In this very tough economic environment, how can independent operators survive -- and even flourish?
That's the question SN posed to industry insiders and observers, and their responses were generally hopeful, a view that while times may be hard they are also filled with opportunity for independent operators.
No one downplayed the current overall economic situation. Norman Mayne, chief executive officer, Dorothy Lane Market, Dayton, Ohio, said, "It's tougher certainly since 9/11. There's uncertainty. A lot of people lost a lot of money in the market. It's tougher to sell $100 bottles of wine, so you're going to sell more $10 or $20 bottles. But the pendulum swings. Right now we're at one end, and we look forward to the day when it will swing in the other direction.
"This is not the first time this has happened. This is not the first recession we've had. It's just one of those periods of times that you have to live through."
And times are not equally tough all over. John Bole, president and CEO, Yoke's Washington Foods, Spokane, Wash., noted, "Spokane isn't changing. Spokane doesn't do well when times boom, and it doesn't do too badly when the economy slows down. It keeps on chugging along in slow motion."
However, everyone acknowledged that the competitive situation has gotten more intense, particularly the pressure from alternate channels.
Richard Niemann Jr., president and chief operating officer, Niemann Foods, Quincy, Ill., said he began noticing changes about 10 years ago. "At that point what we stood for was price, and we realized things were changing, in terms of Wal-Mart, dollar stores, Aldi, Save-A-Lot, those kinds of things," he recalled. "We knew that our price-dominant position was not going to be able to be defended over the long term."
Jake Weber, owner, Weber's IGA, Sedona, Ariz., said non-traditional food retailers have recently been looming larger in his market area. "There's been a change in buying habits. People are doing more of their grocery shopping at fast-food outlets, gas stations, convenience stores and big-box stores. "
The key to success, most suggested, is to do what your competition can't.
Gary M. Giblen, director of research and senior vice president, C L King Associates, New York, said, "You really want to build value into the offering rather than subtract pricing."
Bole said, "Our company is evolving a lot. We're much more quality focused, much more customer-service focused."
Mayne said, "You have to hunker down, watch your costs and still do all the things that you're noted for doing. We try to have items that you can't buy anywhere else: our brownies and our heavenly hams, our wonderful olive oils and vinegars, cheeses that are air-shipped to us direct from Europe."
Weber said, "I think what I try to do also is take care of my employees. We have flexible scheduling to balance their personal needs, educational programs so that they can gain college credits where I pay for that."
Niemann said, "Our solution was really to treat each store as if you were building a brand. And really there are seven things we try to build our brand around: low prices, perishable excellence, friendliness, promotions, loyalty marketing, fuel and signature items."
He added, "In terms of promotions, we feel we have to be very active, always something going on, the place to be. A lot of the time things revolve around price, but there's also things that we do that tie directly to the community and community groups. We want it to be fun for customers and for our associates. We just want to be the place to be."
Willard Bishop, president, Willard Bishop Consulting, Barrington, Ill., said, "At the end of the day, the independent has to recognize that they're never going to buy cheaper so they have to sell better."
The following are comments from independents and other observers on the health of the independent operator.
John Bole
president, CEO
Yoke's Washington Foods
Spokane, Wash.
Our company is evolving a lot. We're much more quality focused, much more customer-service focused. We've been building up our perimeter departments with fresh pastries, outstanding produce, expanded delis.
We've got Wal-Mart bringing in groceries in one area, but other than that competition is not changing that much. Spokane isn't changing. Spokane doesn't do well when times boom, and it doesn't do too badly when the economy slows down. It keeps on chugging along in slow motion.
Norman Mayne
CEO
Dorothy Lane Market
Dayton, Ohio
It's tougher certainly since 9/11. There's uncertainty. A lot of people lost a lot of money in the market. It's tougher to sell $100 bottles of wine, so you're going to sell more $10 or $20 bottles. But the pendulum swings. Right now we're at one end, and we look forward to the day when it will swing in the other direction.
This is not the first time this has happened. This is not the first recession we've had. It's just one of those periods of time that you have to live through.
You have to hunker down, watch your costs and still do all the things that you're noted for doing. We try to have items that you can't buy anywhere else: our brownies and our heavenly hams, our wonderful olive oils and vinegars, cheeses that are air-shipped to us direct from Europe.
Richard Niemann Jr.
president, chief operating officer
Niemann Foods
Quincy, Ill.
For us, the competitive situation started changing around 10 years ago. At that point what we stood for was price, and we realized things were changing, in terms of Wal-Mart, dollar stores, Aldi, Save-A-Lot, those kinds of things. From a consumer standpoint, things were changing too. We knew that our price-dominant position was not going to be able to be defended over the long term. Our solution was really to treat each store as if we were building a brand. And really there are seven things we try to build our brand around: low prices, perishable excellence, friendliness, promotions, loyalty marketing, fuel and signature items.
For example, we feel we have to be very active. Promotions a lot of time revolve around price, but there's also things that we do that tie directly to the community and community groups. We want it to be fun for customers and for our associates. We just want to be the place to be.
Even though the brand that we build in each market, our individual stores even, revolves around these things, we tend to prioritize based on strengths and weaknesses of competitors. We have these general guidelines that we think are important and, depending on the market or the individual store or who's around it, we'll prioritize it a little differently in different situations. I think it's been critical to where we've come in the past 10 years and to what kind of a future that we have.
Gary M. Giblen
director of research, senior vice president
C L King Associates
New York
That's a challenging question. The only position an independent can take is service and perishables and value-added items, signature items. Forget about price. You emphasize service and perishables and have at least some advertised items at good prices. You really want to build value into the offering rather than subtract pricing.
Jake Weber
owner
Weber's IGA
Sedona, Ariz.
The new competition I've been facing has been non-traditional. There's been a change in buying habits. People are doing more of their food shopping at fast-food outlets, gas stations, convenience stores and big-box stores.
When customers walk through my door, I know they have choices about where to spend their money. In our environment, people spend money where they feel like they're appreciated. Customer service is a very big part of it. You have to be right on price and item, but the key issue is how you take care of the customers, listening to them and responding to them.
I also take care of my employees. We have flexible scheduling to balance their personal needs, and educational programs so that they can gain college credits where I pay for that.
Willard Bishop
president
Willard Bishop
Consulting
Barrington, Ill.
At the end of the day, the independent has to recognize that they're never going to buy cheaper so they have to sell better.
There clearly are examples of independent retailers who use their loyalty card not simply to deliver benefits but to get closer to their customers. By that I mean targeting or tiering their prices, using it as a recognition method and fundamentally reaching out to people in a whole different fashion once they realize who their best shoppers are, so that people are appropriately thanked and responded to. Frankly, that's just not something that can be done by most chains. You might find an exceptional store manager.
We have some retailers in Chicago that have taken on a strong ethnic spin. They have become large stores for Italian products at non-premium prices. When you go into their stores, you see a unique assortment of product that is attractively priced.
