INDIANAPOLIS -- Marsh Supermarkets here is counting on innovation and format flexibility as an edge against a continuing influx of national big-box competitors.
New Marsh store formats unveiled this year -- the racetrack-designed Marsh "Lifestyle" store, as well as Arthur's Fresh Market, a smaller specialty store that efficiently targets markets with attractive demographics -- are examples of Marsh's strategic response to increased competition, Don Marsh, chairman and chief executive officer, said in a second-quarter earnings conference call last week.
"A key strategy in the face of increasing competition is to leverage our expertise of operating a range of store formats to meet customer needs better than our competition," Marsh said. "Evolution in our industry is continuous despite the spread of big-box competition."
Arthur's Fresh Market's smaller footprint provides Marsh with an opportunity to gain share even in markets where Marsh does not have a dominant presence, Marsh said. Arthur's, which first opened in July at a 21,000-square-foot former Atlas Supermarket site in Syracuse, Ind., "targets markets that cannot be efficiently reached by big-box competitors," Marsh said. A second Arthur's Fresh Market is scheduled to open in the second half of Marsh's fiscal year, reportedly in New Palestine, Ind.
Marsh Lifestyle stores will lead the company's entrance to the Chicago market next spring, Marsh added.
"We have no illusions about the competition we face," Marsh said. "We expect to see further penetration into our markets in the coming quarters by national chains in a range of store formats."
A slowly improving economy, along with a temporary slowdown in competitive openings, allowed Marsh to post modest sales gains during its fiscal second quarter ended Oct. 9, Marsh said. Sales of $525 million increased 2.8%, compared with the same period last year, but the increase was driven mainly by gasoline sales. Excluding gasoline and revenue from asset sales, Marsh realized a 0.4% sales gain and a decrease of 2% in comparable-store sales.
Net income of $1.3 million increased 91%.
Marsh made progress controlling expenses during the quarter, with identical-store wages decreasing 2.4% from last year, though selling, general and administrative expenses increased by 1.4%, reflecting new store openings and higher advertising expenses.