Independents dig deeper for differentiation strategies

There’s an old phrase coined by the British comedy group Monty Python that happens to perfectly describe what the best independent retailers are all about:

“And now for something completely different.”

Differentiation is everything to independents, and no laughing matter. For this issue of SN, timed to coincide with the NGA Show in Las Vegas, we’ve unveiled two research pieces that shed light on how independents approach differentiation.

The first is our annual ranking of the Top 50 Small Chains and Independents. Year after year, that ranking shows the growing diversity of independent operators as they identify unique niches. This year is no exception, with strategies geared to everything from conventional to ethnic to natural foods. Five companies are profiled in depth.

The second research piece is SN’s annual Center Store Survey. While the survey itself doesn’t focus exclusively on independents, many comments from survey-takers offer the latest industry opinions on independents, their challenges and solutions. Here are some of those remarks:

• Unique Products: “Many independent and smaller chain grocers are finding it extremely difficult to effectively compete in the center store, with so many competitors offering [the same] center store items. The ultimate private label for these grocers is their unique fresh products which can only be bought in their stores.”

• Price Competition: “It’s hard for the independent retailer to maintain center store sales, especially in certain departments. The departments I see as what consumers view as ‘I’ll get that at Walmart’ are: pet food, paper products, HABA, diapers, detergent and cleaners. ... I think a lot of consumers already have certain items locked in their minds that they won’t get it cheaper anywhere else.”

• Dollar Store Competition: “The dollar stores have eroded the sales of many independent retailers. They move into areas that do not have the big retailers and hurt the small businesses trying to survive in small towns.”

• Consumer Needs: “I think you have to offer something unique, something that consumers are looking for when they aren’t just looking for price. When the independent grocer zero’s in on a consumer need, I think they gain something from that. It’s what we have to do to create our own niche.”

The common theme is that independents, more than ever, have to be different to survive. SN’s recent reporting shows retailers are responding. Companies from Coborn’s to Piggly Wiggly are embracing click-and-collect ordering strategies to support consumer convenience and e-commerce. Operators ranging from Jungle Jim’s to Big Y Foods are targeting unique alcohol beverage programs. Dorothy Lane Market is expanding its highly popular signature bakery brand by introducing “Killer Brownie Coffee.” And so on.

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Stories in this issue show how independents are making smart moves needed to grow. For example, Northgate Gonzalez is reinvesting to modernize its stores, Festival Foods is targeting natural and organic for growth, and Redner’s Warehouse Markets is enabling sharp pricing through strict cost controls.

Meanwhile, SN’s ranking of independents shows some companies are opening new units at a fast pace. This includes Rouses, Festival Foods and Harps Food Stores.

You’ll see a lot more about independents in SN’s Total Access Video series that coincides with the NGA Show. Retail leaders from Niemann Foods, Harps Food Stores, Lowe’s Markets and other companies address a wide range of issues impacting this sector. Always, of course, with that unique independent spin.

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