BELLEVUE, Wash. (FNS) -- Larry's Markets here has spent the last 58 years carving out a fine reputation as a high quality specialty retailer. But now it's evaluation time, Mark McKinney, chief executive officer, told SN.
"We realized three years ago that we are in a fast-changing marketplace," McKinney said. "The economy, the competition, the customers are all changing. It is critical for independent grocers to talk a long, hard look at themselves to maintain their business."
Earlier this year, Larry's hired Hambleton Resources, Issaquah, Wash., to find out who Larry's customers are and why they shop at its six stores. DNA Brand Mechanics, Seattle, also was retained to assess and develop Larry's brand image.
"We set out to take the company apart and put it back together," McKinney said.
The market research firm ranked Larry's services and offerings with letter grades. Not surprisingly given its fine reputation, the retailer scored an "A" in overall quality and variety, and, specifically, its produce and meats received top grades.
"Larry's has an excellent reputation for quality in the local area as well as on the national scene," said Robert Hermanns, CEO of Associated Grocers, Seattle, McKinney's wholesaler. "The company is nationally known for its entrepreneurial spirit and its risk taking. As chains consolidate and stores look more and more alike there is a great opportunity for Larry's to demonstrate they are not typical, but distinctive -- a supermarket and more."
Craig Cole, president, Brown & Cole, Bellingham, Wash., reportedly Associated Grocer's largest customer, said, "Any upscale retailer has a challenge of being able to attract people with the promise of satisfying all their needs as opposed to being viewed as simply a specialty provider.
"It is very wise for any retailer to consistently re-examine their market position and their consumers' desires. Nothing sticks long anymore. Things move fast and hard. Retailers have to continually improve and present periodic evolution rather than revolution."
One area for Larry's to improve upon is customer order carryout service in which the retailer scored a "D". "It hits hard when you get a bad grade," McKinney said. "Maybe you don't believe it, or you feel the customers are wrong. It is better to listen and look into the matter and make improvements. We just got complacent in that one area."
Following the preliminary survey findings, executives discovered Larry's Markets was in the right niche, but its message was not consistent.
"We have to bring clarity to the company," said McKinney, "and articulate who we are and where we are going. Changes have to be deliberate and measurable."
As a result of the customer research, Larry's is closely examining its product mix, product positioning and customer service.
"We are working hard to understand what the customers said so we can get to the right balance of products and the right selection of national brands, specialty items and natural selections in all categories."
McKinney expects changes to be made in departments depending upon customers' needs. For example, most customers don't want to wait at the service counter for regular ground beef, McKinney said. In that instance, the item will be offered in self-service.
The chain also is evaluating its 35,000-item product assortment carried at each unit. McKinney expects to align the merchandise assortment with the chain's brand values, he said. "We are taking a hard look at how many natural foods we offer and how many specialty food displays we should have.
"We have to examine our value message and price points. We need to because of the competition being much more precise about whom they are and what they do," he said.
In going through this evaluation process, Harvey Hartman, chairman and CEO, The Hartman Group here, a research and consultant group for the health and wellness market, said it is important for Larry's not lose perspective and dilute its strengths.
"Larry's has a great position of being unique and having specialty items," said Hartman. "If market share is slipping or stagnant, perhaps areas including parking and location should be evaluated. The key for Larry's will be to successfully leverage their differentiation and not get rid of what has made their success."
"Larry's has a tremendous reputation in town as being unsurpassed in several areas," noted Robert Hoyt, consultant for the Philadelphia-based management advisory firm, Partners for Corporate Renewal. Hoyt served as Associated Grocer's interim president prior to Hermanns arrival. "Where they excel is in developing the image of being a high service-oriented store with quality being their hallmark, particularly with perishables. They have stockkeeping units many other stores don't carry, particularly in the high-end gourmet areas. There is a cost associated with that market position, but Larry's meets the market demands."
Good systems, including quick debit and credit processing, and precise demographic targeting have additionally given Larry's a leg up, according to Hoyt. "They realize that not all of their stores are alike and tailor each to the neighborhood."
Sprucing up the stores also is part of Larry's plan to bolster its quality image. The retailer will add thermal printers at the front end to reduce noise. New cases and lighting will also be part of remodeling, along with a new signage package to reflect the changes in product mix.
This is all being backed up with an increased employee-training program. "We are committed to continual education," McKinney said. "Training and continuing education is key." The chain has added one staff member to focus on these areas. Another will be hired next year.
McKinney noted that reported expansion plans publicized in the local newspapers are highly overplayed. While the $126 million company has refinanced debt to free up more cash, there are no current locations earmarked for new stores.
"Like every grocer, I'm always looking at population expansion areas and plots with good potential, but we are focused on our current road," McKinney said.
"Our products and our people are what came out in the research as giving us the largest opportunity to distinguish ourselves. We are a product- and people-driven company. Quality and selection is our niche."