Independents Leverage Local Ownership, Community Ties

ELLIOT ZWIEBACH

It all starts — and ends — with family for some independent operators.

“There's something special in this day and age about being family-owned,” Paul Rosenberg, president of Community Supermarket, Penn Hills, Pa., told SN.

“In a time when the small are dying off and the big are getting bigger, there aren't too many family businesses around. But it's special for us to be in the stores every day.

“Customers feel that special touch when they know who we are and can talk to us. And employees like to know we are right there with them, not in some corporate office 400 miles away, to help resolve any problems on the spot or even to help with bagging, if that's what's needed.”

Community, which celebrated its 80th anniversary last year, uses family ownership as a selling point. Included as part of its corporate logo are the words, “Owned and operated by your neighbors.”

For Don Wood Jr., president and chief executive officer of Woods Supermarket, Bolivar, Mo., the message that family ownership conveys to customers is one of the reasons his company has lasted for 61 years.

“We've survived because we're better merchants,” Wood told SN. “And we're better merchants because we're close to our customers, so we know what they want, and we take care of them.”

Jeff Maurer, president and general manager of Pierce's Supermarket, Baraboo, Wis., echoed his peers' remarks. “Being family-owned connects us with the communities we serve, because the Pierce family is very concerned about those communities, and they're very visible in them,” he told SN.

It was the family's interest in the community that prompted the company to open a store in east Baraboo, even though it was already operating a 45,000-square-foot store in west Baraboo that was able to handle the business it was doing, Maurer said.

“We had the store on the west side,” he recalled, “but the family felt the people on the east side of town, about three miles away, needed a market of their own after a retailer there closed. And even though the Pierces knew they would never make a profit there, they opened a 22,000-square-foot store on part of the property where the other store had been.”

Maintaining a family business through several generations is not always easy, with few lasting beyond a second or third generation.

“It comes down to personalities,” one third-generation supermarket retailer told SN. “In some cases, a sibling doesn't want to take direction from a parent or older relative.

“In addition, the farther you get from the founder, the more family members that tend to be involved in the business and the more divergent their goals become. Depending on how the power has been spread, it can quickly get to a point that people are not going to get along.”

'Solid Woods'

Woods Supermarkets operates eight stores in the Ozarks, including seven in Missouri and one in Kansas, with combined volume of $90 million.

With no prospects for a third generation to follow in his footsteps, Wood said the company is considering its options. “We can sell to a competitor or do an ESOP,” he said.

“We're looking at both options right now, but an employee stock option program seems like something that would be better for us because it would allow employees to become owners.”

The company is actively investing in its store base, with plans this year to relocate a 30,000-square-foot store in Sedalia, Mo., to a 38,000-square-foot site about a mile away, and to remodel and expand its Stockton, Mo., store from 24,000 square feet to 32,000 square feet by taking over an adjacent store.

Woods plans to add in-store pharmacies at both locations — to supplement the three it currently has — and a fuel center at Sedalia.

The Woods store in Fort Scott, Mo., which was the first with a pharmacy, installed an in-store urgent-care facility in November — a section with a nurse practitioner and two examining rooms. The company partnered with nearby Mercy Hospital in setting up the facility.

“We think it will be a real service for customers and help generate our pharmacy business,” Wood said.

Asked how his store stacks up against larger chains, he declared, “I would put our stores up against any stores, even some in big cities. People are genuinely surprised to come to the small towns in which we operate and find stores like ours.

“But that shouldn't be a surprise, since an independent has to have everything a chain offers, as well as more personalized service,” he pointed out.

When it faced the prospect of a new Wal-Mart supercenter opening in its hometown of Bolivar a few years ago, Woods began emphasizing what differentiated its stores from Wal-Mart — in advance of the Wal-Mart opening — to make shoppers realize they needed to shop at Woods Supermarket for the best possible in-store experience, Wood told SN.

The company adopted a new slogan — “That's Solid Woods” — to convey the strength of its overall offerings, including friendly service, easy-to-shop stores, wide variety, bagging and carryout service, in-store butchers, high-quality perishables and price savings.

