LAS VEGAS -- The challenges to the prosperity, even survival, of the independent supermarket sector are many, but they point mostly to one issue: the operator's relationship to the consumer, said a panel of retail experts convened at the National Grocers Association convention here.
The panel, comprised of recognized leaders from the small grocers' and wholesale cooperative communities -- plus one from an international supermarket giant -- acknowledged that being small can help you build those intimate relationships.
However, it can also make the job tougher when you factor in rapidly changing information technologies, the sometimes rocky relations between independents and wholesalers, the nagging problem of hiring and retaining the right people to keep your bond with consumers alive and growing and the looming possibility that one food-safety disaster could poison your credibility.
"Competition centers around the center of our universe, which is the consumer, and the challenge is to keep up with a rapidly changing market," said Robert Bartels, president of Martin's Super Markets, South Bend Ind., and one of the panelists. "The competitive situation that anybody has to operate in is changing rapidly, and that is a big challenge." "We have to be careful to really keep that customer focus. In the final analysis, our customers don't shop with independents, chains, or any particular format, they shop where they get the goods, the services and the values that they deserve and desire."
Bartels was joined on the panel by Joseph H. Campbell, president of Associated Grocers, Baton Rouge, La.; Dean Janeway, president and chief operating officer of Wakefern Food Corp., Elizabeth, N.J.; Orville N. Roth, president of Roth's IGA, Salem, Ore.; and Robert Tobin, chairman of Stop & Shop Cos., Quincy Mass., and interim president and chief executive of Tops Friendly Markets, Buffalo, N.Y., both divisions of the retail conglomerate Ahold.
The five were addressing a series of questions posed by Thomas K. Zaucha, NGA president and chief executive officer. While Zaucha asked a series of questions about different challenges facing independents, the panelists often put their answers in the context of the consumer.
When he asked about the sector's progress in Efficient Consumer Response, for example, cooperative wholesaler Campbell said that while many operators are at about the midpoint in integrating ECR, it is more important to "know your customer" because a faulty relationship with consumers will squash any advantage from operational efficiencies. "Efficiency is only one component of making it happen."
Tobin of Stop & Shop even said that while he loves being big when it comes to the efficiencies that consumers don't see, "where customers see me I want to be Orville," he added, referring to the IGA retailer sharing the stage with him. "It is a very delicate balance."
When Zaucha asked how keeping an eye on the consumer is different now compared to five years ago, retailer Bartels said "I don't think the focus is any different; we have better tools," such as targeted marketing to track purchases and consumer surveys.
Independents, he said, can gather more data than ever before, and may mean that while they are "still focusing on the same questions," these days the access to data afforded by technology means many retailers are "getting different answers. The challenges is to react to those different answers in a way that keeps our customers happy."
That means interpreting those new and different answers correctly, no small task when faced with the piles of data that now routinely float in from scanners and card-marketing programs.
"I would say [the real challenge] is taking the tremendous amount of data and trying to make some sense out of it, as it relates to the consumer," said Campbell of Associated. "We are bombarded with reports that are supposed to tell us what should work and what should not work." His own distillation, he said, comes down to a not surprising axiom to be "fast, flexible, focused and friendly" in trying to keep up with consumers.
Tobin responded that as a chain operator, he finds the innovations in the business coming from targeted consumer marketing. "That is where it's at."
Wakefern's Janeway, however, pointed to the dark side of such "innovation," in the dilemma of figuring out how to use reams and reams of data. "For us we are still in the infancy; but you can identify what customers stopped buying certain products from you in the last two weeks, the last three weeks.
"There is a lot of information; the question is how do you get it, how do you use it effectively, and how do you measure the end result of that, because you have to invest dollars and time. It takes a lot of effort, when you have a company with an average customer count of 16,000, 17,000 per store. It's tough. We have a marketing department with, I think, five people devoted just to direct marketing. We have asked our vendor friends to help us analyze that data and how to go to the consumer. The question is how do you get them to help you do that better than you are today."
Zaucha then asked Janeway if that need has changed the position of the buyer, and the Wakefern executive replied that the buyer is an "evolving position, the buyer is always going to bang for the best cost, and then after he gets the best cost he is going to say, 'give me a little over here.' "
Bartels said that marketing data is being turned into action at his stores in a few specific departments such as in-store bakery and the pet goods section.
For Roth of Roth's IGA, the frustration comes from an inherent weakness in costly card programs. "I firmly believe that the future of our industry is in the card business, every independent has to be involved in the card program. But the bottom line is I have no information on what customers are shopping in my competitors' stores. I have everything on my own customers, I still need to figure out how to attract those outside our stores."
Zaucha raised the issue of how a greater interdependency between retailers and their wholesalers can help extend that marketing reach beyond a single company, and acknowledged that it calls for levels of trust that are difficult to come by.
"I think we have no choice," said Bartels. "Our independent streak is our strength and also our weakness." While dealing with independents can be "like trying to herd cats," the industry is at a "crossroads" in requiring wholesaler-retailer relationships to work on new levels. "We will either hang together or hang separately."
One obstacle that retailers and wholesalers should work together overcome is what Campbell said was the consumers' image that "bigger is better" in the supermarket universe, especially when it comes to offering value.