BUILDING A NEW BRAND

Mark Hamstra

PITTSBURGH -- Forging steel is second nature in this rugged city, but can the region's dominant supermarket chain forge a new brand?

Giant Eagle is stoking its furnace for this particular endeavor. But rather than mixing pig iron and lime like its metal-making counterparts, Giant Eagle is pouring its own fresh-foods expertise into the hopper with the convenience store know-how of a local operator to create the GetGo from Giant Eagle mini-mart concept.

One year after forming a joint venture with the Guttman Group, the Belle Vernon, Pa.-based operator of the Crossroads convenience store chain, the companies have begun opening their first GetGo stores. The stores, which range in size from 600-square-foot gas-pad kiosks to 1,800-square-foot full-fledged convenience stores offering on-premise baking and sandwich preparation, are being positioned as a faster alternative to supermarket shopping enhanced by the familiarity of Giant Eagle products and services.

"People are more and more time-pressed, and the need for convenience continues to escalate," said Kevin Srigley, vice president of marketing, Giant Eagle, in an interview with SN. "We began to look at how we might be better able to fulfill that fill-in need from a customer perspective, which led us to the joint venture with the Guttman Group, and within that, the joint development of the GetGo brand."

The joint venture operates Guttman's 27 Crossroads convenience stores and all 15 Giant Eagle Fuel Stations in Pennsylvania and Ohio. Plans call for all of Giant Eagle's on-site gas stations to be converted to the GetGo brand, and the company is evaluating the Crossroads site to determine which of those can be converted to GetGo stores. It expects to decide in the next year or so which Crossroads stores will be converted. In addition, the joint venture -- dubbed Crossroads Convenience LLC -- also is developing separate, freestanding convenience stores under the GetGo brand.

Giant Eagle Fuel Stations, located on the parking lots of traditional Giant Eagle supermarkets, currently include small kiosks offering a handful of snack items. Some of those will remain small kiosks under the GetGo banner, while others will be expanded, according to Srigley.

"There are a lot of programs under development at this time, but the convenience business will be food-focused," he said. "The reasons we thought this joint venture would be so powerful were that one, we have the experience of the Guttman Group in not only managing fuel but also convenience stores, and two, we had the brand strength of Giant Eagle when it comes to offering customers high-quality food."

Srigley said the company currently is evaluating what foods will be offered in the GetGo stores, although the first two sites that opened already carry Giant Eagle's private-label brands of milk and eggs, in addition to traditional convenience store offerings of snacks, film and batteries. They also offer a line of store-made sandwiches that had been successful in the Crossroads stores.

Dan Pastor, chief operating officer, Crossroads Convenience, said the joint venture is examining a range of options for expanding the GetGo prepared-foods offering by leveraging Giant Eagle's expertise in that area.

"We are looking at all of the synergies of what Giant Eagle is doing from a food perspective and what we want to supplement, add, change and further develop," he said. "It could go into their prepared-chicken program; it could go into their prepared-sushi program. There are a lot of programs we are looking at synergistically and logistically to really make a point of difference."

Other supermarket companies that are seeking to leverage their expertise into the convenience store format include Publix, Lakeland, Fla., which operates a handful of Pix convenience stores. In the United Kingdom, Tesco has long operated its own convenience stores, and last week its rival J Sainsbury said it would open 100 Sainsbury Local convenience stores at Shell gas sites. Other operators also have adding food offerings at their on-site fuel centers.

One of the ways Giant Eagle hopes to drive its core customers into the GetGo stores is through the use of the Giant Eagle Advantage card to offer shoppers discounts on convenience store merchandise and gasoline.

"What we offer that the Wawas and the 7-Elevens of the world can't offer is customers of value that can cross channels, and one of the key ways we can do that is via the Giant Eagle Advantage Card," Srigley said. "We will be cross-promoting the two channels in Giant Eagle and GetGo aggressively, both on a local basis and as the concept evolves on a more market-by-market basis."

One of the original sites -- in Painesville Township, Ohio -- also includes a car wash, a feature that could be added to other sites, Pastor said. Additional GetGo sites are in Canton and Westerville, Ohio.

The companies also hope to breach the traditional gender gap that separates convenience stores from supermarkets by driving more female shoppers into the GetGo stores through the use of the frequent-shopper card and the offering of traditional Giant Eagle products.

Men make 53% of all shopping trips to convenience stores, according to a recent study by ACNielsen, Schaumberg, Ill., while women dominate the shopping at all other retail channels. Women make 64% of shopping trips to supermarkets, for example, and 72% of all trips to supercenters.

The joint venture also is capitalizing on some operating synergies. For example, Guttman Enterprises has taken over the fuel operations of all the Giant Eagle Fuel Stations, leveraging Guttman's fuel-buying expertise, while the Crossroads stores also have been able to capitalize on Giant Eagle's buying power to some degree, Pastor said.

Srigley and Pastor declined to discuss the terms of the financial relationship among Guttman, Crossroads and Giant Eagle.

The companies also anticipate that there will be management synergies between GetGo and the traditional Giant Eagle operations.

"From a more administrative level, there are tremendous synergies," Srigley said. "We'll have district managers that are responsible for the GetGo brand and image, and as we have more locations and more sales, we can spread that administrative support structure across more locations."

He also said the company "has had discussions" about how GetGo might be used as a "stepping stone" for employees to move up to larger stores.

The main focus of the joint venture, however, will be on meeting the needs of the consumer.

"We are bringing them innovation in the convenience store business in that we have a brand that stands for high-quality food in the supermarket world, but also that we're redefining what the supermarket and convenience store worlds mean to people, both in terms of a promotional standpoint and a shopping standpoint," Srigley said.