Giant Eagle, the privately held chain in Pittsburgh, isn't the largest chain around, but it has big ambitions. They were outlined in a Page 1 news feature in last week's SN.
Executives of the chain hope to build its current sales level from $4.5 billion to $9 billion in the space of five years. Many retailers have similar plans. Some will succeed, others won't.
But the reason ambitions for Giant Eagle are worth a second look this week is that its executives' view of food retailing is highly pragmatic and well-focused on its real competitive set, not an imagined set.
So let's take another look at Giant Eagle and some of the strategic thinking that may at least move it toward its sales-growth targets.
Here's the first clue that thinking at Giant Eagle is pointed in the right direction: "We think about the in-store services we provide as individual businesses, not as part of a supermarket business. So we benchmark ourselves against the best in class," one executive told SN.
How does that notion find expression? Here's one way: Giant Eagle operates pharmacies, as do many supermarket chains. In many instances, these supermarkets face competition from drug stores that have drive-through windows.
But in the interest of compelling shoppers to enter the supermarket, the decision is often made not to offer a drive-through window to accompany the supermarket pharmacy. Not so at Giant Eagle. Since the chain views its primary competition as drug stores, not other supermarkets, the decision about whether to offer drive-in windows at Giant Eagle pharmacies was an easy one to make: Do it.
This is undoubtedly the correct decision, driven by the right reasons. After all, many drug stores offer a fairly substantial selection of grocery products, so if a supermarket operator decides not to offer a drive-through window -- effectively moving some business from the supermarket to the drug store -- more than the prescription business will be lost. Shoppers may do a little fill-in grocery shopping at the drug store, perhaps taking another trip out of the supermarket-shopping schedule.
Here's another example: video. At many supermarket chains the decision has been made in recent time to back away from the video business.
The reason is lagging sales, but that's often the result of a lack of commitment to the category, manifested by little copy depth and a tiny footprint.
At Giant Eagle, Blockbuster and similar outlets are viewed as the chief competition, so the decision was made to treat video in the same way it would be in a freestanding video store. Results have been gratifying.
The lesson to be drawn from all of them is plain: Supermarket operators who view their competition as being no more than other supermarkets do themselves a huge disservice. Those that see competition on a department-by-department basis, and as involving all classes of trade that offer product common to a department, will have a chance to be big winners.
