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    COVER STORY: Store of the Month: New frontier

    Ukrop's Roanoke, Va. entry proves that independents can still successfully embark on new territory.

    By Jenny McTaggart

    The turnout at the grand opening of Ukrop's Super Market in Roanoke, Va. was so impressive that it inspired a cartoon in the local newspaper. In the comic, as a long line of people wait for Ukrop's to open its doors, a bystander asks, "Is this the line for the iPhone?" Indeed, just as the iPhone was received with enthusiasm bordering on hysteria by throngs of eager techies in June, Richmond, Va.-based Ukrop's is a dream come true for foodies in Roanoke, a city of 95,000 that's considered a commercial hub of western Virginia and southern West Virginia.

    Retailers including Kroger, Food Lion, and Wal-Mart have already penetrated the market, but the management at Ukrop's -- the family-owned independent with 28 stores in Richmond, Williamsburg, and Fredericksburg, Va. -- feels that it offers something quite different -- always has, in fact.

    For one thing, the industry's current obsession with prepared foods and other convenience-driven concepts just makes Ukrop's president and c.e.o. Bobby Ukrop scratch his head.

    "We've been making food in a central kitchen for 18 years," explains Ukrop. "We're already 'fresh and easy,'" he adds, making obvious reference to Tesco's much anticipated built-for-America format set to debut within months on the West Coast.

    Of course, if you're an independently owned regional retailer, it's often easier to fly under the radar than if you're a multinational retail powerhouse. But it's also easier to stay closer to your customer base, a tactic at which Ukrop's excels.

    The primary characteristics that set this independent apart from its larger counterparts are an obsession with food (anyone who's been around Bobby Ukrop will quickly pick up that he's a full-fledged foodie) and service. In pursuit of those obsessions, Ukrop's is constantly experimenting with trademark recipes and merchandising techniques on the one hand, and investing in technology to improve associate relations and customer service on the other.

    The result is a shopping -- and, indeed, eating -- experience that Virginians in its existing markets have come to love, and competitors and industry observers have come to respect. Unlike the majority of U.S. supermarkets, Ukrop's has achieved "restaurant" status in its hometown of Richmond, thanks to the 200-plus signature dishes it regularly prepares in its central kitchen and serves up in stores.

    Yet one area where Ukrop's has struggled is in addressing the realities of price sensitivity facing many of its shoppers. In that sense, admits Ukrop, his company plays second fiddle to industry giant Wal-Mart. But Ukrop's has been rising to the challenge in its own way, rolling out a pricing strategy it calls "Consistent Low Prices" (CLP). Since the program's introduction at the beginning of 2006, Ukrop's has added more than 10,000 price-sensitive products to its stores' assortments.

    Customers can easily recognize Ukrop's CLP items, as they're marked with black-and-white signage. But what's even more distinctive is the program's premise: Ukrop's enlists the help of suppliers to lower retail prices for the longer term, breaking free of the business model of the traditional weekly deal that most grocers cling to.

    The retailer also passes along seasonal and one-time-only savings through about 50 to 60 advertised weekly specials called "U-Savers." Meanwhile customers who sign up for the Ukrop's Valued Customer (UVC) card are entitled to a host of extra benefits beyond the sale prices in its weekly circular.

    Ukrop's has long been eager to bring its brand of food retailing to Roanoke, and dealt with frustrating delays before finally opening its doors this past June. (See "The waiting game" online for more on that.)

    But folks in Roanoke doubtless would say it was worth the wait. The 58,700-square-foot supermarket, which from the outside resembles a European villa more than a grocery store, is drawing plenty of curious shoppers who'd heard about the Ukrop's experience from fellow Virginians. Sales so far have been brisk, and some of Ukrop's signature homemade items are actually overindexing, according to the c.e.o.

    For its part Ukrop's has been "eager to come in and serve the market, to learn shoppers' wants and needs," says Scott Aronson, v.p. of marketing and analysis.

    Of course, Ukrop's did its homework before it ventured into new territory. The retailer knew going in, for instance, that many Richmond natives relocate to Roanoke, especially retirees -- a definite bonus for the new Ukrop's. The grocer also conducted focus groups and online surveys to learn as much as it could about its future shopper base.

    Still, the learning continues day by day, says the Roanoke store's general manager, Jason Woodcock. For one thing, he's discovered that his shoppers are keen on natural and organic foods. They also appreciate the fine cheeses on hand, in a department where Ukrop's has outdone itself.

