The bull market charges on and consumer confidence remains high, but supermarket operators are anything but complacent.
Looking ahead to the rest of 1998, senior executives surveyed by SN were optimistic but quick to mention the various strategies they are pursuing -- from new-store development to expanded perishables and private-label offerings -- to keep pace with the growing economy as well as with competitors.
"We continue to have more of the same. People seem to be happy with the economy, there's very little inflation, and I see no reason to think that will change," said Ed Kolodzieski, vice president of strategic planning and store development for Ingles Markets, Black Mountain, N.C. "Our company is in an overall growth mode, and we're very excited about that."
"Business is healthy. We're looking at good growth across our markets," said Neil Golub, president of Price Chopper Supermarkets, Schenectady, N.Y. "Our governor in New York state [George Pataki] has been very proactive in working with the business community and improving the business climate, so we're seeing some positive changes in taxes and other areas."
"Our business is awfully good," said David Waldrip, president of David's Supermarkets, Grandview, Texas, adding that the chain's same-store sales increased by 6% last year. "I'm very optimistic about 1998; I don't foresee anything negative."
Glen Catt, president and chief executive officer of Glen's Markets, Gaylord, Mich., said he was looking forward to strong sales this summer following a rough winter.
"I hate to point the finger at El Nino, but in northern Michigan we depend on tourism a lot, and we basically lost all that tourism this winter," Catt said. The season was unusually warm and dry, he said, with about half the average snowfall.
"It's been an extremely soft six months for us up here. But as we talk to our various suppliers, it seems like things are pretty soft for all our competition as well."
Timothy Copps, president and chief operating officer of Copps Corp., Stevens Point, Wis., said he was starting to see some El Nino-related increases in produce prices. "But," he added, "I don't think it'll be as serious as people thought it would be."
All agreed that, through good times and bad, tough competition would remain a constant.
In assessing the battlefield in Price Chopper's operating areas, Golub acknowledged Wayne, N.J.-based Grand Union Co.'s financial troubles but also noted the threat posed by limited-assortment retailer Save-A-Lot, St. Louis, which plans to expand in New York and New England this fiscal year.
"They will cause some market turbulence, no question about it," he said.
Price Chopper has already opened one new store and two replacements this year. All told, Golub said, the company will open seven to 10 units in 1998, with a 50-50 split between new and replacement stores. "We have a very aggressive development plan going on; stores are getting larger and we're adding more variety."
Golub cited perishables -- the chain is developing its Ready Meals and sushi programs, as well as its bakery, seafood and produce departments -- as the primary arena in which it hopes to stand out from competitors. This year Price Chopper will also expand its floral offerings and open more pharmacies, he said.
Copps said he did not expect any great step-up in new-store openings by his company's competitors in Wisconsin. "It's always intense. Everybody's trying for market share -- that's the name of the game, but I don't see any dramatic swings. Perhaps lower interest rates will bring some more capital spending and building."
He added that Copps Corp. was part of "the whole industry shift to the perishables side of the store" and would continue to emphasize its perishables departments.
Kolodzieski said Ingles' recent acquisition of 13 Bruno's stores in the Atlanta area -- "an excellent fill-in opportunity" -- might abate Ingles' competitive pressures somewhat.
"That acquisition, plus a few selected store closings by our competitors, lead us to believe things may ease a bit. It's still going to be competitive, but we think it may have peaked out," he said.
"[The Bruno's deal] worked out very well. The Atlanta area is very expensive for advertising, and we were able to pick up some stores in an area where we already have the advertising expenses laid out."
Kolodzieski said Ingles, which now operates 202 stores, planned to open 10 new or replacement stores by the end of this year. He said the chain would continue to build on its successful "power alley" perishables format, which aligns produce, deli and bakery on the right side of the store, and expand the number of its video departments. (SN has reported that Ingles may add as many as 30 video departments, for a total of 100, by the end of 1998.)
Catt said Glen's has not faced any new competitors in the last two or three years, but all the Kmarts in the area have converted to the Big Kmart format. There have also been rumors that both Kroger and A&P are looking to expand into northern Michigan, he said.
Glen's advantage, Catt said, is that "we've been around 47 years. We know our customers, and we're extremely involved with our communities." However, he said, "I don't think there is the customer loyalty there used to be, so that's always a challenge."
The company views its frequent-shopper card as an important line of defense against any competitive incursions, Catt said. "We're having excellent success with our card; we've been happy to watch it mature. Sales have been flat, but without the card we may have had a dip in sales. The card is at least keeping us even."
Catt said that Glen's switch nine months ago to the President's Choice private-label line has been a hit and that the chain would be expanding the program in the months ahead.
"We have exclusivity on that in our marketing area, and it's doing an excellent job for us. Customers have really come to like the product, and we're the only place they can get it. We no doubt will keep adding stockkeeping units as we go along."
Another bright spot has been the Glen's Own Beef program, which was modeled after a similar, very successful program at Ukrop's Super Markets, Richmond, Va., Catt said. The beef, corn-fed and raised to the retailer's specifications, is leaner and of better quality overall, he said. "That's helped strengthen our meat offering. We've had some very positive results."
Waldrip said David's is following suit. "We will have our own branded beef program, which we plan to kick off in May. That's a really exciting development that will serve the customer well."
Now operating 32 stores, the company plans to be at 50 units in three years, Waldrip said.
He added that competition, mainly from larger players like Minyard Food Stores, Coppell, Texas, and Randalls Food Markets, Houston, has never been fiercer.
"I think it makes you work a little harder. We have to seek some niches that we can fill better than our larger competitors," he said. "It heightens awareness of serving our customers better at the retail level, not tolerating out-of-stocks, trying to make that shopping trip as enjoyable for the customer as possible."
