What Makes an Independent Grocer Special?
By Al McClain
Independent retailers have a very tough time beating mega-retailers on price, but they are more nimble and can use that in various ways to their advantage. How to draw consumers to independent stores was the theme of a “RetailWire Live” workshop at the recent National Grocers Association (NGA) convention in Las Vegas.
BrainTrust members Tom McGoldrick, Rochelle
Newman-Carrasco, Jamie Tenser and David
Zahn all weighed in with ideas that “small guys” should be thinking about.
Mr. McGoldrick’s top three ideas were: create a customer service map to overlay your brand image on your operations manual; make organic/natural food delicious and easy (appeals better to shoppers than “healthy and environmentally friendly”); and nurture loyal customers through loyalty to the community – be loyal to employees while making customers’ lives easier.
Ms. Newman-Carrasco suggested appealing to ethnic groups by showing off your in-culture and in-language strengths via signage, staffing, product mix and overall experience. Also, retailers should become a source of experience beyond the tactical need to shop via community-based involvement; and implement customer service that speaks to lifestyle needs such as special hours, delivery, web services and customized specials.
Mr. Tenser advocated redefining “service” as “experience” and expanding thinking to include all functions, such as in-stock consistency, pricing and cleanliness. He also believes it is important to educate shoppers on the importance of quality via cooking classes, nutrition seminars and in-store messaging. And, he suggested reversing the loyalty arrow by being loyal to your best customers and not treating them as “marks”.
Mr. Zahn mentioned transitioning from transaction-based programs to relationship-based activities, believing that focusing on why the consumer shops with you is more important than operational efficiencies. And, he suggested overhauling the organization – rewarding employees for providing good customer service and through “open book” management. Finally, he suggested getting “cozy” with your customers, identifying who they are and getting more data from manufacturers.
The overall sense at the convention is that independents and regional chains are operating in an environment where shoppers have tired just a bit of enormous stores, impersonal service and national programs and are willing to at least think about embracing retailers with local flavor, community involvement and superior customer service.
Moderator’s Comment: What are your suggestions for independents looking to become special in the minds of consumers? Are there independents or smaller
chains that you can point to as models?
The good news for smaller operators is that the opportunity to succeed is there, if they seize it. But, those who really want to thrive need to really be
aggressive in making sure they are top performers in quality, service, cleanliness and the overall shopping experience. There are still a lot of “me too” operators out there and
those that are unwilling to really make a commitment in these areas will fail. –
Al McClain – Moderator
Make a list of the feelings and emotions you would like to have when you go into a retail establishment. My own list would include:
– Comfortable
– Welcome
– Important
– Special
– Well-served
– Smart/savvy/a wise shopper
Then make your customers feel that way. The big boxes (Wal-Mart) and specialty retailers (Whole Foods; Trader Joe’s; Aldi) generally are successful by accomplishing only one or two of these. The independent / regional who can do all (Don’s, Sunset Foods, Dave’s to name a few around north Chicago) do just fine.
Like Norm said “sometimes it’s nice to go where everybody knows your name…”
With regard to the comment above that every suggestion targets upscale customers, that appears “true,” but it isn’t necessarily true. Farmers Markets do plenty of popular cooking demonstrations, and at least in urban areas, many of the customers use WIC coupons and other USDA food supplement programs.
I once had an “argument” with a candy store operator on Girard Avenue in Philadelphia, on a tour of the strip during a LISC-National Main Street conference on urban commercial district revitalization programs.
Beautiful store, built in the mid-1800s, original tin (and high) ceilings, dark wood, original cabinetry etc. The owner, in his late 60s or older, went into likely a repeated shtick about how back in the 1970s the nasty supermarkets and dairy manufacturers had the state laws changed allowing so much more air in ice cream and his dense by comparison ice cream products couldn’t compete, so he stopped making ice cream.
Girard Avenue is on harder times these days, but the store is less than one mile from the Philadelphia Zoo, and people in “lower income” neighborhoods still buy ice cream… and Starbucks coffee, just maybe not in their own neighborhoods, because stores don’t sell what they want.
I couldn’t believe it and I couldn’t hold myself. I exclaimed “You’re not competing with grocery stores, you’re selling experiences” and of course I said a lot more. An African-American person on the tour with me exclaimed “People in this neighborhood can’t afford that.”
To use the vernacular “Say What?”
