Zagara's Offers Value Proposition

JON SPRINGER

CLEVELAND — “I have a theory that people will always ‘shop up’ but they don't like to ‘shop down,’” said John Zagara, owner of Zagara's Marketplace stores. “So we like to appear upscale, even though our customer base is very mixed, racially and economically.”

For Zagara, the key to surviving the current economic slowdown is to maintain the unique feel and product selection of his two stores while providing his customers with values they need when times are tight.

“Once they trust your prices, they will stay with you because they like to shop up,” Zagara explained.

Thus far in 2008, that formula is providing his two stores here with higher average sales per customer, while store traffic is down slightly.

“We tend to like recessions,” Zagara said. “It tends to keep people's disposable income close to home, and probably discourages them from visiting restaurants.”

The economy has been troublesome in northeastern Ohio even before the subprime housing crisis, falling U.S. dollar and product cost inflation led some economists to believe the U.S. economy is in a nationwide recession. Zagara has made minor adjustments to his stores to suit the changing times.

“We are trying to develop endcaps that have a focus on value, rather than what we typically do, which is cross-merchandising,” he explained.

Elsewhere, the store is seeing excellent growth in programs like “Pick 5,” which allows shoppers to choose any five selected lower-end meat items for $19.99. That program is up by 14% this year, he said, while service meat is down slightly.

“Some of the high-end grocery items are down too,” Zagara said.