New Era in Richmond

JON SPRINGER

At Martin’s Short Pump store, among the first group of stores to be converted, produce selection increased by 30% — “a big difference,” according to company officials. Martin’s also added a new natural and organic section featuring Ahold’s Nature’s Promise private label.

If it were only about adding some beer and wine to the product mix, and an extra day of sales each week, the transition of the Ukrop's banner would be a breeze.

But for Giant of Carlisle, which bought the storied Richmond, Va., chain last year and last week opened the first of its converted stores under its Martin's banner, it's a little more complicated than Budweiser on Sunday.

At a grand opening event at Martin's Short Pump location last week, Rick Herring, Giant's president, entertained no illusions of an easy go in Richmond, where changing shopper habits and sharp competitors helped to take out the longtime local leader.

“We have a big challenge ahead of us to turn around some sales fall-off that Ukrop's had been experiencing,” Herring noted.

At the same time, Herring expressed confidence that a formula combining Giant's price and selection expertise with Ukrop's strengths of quality and service would be the right solution for the Richmond market. A complementary pairing of corporate cultures, as 3,500 Ukrop's employees join the Giant fold, is also helping the effort, he added.

Giant-Carlisle, a division of Ahold, expects to complete the conversion of 25 acquired Ukrop's stores in phases over the next month. Another four stores are set for conversion this week. Physical renovations range from minor touch-ups and lighting at newer stores like Short Pump, to more extensive renovations of some of Ukrop's older stores. Giant officials describe the renovation process as a multi-million dollar expense, covering systems changes as well as physical modifications in stores.

Among the most visible changes in the Short Pump location came as customers arrived to find a larger produce section displaying approximately 30% more products than it previously had, officials said. Jim Scanlon, a longtime Ukrop's employee hired as Giant's regional vice president, said he saw the produce section at Martin's Short Pump store as the most dramatic visual change from Ukrop's.

“The ability to have our own produce distribution center is going to make a big difference,” Scanlon noted. “Everybody who walked in the store today said the same thing: The produce just popped. For those of us who are nuts about this business, it was really something to see.”

Elsewhere in the store, Martin's added a dedicated natural and organics section, installed brighter lights throughout the building and added wine and beer — both in dedicated aisles and island displays around the store. Customers at the grand opening milled around a display allowing shoppers to create their own beer six-packs. One section of the wine selection was reserved for wines from Virginia.

Employees — at least those not on loan from other Giant and Martin's stores aiding with the transition — dressed in bright, lime-green uniform tops. The color, which also adorns signs and shopping carts at the new Martin's, was chosen especially for the Richmond stores. Martin's employees wear a darker shade of green.

Scanlon said the color choice came out of a multi-departmental group charged with making the transition. In response to suggestions from employees, the uniforms are tailored to be worn either tucked in to the pants or not, depending on the preference of the worker, Scanlon said.

The store has the feel and features of typical Giant and Martin's stores, with a strong emphasis on price and variety. They maintain an everyday low price position, indicate weekly specials with Bonus Buy tags, and double manufacturer coupons and pricing efforts are tied to its BonusCard program, which is replacing Ukrop's MVP frequent shopper program.

In-store kiosks providing navigation, recipes and special information — as well as self-checkout lanes — are also a part of the stores for the first time. These features might have found themselves in conflict with Ukrop's tenets of service — for example, customers seeking an item were led to it by employee as a policy at Ukrop's — although Martin's is taking pains to indicate this type of service will continue when requested by the shopper. The navigation kiosk provides an additional convenience, officials said.

Economies of Scale

Making a good price impression is particularly important for the converted stores, officials said, acknowledging that Ukrop's had limited ability to get and pass along the kind of volume discounts that Giant can. The situation became particularly difficult for Ukrop's with the onset of the economic recession, which coincided with efforts among local competitors to be more price competitive with Wal-Mart.

“We're a bigger player now and we have the economies of scale to dramatically impact pricing,” Scanlon said. “Before, as a 25-store chain, it was difficult to do. As well as we tried, it was hard to make a great price impression. That was the best-known secret in town.

“People are looking for more value here,” Scanlon added. “More people are watching their dollars and being careful with their spending, so having the ability to do things like double-coupons that enhance people's ability to save money is critical. That's what it's all about right now, no matter what your income level.”

Herring said pricing would be a foundation to win back customers who might have fled for better perceived value elsewhere, and it could draw new shoppers as well. The opening last week sparked considerable activity in the area: A Whole Foods store less than a mile away declared last week “Customer Appreciation Week” with live bands and specials. With Martin's store openings scheduled through next month, competition should be keen.

“If you walk around the store you'll see thousands of lower prices that you'll recognize,” Herring said. “We've made a conscious effort to make a strong statement on lower prices. That will help us shore up our customer base and draw some new customers too.”

Keeping Ukrop's Alive

The Ukrop's influence is far from erased from the new stores. The name and logo in fact still appears on the storefront in a slogan reading “Featuring Ukrop's Kitchen and Bakery.”

Inside, the large prepared-foods and bakery departments are very much as they were when Ukrop's ran the store. Prepared selections — ranging from sandwiches to sushi — that made the Short Pump store a lunch gathering place remain, with menu items changing daily. The bakery features Ukrop's branded items including its Whitehouse rolls, cakes and donuts, prepared at its central commissary. The Ukrop family continues to run that side of the business and has agreed to continue supplying Martin's stores with those goods.

Officials contend that retaining these features — along with continuing to support local causes — will keep a strain of what made Ukrop's special alive at Martin's.

“One thing that people associate with Ukrop's was community involvement,” Scanlon said. “I think a lot of people will be pleased when they see how much community involvement we will still bring to the table.”

From a business perspective, the addition of store hours and product categories is an obvious advantage for Martin's to capture, but officials have been hesitant to put a figure to it. Observers have estimated that sales could easily increase by 15% or more, particularly if Martin's price appeal is effective and its stores don't suffer any backlash. The newcomer already took some criticism for its policy restricting fundraising groups assembling outside stores.

Strategically, Herring made a case for Richmond being a geographic target for Giant-Carlisle, which operates some stores in Virginia and has long looked toward Richmond for potential expansion opportunities. He said Giant-Carlisle made a better “cultural fit” than its sister chain Giant-Landover, the latter being a union chain that previously operated in Richmond in the 1980s.

“We've always been interested in Richmond, and always had great admiration for Ukrop's. So when the opportunity [to buy stores] came up, we just wanted to be in the mix to get some, because it would have been more difficult to get here one store at a time. This just screamed a great strategic fit.”

Herring said Giant's first priority would be to get the Richmond stores converted and regain their momentum, but that it would also be looking for additional store sites in the area.

“I don't want to say this won't be a challenge,” Herring said. “We have Food Lion, Wal-Mart and Kroger here already, and they're no slouch competitors. But I think we'll compete here very well with the formula of customer service, lower prices and the quality of products.”

Take a tour of the Martin’s Short Pump store by visiting SN’s photo gallery.