Meat cutters are getting $14 to $15 an hour, he noted, “and with the market so competitive, we've had to get some people away from other retailers.”
Jones said he's also paying health benefits and year-end bonuses, “so our payroll is up quite a bit, but we're also doing more business.”

To cover the higher costs, Jones said he's raised some prices “where we can and still be competitive. But though our store is very service-oriented, and many of our customers are willing to pay a bit more for service, we can't be ridiculous, with Wal-Mart and Target out there.”

Rouses Grows
In a market heavy with independents, Rouse Enterprises, Thibodaux, La., has emerged as a major regional player following its acquisition last fall of 16 of A&P's 21 Sav-A-Center stores in the New Orleans market, boosting his store count from 15 to 31.

“Business at those [Sav-A-Center] stores is up 10% to 15% and rising every week because we're doing a better job — and because some competing stores have been down,” Don Rouse, president, told SN.

What's changed for Rouses beyond the store count is its source of supply: After nearly 50 years with Associated Grocers, the company switched to C&S Wholesale Grocers, Keene, N.H., earlier this year.

C&S had been supplying the Sav-A-Center stores, and once Rouses acquired them, “we were able to look at the cost of goods they were getting,” Rouse told SN.

After putting the supply contract out for bids, Rouse said it got the best offer from C&S. However, Rouses, which had been AG's largest customer, remains a shareholder in the cooperative, though it is not buying from the company, he noted.

Since the switch to C&S, Rouses has broadened the variety it offers, “and we've been able to deal directly with manufacturers and brokers and do our own buying, and we can take the money they offer, apply it to the cost of goods and pass it on to our customers, which is what I've been after for years,” Rouse said.

In the process, Rouses brought Sav-A-Center's promotional prices down to its own everyday-low-price levels, he added, “so our prices are better, and we're more competitive with Wal-Mart than anyone else in the market.”

Rouses has also increased the number of employees at the acquired stores by 10% to 15% “because of the way we handle perishables and how we operate the front end,” he said.

But getting labor “is a challenge, and always has been,” he acknowledged, “because New Orleans has had such a high number of people working in the service industries at the hotels and restaurants, and after Katrina, only a limited number of those people came back.”

Like Jones, he acknowledged that labor costs have gone up, “but they were low before. Now many entry-level people are considering construction jobs instead of bagging groceries, so we're competing for those people more aggressively.”

With the Sav-A-Center acquisition, Rouses has four stores in Orleans Parish and a like number in neighboring Jefferson. It's also opened a new store in Orleans, Rouse said, and it's contemplating opening another inner-city store “because business is good and continuing to grow.”