SMALL IS THE NEW BIG

WENDY TOTH and DAN ALAIMO

PITTSBURGH — Giant Eagle here has found another new flight path.

With a 14,000-square-foot Giant Eagle Express store and 16 fuel pumps, the retailer has created a format geared to the lives of busy consumers. The store, which replaces an older supermarket in Harmar Township, Pa., outside of Pittsburgh, opened earlier this month and is seen by some as an industry first.

Reported earlier this year during the planning stages, the store is remarkable as much for its size and fuel offering as for its combination of products and services.

In terms of nonfood, the store has a full pharmacy with a drive-through window, together with a small but complete selection of health and beauty care items, a redbox DVD rental kiosk, ink-jet cartridge refills, three digital photo stations, and wireless Internet in the cafe area, where two of the digital photo kiosks are located so customers can edit their images while eating a snack or enjoying a beverage.

In food, Giant Eagle Express aspires to provide consumers what they need in a fill-in trip or a weekly shopping trip, as well as extensive fresh and prepared food offerings. The menu, which includes entrees like Tuscan roasted chicken and potatoes, is prepared by trained chefs, and is more extensive than that offered in Giant Eagle supermarkets.

This is not a pilot or a test, Brett Merrell, vice president of marketing, told SN. However, the chain does not have immediate plans to extend the concept, and changes may be made depending on what is learned from it, he said.

“This is a contemporary neighborhood grocery store with fuel,” Merrell said. “You won't see as much variety in sizes and flavors, but for the most part, if you come to Giant Eagle Express, you will find what you need.”

While Merrell would not discuss other new formats, such as Tesco's Fresh & Easy markets, he did relate the project to industry trends by commenting, “Small is the new big.”

As denoted by a unique logo, Giant Eagle Express is a new format for the company and should not be confused with its traditional supermarkets, its upscale Market District stores or its GetGo convenience outlets, Merrell said. “This is not a convenience store where you have a few things to pick from and pay inflated prices for them.”

“Giant Eagle Express is another way for us to put a pharmacy in a lot of our existing markets,” said Randy Heiser, vice president of pharmacy, interviewed last week during the Food Marketing Institute Pharmacy Conference in Chicago.

The Express store adds to the convenience shoppers already find in regular Giant Eagle stores, he said. “Now we are going to make it easy for them when they are on their way home or going to work. They won't have to go into a large store. They can go into a Giant Eagle Express — it's on a corner — park, get in and out of the store very quickly,” Heiser said.

The signage inside and outside Giant Eagle Express will be consistent with the new logo. However, the fuel stations will have the GetGo logo to ensure customers realize that the fuel discount program offered at Giant Eagle's other formats, fuelperks!, is also available at Giant Eagle Express.

The Express format is an innovation among U.S. supermarket chains, said Burt P. Flickinger III, managing director at Strategic Resource Group, a business strategy consulting firm based in New York. “It is the first company to really take a smaller footprint to scale in a major U.S. market,” he said.

Meanwhile, if the concept succeeds and develops, it will add to Giant Eagle's buying power, Flickinger said. “If Giant Eagle can use its procurement power from this format in addition to its other stores to get lower prices from manufacturers and pass those prices on to the consumers, it is going to make Giant Eagle even more competitive,” he said.

CONVENIENCE FOR ALL

With a format about the size of most chain drug stores, and a fraction the size of most contemporary supermarkets, Express is also a preemptive strike against future competitors such as Tesco's upcoming small convenience-oriented stores, Wal-Mart Neighborhood Markets and current rivals like CVS/pharmacy and Walgreens, as well as Sheetz with its expansive fuel and convenience operations. “It is a roadblock against key competition coming in and expanding,” he said.

“I don't think there is any secret that this format resembles the opportunity Tesco sees in the U.S., because the new [Giant Eagle Express] format is much like what Tesco is going to be building on the West Coast,” said Brandon Logsdon, executive vice president and general manager, Excentus, Irving, Texas, which provides the technology behind the retailer's fuelperks! marketing program. The resemblance to Tesco's approaching format demonstrates that Giant Eagle understands the market, he said.