It also created a character named “Ed” for its radio ads — a bachelor looking for the kind of woman who would treat him as well as he was treated by Woods, according to the spots.

The company got employees involved by offering an incentive program that rewarded them for providing good customer service, Wood said.

Although sales at the Bolivar store dropped 20% when the supercenter opened, that was offset by increased sales at its other stores because of the new programs, Wood told SN; and those programs, combined with the closing of a competitor's store six months after the Wal-Mart opening, enabled the Bolivar store to realize a sales increase a year after the supercenter opened, he pointed out.

Community Fights Back

Community Supermarket operates five stores in the Pittsburgh area — four under its own banner and one franchised Giant Eagle store. Stores range from 30,000 to 45,000 square feet.

Paul Rosenberg, president, and his brother, Jerry, chairman, are sons of founder Louis Rosenberg; Howard Rosenberg, Jerry's son, serves as secretary-treasurer of the business, carrying family ownership over into the third generation.

With a second Wal-Mart supercenter due to open in its operating area in March, Community is taking to the airwaves to tell its story, Paul Rosenberg told SN.

“We'll start running a series of TV ads in February, a month before the Wal-Mart opens, telling people we are a family-owned local business that's done the right thing for 80 years in terms of taking care of customers,” he said.

When faced with the prospect of going up against the first supercenter in its area, Community opted to simply stress at the point-of-sale what it had always done, including high service levels and the presence of meat cutters at each store, Rosenberg recalled. “We didn't go after price but we tried to beat them on service and basic know-how in meat, produce and deli.”

Community took a hit after the supercenter opened, Rosenberg acknowledged, “but we bounced back and regained some of that volume.”

Value has always been a key element in Community's strategy, Rosenberg said. “A can of peas is a can of peas, and you can buy one anywhere. But there are working people coming to our stores looking for good value.”

Pierce's Fourth Generation

Pierce's Supermarket, which operates five stores in Wisconsin, has been able to keep its stores current, particularly as the number of Wal-Mart supercenters in its area has increased, by upgrading perishables, putting more focus on employee training and remodeling stores, Maurer told SN. “Two or three other independents in our area didn't do that, and they're out of business,” he said.

Pierce's is run by fourth-generation family members — siblings Dave and Angie Pierce. Their father Don, who still visits the stores daily, is the grandson of William and Anna Pierce, who founded the company in 1924.

It's still too early to know if any of the Pierce children will carry ownership through to a fifth generation, Maurer noted. Maurer, who is not a family member by blood, has been part of the 84-year-old business for the past 10 years.

Pierce's is about to launch a new venture — a central bakery that will enable its stores to bake from scratch and also provide a vehicle for selling to other retailers, Maurer told SN.

“We have a bakeoff operation at the stores now, but we plan to go 100% scratch to differentiate ourselves from Wal-Mart,” he explained.

He said he expects the central bakery to open in April.

Pierce's is also diversifying by acquiring a coffee shop in the same shopping center as its Madison store. “We see it as an opportunity to get some synergies and to challenge our staff,” Maurer explained.

It will also enable the company to gain some expertise in operating a coffee shop prior to adding one of its own inside its Portage store in late May, he added.

]For Pierce's, exceeding customer expectations is always the goal, Maurer explained. “For an independent to survive in the 21st century, you have to put more emphasis on being the best. You've got to constantly strive for perfection, and even if you don't quite get there, that's got to be your goal.”

What makes it possible for Pierce's to strive for perfection, he said, is the autonomy and flexibility it gives store personnel.

“We can do exactly what the customer wants us to do and change very quickly. We don't have the bureaucracy of a national chain, so we can let our store managers make decisions they feel are best for their customers.

“That may mean each store looks different, but each one is definitely skewed to the customer base at that store and what those customers want.”

Maurer said he learned the value of always striving for perfection while giving stores complete autonomy from Don Byerly, for whom he worked for 25 years at Minneapolis-based Byerly's. “We were allowed to run our stores as if they were our own,” he recalled.