A GPS SYSTEM FOR INDEPENDENTS TO COMBAT WAL-MART

Christina Veiders

Jump into today's most modern car and head for the streets of Laredo; chances are you'll be aided by the latest state of the art -- the Global Positioning System. It's that on-dash monitor that offers you the fastest route from points A to B. It guides you around road construction, past detours, and points out your position every step of the way.

But what if you're that independent grocer on the streets of Laredo? It's high noon and suddenly you're facing that supercenter moving in across the street. What's your Grocery Positioning System? Who's going to point your way? How do you compete and survive? It's truly a David and Goliath drama and, given this week's front-page story that reports that the giant Wal-Mart's food and supercenter sales are driving the company's growth, it's just another reminder to all food-retailing competitors that they must keep their eye on the prize -- their customer!

It was only two years ago that SN reported Wal-Mart's milestone of becoming the No. 1 food retailer in the country. This retailing giant, which sold Americans on its lowest prices in town, entered the food fight in a big way. So what is it doing today? It's continuing to keep an eye on the prize.

In fact, a new consumer study that measures customer loyalty at a Wal-Mart supercenter, released this month at the National Grocers Association convention (see Page 34), gives Wal-Mart good marks on many fronts, including competitive prices, friendly employees and clean store conditions. Said Fred Martels, who produced the study for the NGA, "I was surprised how high the Wal-Mart supercenter scored on customer satisfaction."

However, as he points out in the study, customer satisfaction is not customer loyalty. Satisfied customers can go anywhere to shop and frequently do, said Martels. Loyal customers, on the other hand, feel compelled to drive past the competition to pick up a gallon of milk at their favored store, he added.

While 49% of the shoppers surveyed at the Wal-Mart supercenter said the retailer deserved their loyalty, what about the other half? The study notes areas of opportunity where that savvy independent or local chain can compete.

Here's where the grocer's GPS system can come into play by knowing customers' shopping patterns and pointing them in the right direction. "Your customers must be the bull's eye, the center of the target," said Martels.

Two independents retailers who have kept their shoppers in the bull's eye are Albert Lees Jr., Lees Supermarket, Westport, Mass., and Marvin Imus, Paw Paw Shopping Center, Paw Paw, Mich. They've been at the forefront in developing loyalty programs early and are now benefiting from the data they constantly mine.

They said during a presentation at the NGA that a frequent-shopper program will not make it possible for independents to survive the giant discounter, but it will give them the ability to compete more effectively and better understand the customers that shop their stores.

Lees said he wouldn't be in business today without his frequent-shopper program. "It's about knowing which customer we should be loyal to, and then try to enhance that customer's experience when in our store."