RETAILERS: ADD VALUE TO PROTECT LOYALTY

MATTHEW ENIS

NEW YORK -- Smaller store operators can continue to thrive in an increasingly competitive marketplace by focusing on value-added services, a panel of three independent retailers said at the 50th annual Fancy Food Show here.

The operators agreed that free educational programs, retention of well-trained, knowledgeable staff and other services have helped them maintain the loyalty of their customers despite competition from larger companies such as Wal-Mart Stores and Whole Foods Market.

For example, customers want reliable health information and personal nutrition guidance, and they will remain loyal to stores that provide those services, said Phil Myers, merchandising manager for Co-op Food Stores, Hanover, N.H. The co-op's two supermarkets maintain a full-time education department staffed by a registered dietitian, a community outreach coordinator, a food events coordinator and a full-time product demo staffer.

"We have a calendar on our Web site for our schedule of daily product demonstrations and tastings, and it gets a ton of hits," said Myers. "Our members and customers seem to be scheduling time for these."

The Web site, along with nutritional fact sheets and recipes -- even a small in-store reference library -- are other components of the "Better Eating for Life" program designed by the chain's dietitian.

Guided tours of the stores are offered by the dietitian on a monthly basis, teaching customers about the variety of foods available for heart-healthy, diabetic or low-sodium diets, and the co-op hosts a year-round lecture series on healthy eating habits at a local medical center.

"Customers love to try new things, but only if they understand how," said Trip Straub, fourth-generation owner of St. Louis-based Straub's Markets.

Upscale Straub's also hosts tasting and demo events at its four stores year-round, and the chain's staff of full-service butchers has made Straub's meat department a St. Louis institution for more than 100 years.

"They provide value-added services," said Straub. "They know our customers by name, they solve their problems with cooking tips and preparation ideas and, since we don't pre-package any of our meats, the full-service interaction adds to our customers' in-store experience."

Capitalizing on the family chain's longevity and upscale atmosphere, Straub's has also cultivated a good relationship with the St. Louis media. "We've worked to train the local media to think of Straub's as their local specialty food resource," Straub said. Positive media attention is not only free advertising, he added; it also positions the company as a smart local market leader with expertise in many areas.

Regardless, all customers want to feel that they are important, and independents are in a unique position to offer services catering to that need.

Several examples went beyond the pale. Straub had once personally taken a turkey to the home of a panicked customer on Thanksgiving morning, and Jay Hathaway, former owner of Peltier's Market, Dorset, Vt., once delivered a 30-cent newspaper to the home of an ill customer who lived 15 miles from his store. At the Hanover Co-op, every time a customer makes a new product suggestion, the company has one of its buyers call the customer within two weeks to explain whether the store will be able to stock the product.

"Sure it's expensive to have [senior staff] look these things up and make these calls, but when our merchandisers have to explain why we can or can't provide something a customer wants to buy from us, it really makes them more customer-focused," said Myers.

Surprisingly, all three retailers also offered customers access to a patently old-fashioned and intimate loyalty device -- the house charge. "We've offered a customer house charge since the days of my great-grandfather," said Straub. "There's no card, no key tag -- it's very much on the honor system."

Although the house charge account carries a fairly high interest rate of 18.5%, Straub said that house charge business is responsible for 15% to 20% of sales.

"Obviously, you have to vet your customer [for creditworthiness] in one way or another, but charge accounts are a great shopping motivator," said Hathaway.

The three retailers agreed that as the "Wal-Mart effect" continues to put pressure on prices and draw customers to other channels, independents must find ways to differentiate to survive. "Mass retailers are reliable on price, but they're rarely reliable on service or education," said Straub.