Sounding Board: Independent aspirations

The environment independent grocers create for shoppers is often more important than price. It is that time of year when consultants, reporters and pundits start placing bets on an age-old battle—chains vs. independents. We are past the time of questioning whether independents can survive. Thanks to resourceful entrepreneurs, attentive wholesalers and creative marketing and merchandising the debate is about more than price. There is widespread realization that cheaper is not necessarily better. I believe there is a direct correlation between the economic wellbeing of cities and suburban areas and the strength of their independent retailers—whether they are supermarkets, restaurants or shoe stores. I know this sounds a bit Norman Rockwell-ish. But as strong as the chains are, they are not nor will they ever be, the only game in town. Difficulties being faced by retail monoliths like Walmart, Albertsons, RadioShackThe environment independent grocers create for shoppers is often more important than price., JCPenney, Sears, Darden Restaurants and even dollar stores underscore everyone’s vulnerability to the vagaries of consumer demand and operational missteps. No doubt the upcoming NGA convention will again offer a rosy outlook for independents. It should, considering the industry represents about $130 billion in sales from more than 21,000 stores. I believe that 2015 will be a watershed for all independents in terms of growth. Clearly, we have reached a point where the concerns of independents and chains are pretty much the same. But independents have to work just a little harder to make their nut. Perhaps the most important thing to come to grips with is a pricing strategy that does not rely solely on the deep discounting that can drive any retailer deep into the red. This is probably heresy, but I have never believed in the time-honored tradition of loss leaders. It may seem like a good idea and necessary in the face of cutthroat pricing by chain competitors, but cherry pickers are the least profitable group to cater to. Independents, more than anyone, need a pricing strategy that will help them meet preset objectives in sales and profits. Maybe the way to go is a higher price on higher quality products that will bolster profit margins. If you are bound and determined to follow a discount strategy—and this is admittedly difficult to avoid entirely—be selective. It is a good way to reward loyal customers; but doing it too often will keep you from ever getting full price for an item. The same is true for private labels. Cheap is not necessarily good and can be disastrous when it comes to store brands. It cheapens the image of the entire store and produces an anti-halo effect for everything that carries the store’s name. A simple idea but something that bears repeating. When independents can get beyond price, there is also the matter of the store environment. This is where the much-publicized dollar stores fall short. True, sales for this segment have been exploding and I have visited multiple locations run by different chains and many independent operators. I have yet to see a customer that looks happy to be there. While many in the industry point to dollar stores as the ultimate model of profitability, I doubt whether any independent is happy to become a purveyor of off-brand goods in a less than appealing shopping environment. In fact, the environment independents create for shoppers is often more important than price. Filling the shelves with the right items at the right price is a given. But the image projected day-after-day is what really creates loyal, happy shoppers. Most independents do not have teams of people to do complex analyses of customer attitudes and shopping behavior. However, that is not always what you need. Step back and really look at your stores the way customers do and put together a simple checklist: •Have clean floors and fixtures; •Remove freestanding merchandisers that block aisles and shelves; •Have clutter-free checkstands; •Make clean baskets and carts available; •Replace handwritten signs that are illegible and sloppy; •Eliminate odors from the produce, meat and seafood departments; •Turn off unnecessary lights in displays to save utility costs; •Fill empty spaces on the shelves with backstock and collect mis-shelved items as soon as possible. This may all sound like Retailing 101, but merchandising is a visual art and a refresher course never hurts. Len Lewis, a regular Grocery Headquarters columnist is a veteran industry journalist, commentator and editorial director of Lewis Communications, Inc. He is the author of The Trader Joe’s Adventure—Turning a Unique Approach to business into a Retail and Cultural Phenomenon. He can be reached at [email protected]. Or at www.lenlewiscommunications.com.