LAS VEGAS - Houchens Industries believes that IGA Crossroads - the combination grocery and convenience store format it is testing at two locations near its home base in Bowling Green, Ky. - could be a key to competing successfully with Wal-Mart Supercenters and Kroger.
"Customers understand the concept, and they are embracing it," said Jimmie Gipson, chief executive officer of the diversified company, at the IGA Global Summit here.
While sales and profits are modest, the two stores are bolstering the image of the other IGA formats Houchens operates: conventional IGA stores and the convenience-oriented IGA Express locations, Gipson said.
Houchens likes the Crossroads concept, he noted, because there is no competition quite like it. "No one can deliver the same value in as timely a manner," he said, given that the stores are centrally located within five to seven miles of every home in the county, "which is something neither Kroger nor Wal-Mart can offer. So if someone needs something from the store quickly, she can get to us and be back home in just a few minutes."
The stores also offer value, Gipson noted. "With IGA items priced identically at all three formats, we're able to offer private-label items that are priced lower than what customers are used to paying at convenience stores," he said.
Houchens opened the first IGA Crossroads store last April and a second one in August, with plans for a third store, also in Bowling Green, before the end of this year, and it has also identified three or four other sites, Gipson told SN after the meeting.
The Crossroads stores have separate entrances for the grocery and convenience sides, with the convenience store entrance located closer to the fuel station on the property, and separate checkstands, he told the meeting.
DIFFERENTIATION
Houchens spoke as part of a panel suggesting ways IGA operators can differentiate their stores through marketing.
Randy Melnichenko, executive vice president and chief operating officer of H.Y. Louie Co., Burnaby, British Columbia, said his company's IGA Marketplace stores were struggling "and losing the competitive pricing battle" before they adopted a new approach that featured a renewed emphasis on customer service and a higher quality of fresh offerings.
Since instituting the new program six years ago, Melnichenko said, sales have increased a minimum of 10% per store - with some stores achieving increases between 15% and 25% - and with same-store sales rising about 4% a year and tracking at 6% this year. The success at its six corporate stores has prompted the wholesaler's 36 licensed IGA independents to adopt a similar approach, he added.
MAKING MUSIC
Trent Stephan, owner of Stephan's IGA, Flora, Ind., said using an outside supplier to provide music for his store - rather than playing a radio over loudspeakers - enabled him to embed IGA ads into the broadcasts, resulting in "a modest sales increase within the last year, which is reversing the trend of the last several years," he said.
"We've also seen some definite sales increases in the products we've featured in our commercial spots," Stephan said. "And the most surprising result was that the ads really reinforced our employees' commitment to customer service, because once we started airing ads that talked about our friendly, helpful service, they started to make it even more true."
In a separate panel on differentiation through people, Bob Kelley, president of Pure Culture Consulting, Midlothian, Va. - who spent several years working at Ukrop's Super Markets, Richmond, Va. - said the culture of a company is what creates differentiation. "Associates must be fully engaged, and the belief system of the owners, combined with the look of the stores and how team members interact with customers, can determine a company's success," he explained.
FAMILY AFFAIR
Wayne Chen, chief executive officer of Super Plus IGA Food Stores, Montego Bay, Jamaica, said he infuses his employees with the core values of his parents, who founded the company that he and his siblings now run, through extensive training and education conducted by family members and longtime employees "who train them in details not always captured in training manuals."
Ian Ashcroft, owner of Ashcroft's Supa IGA, which operates a pair of stores in Orange, New South Wales, Australia, said his stores have benefited from introducing five guarantees to customers: the fastest checkout (or else they get extra points for future purchases), the most convenience, the freshest offerings (or double their money back), the friendliest service and the best shopping carts.