In my transitioning-emerging neighborhood in DC there are plenty of lower-income people (and people of higher incomes who still live in the neighborhood) who buy ice cream and coffee and there is nothing to stop the creation of quality third places in transitioning neighborhoods. E.g., there is a Jamaican ice cream store, making its own ice cream, on Flatbush Avenue in Brooklyn. Etc.
In short, there is nothing to prevent an independent grocer from appealing to multiple market segments. Such stores do this in Boston. And why should there be stigma attached (what the Brits call “social exclusion”) to “upscale” events like cooking demonstrations? Be diverse, have the cooking editor from the local newspaper, or an ethnic cookbook author, proprietors of local ethnic restaurants, etc. I could eat Hispanic food every day of the week and be happy. Ethnic is in…
We have nothing to lose but the chains that bind our thinking…
Interestingly enough in my anecdotal investigation of why an independent store failed in my neighborhood in the early 1990s, people commented that the store’s limited selection as well as the predominance of store (Richfood) brands rather than name brands implied a form of “disrespect,” a belief that people in the neighborhood couldn’t afford higher priced and/or branded goods.
Me, I was happy to buy Richfood Raisin Bran for $2.99 and Richfood Oatmeal for $1.99 (it was a long time ago…). But why not sell more expensive stuff to people who want to buy it?
Aspirational purchases as well as brand purchases driven by brand marketing programs are not atypical events in lower-income communities. Neither should be sound marketing and positioning strategies for stores located in such communities.
Most people in such communities have access to a car, and they just drive and shop someplace else if their preferences cannot be satisfied locally.
I see most everyone is onto the same ideas. Certainly the independents can essentially change on a dime unlike the big boxes such as Wal-Mart. Plus, there’s definitely an anti Wal-Mart backlash from certain consumers who, sensible or not, don’t want anything to do with big business. That’s fine and everyone has his or her own choice.
I’ve seen small businesses struggle because they were always concerned with the major chains, trying to keep prices as low as they could. A good friend of mine had a small but successful auto parts business (another dog eat dog group), due in large part to service, not price. If he didn’t have the part, he knew how to get it quickly and developed a strong loyalty base with this great service.
When I lived in Los Angeles, they had two chains (Gelson’s & Bristol Farms) that catered to the more elite but over the years, won over more middle-class customers due to service – the general theme of comments here.
I would add, marketing through the local community, whether sponsoring an event or team or cause, is essential to creating new customers and retaining the current loyal base. If people feel good about the shopping experience, with an emotional loyalty attached, the retail establishment has the biggest battle won.
In many ways the patient is suffering from multiple organ failure. It is not simply “do this one thing” and all will be well. There is no magic pill or potion. Rather, it will take a systemic and philosophical change for the independent retailer to succeed.
Stew Leonard’s in the Northeast understands that they can’t be “like” their competition and succeed. They have a vastly different approach to what they are, who they are, and how they do it. Continuing to try to mirror what competitors do is reactive and destined to fail. You cannot win a chess match by “aping” what your opponent does.
For these retailers to succeed, they need to firmly put a series of stakes in the ground and differentiate (in terms of assortment, shopping experience, customer service, employee training, and much much more as was discussed at the presentation).
It was a rather informative session and one that left those that attended with much to ponder and consider implementing back “home.” KUDOS to RetailWire for putting this session together!
Many of the suggestions are upscale oriented. Yet most Americans aren’t upscale shoppers, they shop for price. Either way, every grocery’s #1 struggle is to make its net margins. The upscale shoppers want services that raise overhead and the price shoppers want everything to be a loss leader. Even though it isn’t customer-oriented, open book management, if it enhances worthwhile suggestions and analysis, is the most powerful tool listed to enhance net margins. The great open book management fear: If you make a profit, word will leak to the competition who’ll locate near you.
Allen’s is an independent operator that enjoys a loyal following right here in Wal-Mart’s back yard. On that subject, since relocating to Northwest Arkansas, I’ve been stunned at the number of thriving independent retailers of all stripes. Seems that many of them enjoy a bit of protest effect here in Wal-Mart territory – the best evidence so far that other retailers can coexist with Wal-Mart, but I digress. In any case, Allen’s makes it a point to order special items for customers (it was cute when the eager deli department staffer told me excitedly “I just found out what pancetta was YESTERDAY” when I inquired about mortadella). The stores support local charities, are absolutely spotless and perfectly-organized and this particular location is strategically placed at the beginning of a traffic bottleneck that is only getting worse as people like me move into the area. All in all an efficient alternative to area Wal-Marts… that is, until the checkout person complained bitterly to me about how people like me are making the prices go so high in the area that “normal working people” can’t make a living, I departed after a stunned silence…what a buzz kill!
