“We have had to dig deeper than we ever have before — we had to dig into the margin line to maintain our sales.

“We just have to figure out how to balance our mix to get a bigger basket size,” he added. “The challenge is how do you remerchandise to go after that value shopper.”

Darden Heritage, president of Star Markets, a three-store food and pharmacy chain in Huntsville, Ala., said his company was fortunate to be located in an area where the economy has spared its worst. But he noted that consumer trends changed in 2009, and that Star Markets kept busy adjusting.

“In 2009, we still did good business but people were more selective in what they were buying. We saw a lot more private-label buying from people looking for more bang for their buck,” he told SN. “We did some remerchandising of stores to make the private label more attractive. We put it where people could easily find it.”

He is preparing for additional competition from supercenters in 2010, which he noted have been more aggressive in price and, in Alabama, have benefited from the demise of traditional competitors including Bruno's in 2009.

However, he thinks Star Markets can grow in 2010 for the same reason. “We see some opportunity for growth as the result of [store closures]. One of our challenges in 2010 will be to handle that growth, financially and personnel-wise.”

MAINTAINING PRICE LEADERSHIP

Jack Brown, chairman and CEO of Stater Bros. Markets, San Bernardino, Calif., is expecting 2010 to resemble 2009 — including challenges Stater Bros. faced with slow new home growth and high unemployment throughout its geographic markets. He was optimistic that some relief could come late in the year.

“I expect consumer patterns will be pretty consistent for the full year — 2010 will be a mirror image of 2009, with price continuing to be more important.

“In January 2009, price was coming on strong, but by the second half, price was really a compelling issue. Most of the industry had built itself on other accolades, such as quality and service, but consumers today only have so much money to spend and they have to make it go the farthest possible, and many are turning to box stores.

“So price will remain No. 1 for consumers, and while we've seen some full-service chains trying to adapt to a low-price image, many haven't been successful, whereas that's been Stater's position for years.

“Possibly by the fourth quarter of 2010, things might start turning, but it all depends on the job market. In the Inland Empire of Southern California where our stores operate and where construction is the No. 1 industry, we get double-whipped, with fewer new homes being built and fewer new families coming into the area.”

Brown switched to naval terminology to indicate what Stater learned in 2009 that it can apply in 2010. “We've put our operations into dry-dock to scrape the hulls — to look for every barnacle that we can remove to reduce our costs in areas that don't affect customers, such as reducing the use of cell phones, beepers and [BlackBerry devices,] for example, and eliminating email storage to boost systems capacity.”

Regarding promotions, Brown said, “Stater has always been price-oriented, and we've renewed our commitment to customers to deliver the lowest prices year-round, and when others have tried to copy our EDLP program, they've gotten in trouble because it's not something they've grown up with.”

Regarding opportunities for 2010, Brown said, “We're trying to retrench and remodel stores to strengthen ourselves in our primary marketing areas.”

The biggest challenge for Stater Bros., he said, will be to maintain its low-price leadership. “We're the market-share leader in our primary area, and everyone shoots at the leader, so we do battle every day, and we remain ready to battle anyone who chooses to go up against us.”