh produce, meals to go
and fresh baked goods for the morning.
In deciding what new items would most
benefit Swiss Farms’ customer base,
Swiss Farms took its cue from local grocery stores. "We studied how our
customers shop our stores, and they use us as a fill-in grocer. Think of the
10 item or less aisle in the grocery store, only you drive your car though
the aisle and get out quickly — that’s what we aspire to be," Mr.
Friel said.
After examining IRI sales data, polling its customers and observing
customer intercept at local grocery stores, Swiss Farms realized it had an
85 percent overlap with the grocery express lane. Where it fell short was the
fresh food segment. "Rotisserie chicken, produce, meal solutions — those
were things we didn’t have in our legacy stores that met that shopping
need, and that’s why we incorporated those into our new concept," Mr.
Friel said.
The chain is also starting to get a lot of momentum as it signs
up more franchisees.
"As we go from 2011 to 2012 you’ll see a significant increase in
the number of units we can get open," Mr. Friel said. "I’m certain
in 2012 and beyond you’ll see more rapid expansion."
Discussion Questions: What do you think of Swiss Farms’ drive-thru grocer
concept? What do you think of its merchandise focus on items
in the grocery store express lane?
I really like their concept and especially believe that their expansion plans will meet with success. Their online and smart phone ordering capability combined with impulse purchasing facilitated by signing and line of site merchandising could out-convenience the growing hybrid convenience store market players (e.g. Shnucks Markets).
This format fits very well with our developing shopping culture, combining online ordering with convenience and pick up. This format has some real potential.
It reminds me of a conversation I recently had with an Executive at a large multinational retailer. She related to me how it is increasingly common in India to see consumers regularly using their smart phones to search for deals locally, check for local produce and prices, place orders and schedule their pick up.
One day there may be an App for that….Swiss Farms.
The ‘Drive-through’ concept for grocery and beverage stores has great appeal to in terms of convenience, speed, and service to those who are familiar with it. And, once the consumer buys into it, the channel receives a warm welcome from a loyal base. There is an ‘education’ process for the consumer that has to take place.
The labor costs can be effectively managed, yet there is a positive sense of ‘hustle’ as you visit these types of retailers. Franchising the concept brings in an added set of entrepreneurs who will have an interest in ramping up the build-outs.
Local zoning issues, getting the right piece of land, and then scaling the concepts within a market have, and are likely to continue to be the major challenges. Commercial real estate is available. Not likely to be an ubiquitous concept that spreads across the country, but a sound play in the right markets, provided that the franchisees are dedicated players.
This is a terrific concept. I have visited the new prototype store in Milmont Park and it is exactly as described in the article. The positioning as “America’s Drive-Thru Grocer” uniquely differentiates Swiss Farms from the more traditional C-Stores like Wawa, QuickChek, and Sheets. These operations have moved more toward fresh prepared offerings and gasoline leaving the “Express Lane” offerings for Swiss Farms to appropriate.
The key will be dinner offerings. This is a convenience item not well addressed by most C-Stores and, while being pursued by traditional grocers, the consumer still needs to park and go into the store to buy the “meal solution” from other food retail formats. If Swiss Farms is able to present a consistent, value offering at dinner, this will enhance the purchase of complimentary grocery items. In fact, the plan to go online this fall with the opportunity to order grocery items for pick up at the drive thru is another USP not readily duplicated by grocery or C-Stores.
Indeed, Swiss Farms will be an interesting concept to watch.
Add me to the list of “this is a great idea” commentators.
When discussing this concept with other retailers in the past, the most common question is “where’s the moat?” (the insulating competitive characteristic). Conventional retailers contend they can counter this easily by simply grouping all the right items in a readily accessible front-of-store location and using dedicated express checkouts. Perhaps even a “take-out door” and parking as casual dining restaurants do.
But there is a fundamental difference in the convenience of in car vs. pick-up service. And it takes a unique and dedicated design to pull it off, just as it takes a different footprint to put in a McDonald’s versus a Chili’s.
Consumers will make the lateral transfer of behavior from drive-thru fast food to drive-thru fast shopping easily. This is going to be a hit.
I managed a drive-thru only c-store for a couple of years back in the late 1970s. The store was a 8′ x 8′ box with a refrigerated case on the back wall. Sales were basically cigarettes, milk, eggs, soft drinks and chips. There was a steady stream of shoppers from 10 a.m. to 11 p.m. Over 30 years later, the store has changed hands a few times but it is still operating as consumers pull in for what they need.
Before leaving work, get on your smart phone, call the Swiss Farms order line, buy a rotisserie chicken with a side of mac & cheese, PAY on your smart phone, and receive an order number. Drive to the window, give them the number, and be on your way. Nothing could be easier. Good healthy food for the family with no effort at all. This is very cool.
I’m sorry I just don’t understand this concept at all. It doesn’t have the time-saving value of home delivery because you still have to drive to the supermarket. And it just gives you another way of putting on weight, since you don’t even have to get off your backside and go into the shop. This is the worst of all worlds. But maybe I am just missing something here.