A TRADITIONAL STRATEGY

David Merrefield

This is the era of re-engineering and new alliances, so business strategies pivoting on such considerations often capture the limelight. Perhaps for that very reason, it's good to step back from time to time and take a look at a company that's discovered the basis of strategic change in a more traditional and straightforward approach. The development and implementation of just such a strategy is, in a way, the point of the news feature on Big V Supermarkets that's on the front page of this issue. Big V is the regional chain of 30 stores, based in Florida, N.Y., with operations in the Hudson Valley. The chain is supplied by Wakefern Food Corp., Elizabeth, N.J., the nation's largest cooperative wholesaler. As this week's news feature points out, Big V has been facing a steady drumbeat of competition for some time now. Lately, though, the tempo has shifted to quick time. To cite just one instance, competitors trotted out no fewer than six stores along a 10-mile stretch of road -- a road that's the core of Big V's territory. The new entrants were Price Chopper, with two openings, a Stop & Shop supermarket, a Wal-Mart discount store and two membership clubs, one each from Sam's Club and BJ's.

Some of the new entrants have changed the orientation of the market to some degree, too. In the past, much of Big V's competition came from the price side. But now, a couple of the newest competitors are changing the emphasis to big superstores that present a more sophisticated offer of high-quality goods. Of course, quite a bit of price competition remains, too.

No one finds pleasant the prospect of facing such unrelenting competitive pressures as those arrayed against Big V, and some supermarket operators might seek a way out by contemplating radical moves ranging from finding a new way to source product to getting out of retailing altogether. Instead, Big V's executives have increased the pace of a long-term strategy that's rooted firmly in tradition. The strategy focuses on the two most elemental aspects of the store itself: The identification of the right-sized store for the right location, and the identification of the right product offering. That done, the strategy will find expression as the right stores (or refurbished stores), with the right content, are rolled out as quickly as possible. This is no easy or cheap task: "As operators face new challenges, the price of poker goes up," David Bronstein, Big V's chairman and chief executive officer, told David Orgel, a senior editor at SN.

The first task was to find the right store for specific locations: "The strategy [is] to service particular [areas] right," said Stuart Rosenthal, Big V's president and chief operating officer. "In some cases it will mean a brand new store, in others an expansion of stores. So we look at productive square footage growth." In the end, the executives decided the strategy should hinge on building a fleet of stores in the 48,000- to 58,000-square-foot range, avoiding what they see as the trap of excessive size: "You're not going to go into an 80,000-square-foot store for a loaf of bread," David Bronstein pointed out.

But, the executives aver, the store size they favor allows ample room to put in the right departments and expanded product offerings that are demanded by shoppers -- offerings such as deli, bakery, produce, floral, meat, club packs, video and general merchandise. That done, what about distribution? Sometimes regional chains about Big V's size take a look at self-distribution as a means of augmenting their activities, but the executives at Big V see no such move in their future. Indeed, they cite positive strategic advantages that attach to remaining with Wakefern. "The Wakefern participation gives us very strong price advantages," said Bronstein. "Wakefern also has the familiar brands in this marketplace; so, for example, we can carry six or seven different lines of pasta versus three for competitors.

"[Without Wakefern,] we'd never be able to afford the advertising we get in the New York metropolitan area or the buying clout." Sometimes a traditional strategy looks like just the right stuff.