“This is a response to changing consumer needs and lifestyles,” Merrell said.

The convenience format is growing in importance “with the opening of Tesco, and with the success of people like Trader Joe's, Walgreens and CVS,” said Neil Stern, senior partner, McMillan/Doolittle, Chicago.

The share of customer shopping trips has been declining for the supermarket business, he said. As a result, “Giant Eagle has been more willing than most to explore new formats and figure out what the right convenience mix is, whether it includes pharmacy and gas pumps and prepared foods — that's the real challenge that stores need to puzzle through.”

With its decision to combine fuel, food and pharmacy in one small-scale format, the company is using the same approach to merging the promotion of these two commodities that it sometimes does in its large-format stores. “There will be opportunities where we will tie in fuelperks! with our pharmacies,” Merrell said. For example, customers often earn $1 off per gallon per new prescription, he said.

“In the past [using gasoline discounts to acquire pharmacy customers] has been extremely successful for them,” Logsdon said. “So it makes sense to further proliferate that idea at the smaller-store level.”

In the way that fuel discounts and a drive-though pharmacy complement one another, the format is trying to bring old-fashioned customer service to its patrons by using the latest in technology. For example, Express customers will be able to sign up for text messages alerting them to lunch and dinner specials.

Other uses of text messages, such as the way Meijer is advising customers about fuel pricing — by text-messaging them a few hours before prices are set to increase — are a possibility in the future, Merrell said.

CONVENIENCE FOR ALL

Customers of this Express store are likely to be en route to or from the more urban parts of Pittsburgh. Resting near the interchange between Interstate 76 — the Pennsylvania Turnpike — and another major road, the location is considered a high-traffic commuter area, said Giant Eagle spokesman Dan Donovan.

Some of the eight checkout lanes will be designated solely for gas customers, Merrell said.

Some consumers might want to come in simply to buy gift cards. Giant Eagle lets customers earn fuelperks! on gift cards, and aggressively promotes them for use at other retail stores. “Gift cards will be available at every checkout lane,” he said.

The health and beauty care area, located around the pharmacy, contributes to the overall impact of a “community drug store,” Merrell said. “We have a very strong HBC selection.” Similarly edited general merchandise sections include auto, pet and office supplies, greeting cards and a floral section.

The company thinks the Express format has the potential to work in urban areas where there is a need for supermarkets but not a lot of room; in suburban areas, where families can make quick trips; and in rural settings where “there were once local grocery stores that have since closed down,” Merrell said.

Giant Eagle will, however, be mindful of the proximity of its Express stores to its other formats. The closest Giant Eagle supermarket to the new Harmar Township store is about five miles away, Donovan said. “We will find the right balance.”

Old-Fashioned Cyber Service

PITTSBURGH — Although Giant Eagle's new Express format store greets customers with an earthy new logo, a wide array of hot, fresh food, a deli and a bakery, it's exceptionally tech-savvy.

Customers can sip fresh coffee while sitting on stools in a cafe area. While they're at it, they can access Fuji digital photo kiosks, or flip open their laptops and access the free wireless Internet connection.

Maybe they'll stop by on the way home from work to take advantage of a text message they received from Giant Eagle Express saying, “Next 30 customers to spend $30 get a free rotisserie chicken.”

Those examples are a result of the midsized store's friendly convenience format, said Brett Merrell, vice president, marketing, Giant Eagle. “As we laid out the design for this store, we were taking all of the products and services of today, customizing them for the local area and doing it with all the zest and excitement that the electronic world has to offer.”

Time-starved customers shouldn't have to sacrifice freshness, naturalness and great taste for wanting convenient service, he said.

The Express store has a total of three digital photo kiosks, which is a big number for a 14,000-square-foot store, because Giant Eagle wants Express customers to have the speed of using the kiosks, but “we want people to take their time and be able to enjoy using the kiosks. We don't want them to feel like they are in a rushed, fast-paced place, but we also don't want them to have to wait in line to use them,” Merrell said.
— W.T.