The basics will draw consumers to the independents. First, a friendly environment which includes being aware of the diversity of your shoppers and then ensuring the ease of completing the task of purchasing items are basically what’s needed.
Consumers would be delighted if the store had the products that were being sought in stock during the shopping trip, especially if the item was on sale. Having the products shelved so that they were accessible would make consumers happy. Having end-caps that were interesting would be a draw. No additional displays cluttering the aisles would be appreciated so that one could move through the store easily. The ability to shop rapidly would be a nice option with store personnel that knew where products were located, their price and some product knowledge. Lastly, check out lanes would be staffed to ensure speed of payment and a quick exit.
First, forget the “Big Boys, and supercenters.” Each of them will get the center store business, and low price features!
The community focused retailer knows that its community shopper wants special attention, care and respect. None of the “big boys” or supercenters know the meaning of special attention, care and respect — or care about them.
So, one big idea that I have recommended and utilized with my base of independent retailers is to have a senior day for health care. Bring in a local doctor to do reduced price or free consultation, and minor check-ups.
Great way for a doctor to get know patients, and contribute to the community. Also, retailers can have weekly foods, and meals that the doctor suggests for best healthy eating, for shoppers, or different segments.
Two, start modifying the aisle width, and ease to enter and exit the store; like a special checkout counter for the elderly, who may need more time and assistance than the regular consumer.
Finally, have a teen day, after school, or weekend time,
to teach cooking, or how to eat well. Have nutrition expert
to give a class; over an 8 week period. Parents may show up also. Many opportunities in thinking about shoppers of all ages.
More sales, loyalty, and possibly, center store sales, at normal everyday prices; leading to solid GPM$$$. Hmmmmmmm
Local market knowledge must lead to a customization of product and service offerings, so there is no template for an independent to follow for success. Some of the best examples of independents might not work in other parts of the country. Would Ukrop’s, for example, with its stores closed on Sundays work in Southern California? I tend to doubt it.
Demand creation is the key for independents, with the goal of making the store a “must-shop” location. There is a reason why I always try to stop at Stew Leonard’s on the way up to or back from my in-laws in Rhode Island, and it’s not just professional interest.
Intimacy is also critical for independents. It’s the little things that often count the most. Our local King’s has incredibly knowledgeable butchers and fishmongers who spend a fair amount of time on the selling floor giving advice on cooking methods and providing help with recipes. The prices are certainly higher there than the ShopRite we do most of our shopping at, but I’m willing to pay the extra few bucks for the special treatment.
Local market knowledge, demand creation and intimacy. My grandfather, a ShopRite Supermarket operator for years, always said, “My job as a retailer is to make it as easy as possible for my customers to buy from me and as hard as possible to buy from anyone else.” This holds especially true for independents.
Smaller independent grocers can have an advantage. But first, they need to establish what they are. They cannot be all things to all people. Secondly, they need to understand what their customers want AND need. Thirdly, they must deliver the highest caliber of service. Fourth, they need to continuously measure and monitor how they doing and trending. Independents can be nimble. They can be quick and they can be personable. Thus they can be VERY special and successful. Bigger isn’t always better.
Although most of the suggestions already made are excellent, they don’t necessarily address the question of how to attract customers in through the door the first time. For this, I believe, you need to show them quality, freshness and beautiful presentation that has very obviously been prepared with love and attention (even though all but the dimmest customer will realise instantly that it’s being done purely for the sake of parting them from their cash). Which means that you need a shopfront or, at the least, big windows to peer through. I was in a popular shopping street in London today and the biggest line I saw, which stretched out through the door, was for a fish shop. The fish looked fantastic, nestling on their beds of ice with bright shiny eyes and succulent, glossy skins. Not far away was a bakery with bread and cakes on display. Then a window into a supermarket through which you could see the cheese counter. And, of course, a greengrocer with glossy fruit and vegetables as well as a range of less glossy but more unusual produce. Yes, the shops were upmarket; yes, the customers were happy to pay a bit extra; and yes, those shoppers looked comfortable and were chatting happily with each other and the staff which indicated to me that they had either been there before and/or were expecting to be there again. They didn’t even seem to mind that they were waitng on line.
