BELLINGHAM, WASH. — Trying to create a new image for established stores is always a challenge, and doing so in the midst of a weak economic environment doesn't make it any easier.
However, that's what The Markets here, formerly known as Brown & Cole, is doing, Kevin Weatherill, president and chief executive officer, told SN.
The company is in the second year of a four-year process of converting the Food Pavilions and Cost Cutter stores operated by its former owners into 15 The Market locations and six International Markets, a Hispanic-oriented format.
Weatherill is projecting flat sales growth and stable margins for the year.
The 21 stores are spread across Washington, and their performance could depend on their geography, Weatherill told SN, with stores in eastern Washington that have not been affected by the housing crisis and a strike at Boeing doing better than those closer to Seattle; and stores in northern Washington, where Canadian currency affects the local economy, suffering from the negative exchange rate (a 26% drop from a year ago).
“But in remote areas where we are the only store in town or one of two, we're seeing good growth,” he added.
The company remodeled two stores in 2008 — converting one to an International Market and one to The Market at Anacortes; Weatherill said the company plans to open one brand new store in April — The Market at Birch Bay — and two more remodels later in the year.
“As we renew our stores, we will add features that require more capital,” he said, “but we're also looking forward to rolling out marketing and merchandising programs that add more interest and excitement to our stores.”
For Weatherill, the company's biggest initiatives this year will involve continuing to change the sales mix at the stores, including offering a broader assortment; working with its supplier, Supervalu, to expand the third-tier own-brand line it introduced last year; and rolling out the Certified-tender beef program it tested at the Anacortes, Wash., store.
It also intends to expand to each new or remodeled store the “Gusto Italiano” Center Store section it tested at Anacortes — a section devoted exclusively to Italian items, including pasta, sauces, wines, gelato and cookware.
“It's an ethnic section but more everyday ethnic — nothing too far out — just basic ethnic items but with more sizzle,” Weatherill explained. “We tested it because we know everyone cooks Italian at least once a week.”
During 2009, The Market is working “on another Center Store feature department that will give us more destination dominance and flavor but without making us into a specialty market with the perception of high prices,” he said, though he declined to pinpoint what that department will involve.
Other goals for this year are “to focus on the value equation and promote own-brands, and to make sure we have the right level of promotional layers to appeal to our customers' pocketbooks, including couponing, multiple pricing and private-label programs.”
To accommodate the weaker economy, Weatherill said The Market has been concentrating on value for the last two years, with more focus on private-label programs and getting a better cost-of-goods “so we're in a position to improve our ability to have competitive pricing. We've also realigned our primary produce, meat and deli suppliers to put us in a more competitive position.”
Weatherill said the biggest change he's seen in shopper behavior “is the connection between paychecks and sales. It used to be a pretty gentle curve, with few peaks and valleys, but now in weeks in which customers don't get paychecks, we see sales really dip, and they don't come back to life till paychecks are received again.”
He said that behavior has progressed since June, “but you can really notice it now.”
