A STRATEGY TO KEEP INDEPENDENT RETAILING SUCCESSFUL

David Merrefield

One of the challenges confronting the independent sector of supermarket retailing has to do with the continuation of business.

In many instances, the ownership of an independently owned supermarket, or group of supermarkets, is in the hands of a family. The issue of business continuation arises when it's time for one generation to retire from the business and the next to take over. It frequently happens that the founding generation successfully passes management to the next, but by the time the third generation is called upon, the process has an increasing probability of breaking down.

By then, it's likely that the incoming generation has lost some passion for and interest in the business, perhaps because members of that generation have been educated for a non-retailing profession, or, in any event, have found a different way to make a living. It may also be that competitive pressures render the incoming generation unsure that the business is a long-term income maker, or it may be that the new generation discovers that the business is worth more for its real-estate holdings than as an ongoing business.

As you'll see by leafing two pages forward, though, one wholesaler is taking a look at the problem of business continuation and is working on a solution. The solution involves inspiring and building the confidence of members of the incoming generation to help ensure they will remain in the business. That wholesaler is Associated Food Stores, Salt Lake City. Here's how one AFS executive framed the situation: "Too often that second and third generation lacks the passion an independent grocer needs. But with education and the greater sense of confidence that provides, their passion can grow."

Specifically, AFS has formed the Retail Leadership Institute, formalizing a process some companies offer on an ad hoc basis. The work of the institute is to offer what amounts to an internship in food retailing to those in an incoming independent-retailer generation. Features of the intern program include four months working in various departments at the wholesaler, four months at a university and one or two years of in-store work. The last period is spent in a supermarket other than one owned by the intern's family. The idea is that at the conclusion of the training period, interns will be well-equipped to return to the family-owned business, or, if that isn't possible for some reason, to be employable at the training store or by AFS.

No doubt, programs of this sort are just what is needed to help with the continuation of the independent sector. It's also possible that such a program could enlarge the independent sector.

Here's how: Such a program could be used to train potential entrepreneurs without any family connection to independent retailing. After the training period, they could end up owning supermarkets. This is especially important at the present time, because as chain operators put stores up for sale in increasing numbers, opportunities for independent store ownership are brighter than they have been for many years. The picture would look even brighter if a financial component were added that would give a potential entrepreneur the wherewithal to acquire a store.