Meijer’s Reason for Being
By George Anderson
Hank Meijer, cochairman and chief executive officer of Meijer Inc., says there is a fundamental difference between his company and archrival, Wal-Mart.
“Food for them,” he told Tom Walsh of the Detroit Free Press, “is a tool to get people into the general merchandise part of their store and increase the frequency of visits.”
“For us” he said, “food is our reason for being.”
That difference, Mr. Meijer believes, is demonstrated by the vast selection of food the chain offers in comparison to Wal-Mart’s Supercenters.
A great selection of food, however, can only go so far when your core markets include states such as Michigan that saw its unemployment claims jump even while the national market was boasting an increase of 377,000 jobs last week.
“We won’t be ever the lowest in price,” Mr. Meijer acknowledged, helping to explain why Wal-Mart has 14 of its Supercenters operating in the state where Meijer was founded and makes its headquarters.
Meijer has sought to hold back Wal-Mart’s encroachment and stay price competitive by reducing its workforce, improving supply chain operations and remodeling stores.
Still, Mr. Meijer will be the first to acknowledge, Wal-Mart is not going away.
Moderator’s Comment: What has Meijer done to compete with Wal-Mart? What will it need to do if it wishes to grow?
While there is no bigger competitor in the world, Hank Meijer does believe his company has some advantages going head-to-head with Wal-Mart. For one, Meijer
is a private company. “No stock price to worry about, no dividends to pay,” he told the Free Press. –
George Anderson – Moderator
Meijer can effectively compete with Wal-Mart only if it continues to differentiate itself from it’s rivals. In the past it has done so through customer service, clean stores, enhanced selection and a reputation for high quality produce. Unfortunately, in response to the threat that Wal-Mart has brought, it has cut its staffing at the store level to the bone. This has translated into a poorer experience for the shopper, not only in customer service but also in store merchandising and cleanliness.
Meijer has always been a leader in the past and pioneered the retail superstore concept but it needs to become more focused on providing a positive shopping experience for its guests or it may not have any left at some point in the future. The niche that Meijer can occupy, as it has in the past, is to offer great prices combined with a clean and friendly store shopping experience. At present, it is trying too hard to be like Wal-Mart. Any attempt to simply copy Wal-Mart is doomed to failure.
The Meijer store that I work at in Cincinnati just had the good fortune of having 2 Wal-Mart Supercenters open within 5 miles of them. Sales dropped about 20% for the first 3 weeks, but the sales have since returned. This leads me to conclude that the estimated $1.8 million in sales that those 2 Wal-Marts are doing each week has had to come from competitors such as Kroger and Bigg’s. It is well understood in the “Meijer World” that foods drive in the business, while general merchandise brings home the profits. So the question of whether or not Meijer can compete with Wal-Mart is answered: Yes! My store does it double time every day, and we are holding our own!