Over the past 15+ years, I have analyzed data from tens of millions of surveys, conducted countless focus groups, and built all manner of detailed and obscure statistical models only to learn one thing. My grandma was right! Treat people with respect, keep your store clean and sell a quality product.
Independents should have an advantage in all three categories if they are run correctly. Especially if management practices “management by walking around,” it is the best way to know what your unique community wants and how your store is delivering it.
With all of the great ideas being surfaced here, it reminds me of one of the comments made at the session. Al asked the panelists what our suggestion would be if we had to pick one thing to do.
my answer then was and still is…”you can’t be all things to all people.” It is not about “flavor of the month” business processes. Pick something or somethings that you stand for and represent and then do that to a level that exceeds others in the market. Be something other than what is already readily available through other channels or retailers.
Great dialogue and a topic that has clearly resonated with many people on this site!
I really believe we are on the verge of a real renaissance for the independent retailer. If the independent retailer is really into having the “best store in town” and they convey that philosophy to all the people in their organization, then they will beat the “big chain” competitors hands down. They have “more skin” in the game than any of their competition.
Traditionally, chains have been able to leverage the “economies of scale” by developing processes and services once then repeating them across many outlets. This advantage is quickly going away as the internet is bringing access to market data and services down to individual stores. The network is allowing the chains to reduce the “middle layer” of management, but it does not help them get rid of old labor contracts or motivate part time clerks. This is where the independent has a great advantage. As the owner develops their staff and builds the commitment to the customer, they will naturally take business away from the impersonal approach of the chains. Independent operators must be able to choose suppliers that support their goal to provide a targeted shopping experience and build customer loyalty.
Independents do have the advantage of being nimble and responsive if they want to be. The session next door to our presentation at the NGA was all about leadership. This is the element that is a make or break for the independent. They can’t hide behind a lot of other resources that can compensate for bad leadership. They are dependent upon vision and leadership keeping them moving forward. So, invest in leadership training from the bottom up and walk the talk, don’t just walk the aisles.
When working with one of my independent retailers in his store during my years with Fleming Foods, I asked him what he thought of a close-by competitor’s store. “I wouldn’t know,” he said. “I’ve never been in that store. I’m afraid I might run into one of my customers and embarrass them.”
Successful independent supermarket retailers are of, by, and for the communities they serve. The key positions in the store are held by family members, they employ the sons and daughters of customers, and they participate in and sponsor community activities. They are connected.
Plus, they have great butchers. The heritage of many of the successful independents served by both Fleming (now gone) and Supervalu is that their business was built around excellent meat cutters with terrific personalities. Often as not, new stores were started by butchers leaving their employers and taking their special customers with them.
I thoroughly respect all of the highfalutin and/or no-brainer solutions suggested by others. They are right. But, the key to success in independent supermarket retailing is personality. Ron Margulis identified it as “intimacy.” As an excellent example of this, I reference not a grocery retailer, but successful car dealerships. They are always local, and feature corny TV ads with the owner, his kids, and their pets. You know the kind. The key is that this type of campaign works, and they work because they exude personality. Successful independent grocery operators communicate that same type of personality in a different way, but they always do it. When – but not before – a winning personality is successfully communicated, all other business-building recommendations can be considered.
I really like the idea of making Service an experience. Some of today’s most successful retailers have found ways to make the participation in an element of service something the customer looks forward to in every shopping trip.
Another suggestion I would make would be to gather a collection of experienced customers and turn them into ambassadors of natural foods. Make their opinions and knowledge available to new customers. The product category is full of new tastes and preparation requirements that the novice might not know about. Use those who have tried products (either on their own or because the store has given them free samples) and ask them to conduct taste samplings, attend favorite recipe night, or gather opinions together for a informal customer cookbook publication. (Schools do this all the time; so too can the independent retailer.) In all, these effort can make the regular customer feel important, and the new shopper gets a sense that this store really values customers’ opinions.
Be active, visible and invest in the community you serve. Offer the highest quality produce and meats. Relate with your customers. Keep your store clean and inviting inside and out. Insist that employees maintain a friendly and positive attitude throughout the store. Manage your store with zeal and passion!
