Howard's Responds Quickly to Changing Environment

CHRISTINA VEIDERS

SPRINGFIELD, Ohio — Neither a struggling economy, an activity-use state tax on sales, new competition, nor Hurricane Ike can keep Howard's Management Group here from posting year-end sales increases.

Although he declined to reveal revenues, Bill Price, president of the nine-store grocery retailing business based here, confidently told SN sales will be up and that the business is OK.

The company, which employs about 350 full- and part-time associates, is finishing up renovations on two of its stores. One is a 20,000-square-foot Howard's IGA in New Carlisle, Ohio, and the other is a 15,000-square-foot Sav-U-Mor IGA, a new format, here. The remodels consist of a new decor package with lighting, flooring and new equipment. The investment in the remodels is about $500,000, Price said. More emphasis is being placed on perishables and beer and wine in the IGA store. Sav-U-Mor, which lacks a deli, is a hybrid between a conventional IGA and a Save-A-Lot.

Price, 50, has seen the good, bad and ugly sides of grocery retailing in his long career. At age 16, he started as a bag boy for a Big Bear store in Columbus, Ohio. Then he spent 18 years in wholesaling, mainly with Fleming Cos., advising independents. He has seen what works and what doesn't, and he applies that knowledge to his current position with Howard's.

Price returned to retailing in 2001 to partner with long-time retail veteran Howard Dodds, who at age 69 is semi-retired but still involved in the business. Dodds owns seven of the nine stores (three Howard's IGAs, three Save-A-Lots and Sav-U-Mor). Price owns McMaken's IGA in Brookville and Save-A-Lot in Fairborn.

Price wears many hats in the day-to-day operation of the business. He oversees two distinct formats that range in size from 10,000 to 35,000 square feet. He is also involved in promotion, merchandising, human resources and real estate/lease negotiations.

The business is growing, albeit slowly. Price said there are a couple of new locations on the table that the company is looking at, and it is in a financial position to acquire stores if it wanted to. “We are conservative. We aren't going to grow just to get more stores to grow. If we can make money, we'll look at new locations. Neither Howard nor I have big egos,” said Price.

So far this year, the weather has proved more of a deterrent than the poor economy to business. In September, strong winds from Hurricane Ike slammed into Ohio and bordering states. Howard's suffered $165,000 in damages, and the storm left stores without power. Price's McMaken's store was shuttered for nearly a week.

Howard's competes with major grocery chains and discounters here. It recently had a Kroger Marketplace open. When gasoline prices were high, people were less prone to drive to the competition and they patronized their local neighborhood stores instead. Now that gas prices have hit a five-year low, the competition is benefiting, said Price. The retailer has been quick to respond by rolling out an EDLP program from its distributor, Laurel Grocery Co., London, Ky., on 2,500 items sold in the IGA stores. Price said the goal of the program is to stop any leakage to the competition of Center Store sales.

Being sharp on price is important for an independent in such a competitive market. Howard's has invested in price optimization software from Revionics. In response to the economy, the retailer is promoting value packs of meat, such as five packages with the “Pick 5 label” for $19.99, at a 20% savings. Meats are considered a growth department, and Howard's emphasizes its meats and butcher service.

Price said shoppers are trading down in response to the economy, and private label has really picked up as a result. In bread, for example, Price said, “They are trading from expensive to basic everyday white and wheat breads.” Consumers are also shopping more frequently and not filling up their pantries.

The salvation for grocery retailers is that people have to eat. “They have to go somewhere, and we are trying to give them value to shop our stores,” said Price.

He added that the company is focused on becoming good merchants and selling impulse items, whether it be stuffed animals, five-packs of meats or holiday fruit baskets that are not on shoppers' lists.

The Save-A-Lot stores are benefiting in a depressed economy, Price reported. “It's still a great format, especially with the economy. We are seeing good numbers and customer count growth with our Save-A-Lots. It is an easy concept to run. We like it.”

Howard's is a second family to its employees, which the company calls team members. “We have an open-door policy where anyone of our team members or customers can call and come in and talk to us,” said Price.

McMaken's is soliciting customer feedback on its website that states: “Your Opinion Counts! We would like to hear about your shopping experience. You could win a $50 IGA Gift Certificate by completing a brief survey about your visit to our store — 20 winners will be selected each month! Thanks for your feedback — we're working to make your IGA experience the best it can be!”

Price said that employees participate in 401(k) matching funds and have health care benefits, and managers and department heads participate in a bonus program. He is concerned about the Employee Free Choice Act that the incoming Obama administration supports and thinks it could negatively impact his business if the company became unionized.

Price — who is a member of the IGA advisory committee, past chairman of the Ohio Grocers Association and on the National Retailer Advisory Board — said it is important to be involved with other organizations and community groups, because it pays off in making Howard's a better grocery retailer.

He credits Dodds for being a successful retailer and creating a company focused on the customer. “None of us would have a job if it wasn't for the customer, and we try to go above and beyond to take care of them,” Price said.