Maybe you can’t compete on price. But you can compete on cleanliness, merchandising, quality, service, convenience, loyalty and value.
This subject has been well and truly addressed. Well done, BrainTrust Panelists! I sincerely hope that independent grocery management actually listens. From redefining customer service (excellent and timely) to overlaying a customer service map on operational procedures to understanding the needs of the local market…these are extremely strong suggestions.
I’d like to, however, suggest something a bit more fundamental. Zenith Consulting’s study shows something extraordinary about efficiency. Or rather lack there of. I am rapidly coming to the belief that an independent can simply settle on any already established business models, and then focus on doing it with efficiency…and be a model of success. Perhaps it doesn’t take disruptive innovation, or 22nd century thinking. Perhaps, all that really is required is to have a true commitment to excellence, and then deliver.
Novel, I know. And so much harder than something sexy and superficial. Just become world class at operating your store. Simplify what you do until you do it better than anyone else has. Then gradually add complexity, without yielding to the temptation to equally gradually erode the efficiency you’ve built.
This entire approach is in many ways an excellent idea. “Do what the big chains (and what Wal-Mart) can NOT do, and do it well.” This seems to have become the main, and in some ways, the only strategy that seems open to the independents, maybe even the grocery industry as a whole.
Mark Lilien, you make what I see as yet another incisive comment: “Many of the suggestions are upscale oriented. Yet most Americans aren’t upscale shoppers, they shop for price.” There is a vast middle-market that is currently being captured by the big chains, but more by Wal-Mart. This is really the threat we are addressing, isn’t it? If Wal-Mart weren’t a player, would this even be an issue?
Wal-Mart captures much more of a market than it has a right to: 85% of its prices are HIGHER than its competitors as a group, and we all buy the myth that its prices are lower. So we keep saying, “You can’t fight Wal-Mart on price, so differentiate, differentiate, differentiate.”
What we end up doing is surrendering to Wal-Mart a huge segment of the market that it is capturing because of the myth. The myth is not just ferocious PR, but also the dynamics of how shoppers perceptions are CHANGED as they shop at Wal-Mart.
The problem with the “differentiate” strategy is that the independents and even the large chains are losing their customers little by little, when there is no need for this. It is possible for a single indie, or a small chain, to survive, while hundreds go under, all because we won’t confront the myth.
And there is an even bigger problem here, which is the reluctance of independents, and the grocery giants, to work together to solve a problem they can solve. As in other industries, the individual organizations focus on their own survival, they don’t band together to protect and energize the industry as a whole, and the industry just gets weaker and weaker.
Our study of how 180 shoppers were brought back to shopping at supermarkets showed that there is a way to address the entire industry issue, but the industry has had a difficult time looking at this information — the study immediately contradicts the myths we hold, and even though it has an answer to the entire Wal-Mart problem, it is insulting to consider we may have been missing such a big opportunity all along. Reactions to this kind of situation are disappointing but entirely understandable: shoot down the new idea, and retreat to the ideas that are ironically more comfortable, but can’t really solve the problem.
I work for a number of very successful independents. Those are my favorite clients. Some things they have in common:
1. They are an ESOP so the employees own part of the company.
2. The management is honest and decent.
3. They hire good looking, attractive employees who are friendly.
4. The store manager is usually a real “lady’s man” who makes his female customers feel noticed and appreciated.
5. The store manager knows his customers by name and spends most of his time on the sales floor.
6. An encounter with a store employee is always a positive experience.
7. A good independent uses Wal-Mart as muscle to help drive out the competition.
I couldn’t possibly add anything much to all of the comments. I will however add just a note on to Doc Banks’ comments.
I grew up in a small independent grocery environment. This particular store’s thrust into their early growth occurred by buying out the local butcher shop and bringing the owner with it to run their meat department. Running the meat department, in this case, was really an understatement. He brought with him his clientele and his wonderful ability to teach others without even knowing they were being taught. At the ripe old age of 14, when I began working there, I was astonished when he knew my name before I even knew his! I was lucky to have worked with him and to know him. I learned more about customer service and sales from him than anyone in my career. Hundreds of others would likely say the same thing.
It’s this type of leadership and mentorship that exists in independent retailers that is missing most anywhere else. This was a small business, but it was connected in every way mentioned by others here. It seems to me that its about having a stake.