    "This store is No. 1 in the company in cheese sales," notes Woodcock. "The trick is having someone behind the counter at all times," he adds, referring to the cheesemonger regularly stationed at the circular cheese island in the deli.

    Ukrop's the restaurateur

    Perhaps the biggest revelation for Roanoke shoppers is that Ukrop's isn't just a supermarket. "We're also a restaurant," says Bobby Ukrop. The Roanoke store, for instance, features two levels of dine-in seating, more than at any of its other stores.

    Overall, 20 percent of Ukrop's business consists of deli kitchen items. Its variety of prepared foods is something that Richmonders, of course, have grown quite familiar with, and fond of, over the past few decades. But its strategy is a new concept for this market. Still, customers have been quick to adapt, according to Woodcock. "We even have an older couple who have been eating breakfast, lunch, and dinner here every day."

    The chilled prepared foods alone comprise a voluminous menu that for some shoppers can be too much to take in. "We now have 200 recipes in our central kitchen," notes Ukrop. "If anything, we may have too wide of an array of food." (In total, the company has developed more than 500 recipes, but it typically has 200 dishes prepared on any given day, explains retail marketing and communications manager Mandy Burnette.)

    At Roanoke the retailer has been highlighting signature items in a Chef's Specials case -- a tactic it doesn't need to do in Richmond.

    The items from the central kitchen and central bakery are delivered fresh every morning by 6:30. Ukrop's most popular homemade delicacies include chicken salad (with one of the grocer's signature White House Rolls, it's even better, says Ukrop), Duchess Potatoes, and Triple Cheese Macaroni and Cheese. Among its newer items: Buffalo Chicken Dip, and Spiced Sesame Noodles.

    Other chef specialties, such as BLT Salad and Jumbo Lump Crab Cakes, are made in the store daily as well. "We try and mix up the selection on a daily basis," observes Ukrop.

    In the interests of both creativity and efficiency, chefs consult with fresh department managers regularly to keep tabs on slower-moving items, or ingredients that have hit their peak, so that they can incorporate them into these recipes. For example, when juicy Virginia peaches were in their prime, special peach salads and a chilled peach soup appeared on the menu.

    To facilitate this cross-department interaction, Woodcock organizes two daily food meetings for his staff: one at 9:30 a.m., and a second at 2:30 p.m.

    No slow mover, meanwhile, is fried chicken, which accounts for 1.77 percent of company sales and is now trans-fat-free to cater to consumers' health concerns. Other high-demand offerings include grab-and-go salads and sandwiches; and a salad bar with "something for everyone," as Ukrop puts it.

    The grocer's signature products are also available in grab-and-go packaging.

    Takeout versions of its specialty bakery items are readily available in the deli. Customers can choose from mini packs of White House Rolls or individual slices of pie, for instance. "In some stores we sell 200 to 250 pie slices a week," notes Ukrop.

    In place of the standard grill in its other units, Ukrop's is testing a Bistro Meals section in Roanoke, where it features three hot items at lunch, and three different items at dinner. The lunch menu is available from 11 a.m. to 2 p.m., and dinner is available from 5 p.m. to 8 p.m. For $14.99 customers can get an entree such as beef tenderloin served with two side dishes.

    "We've been pleased with the response so far," says Woodcock of the program. In fact, Ukrop sees the Bistro as the best choice for busy shoppers today. "We think it will move from the grill to this type of concept," he says.

    The deli department's offerings are rounded out by classic Ciabatta Pizza and Panini, Boar's Head meats and cheeses, a sushi station, and an all-natural soup bar.

    With such a wide variety of food that tastes this good, "the best education is getting food in the customers' mouths," says Aronson. As such, Ukrop's makes ample use of sampling. "We'll sample anything," notes Woodcock.

    That goes for the entire store, including tying in private label products -- a smart way for Ukrop's to introduce its own brand to Roanoke shoppers. One example of such a sample at the cheese station is Reny Picot brie on private label Joe's Market flatbread, drizzled with honey.

    Destination location

    As if all of that tasty food isn't enough to attract shoppers, Ukrop's also provides a place to kick back and relax. A Starbucks coffee shop is stationed at the front of the store, and the two-story cafe area has seating for 200, including outdoor seating. Comfy lounge chairs and wireless Internet access add to the ambience.

    "This would be considered heresy for a grocer to have so much space in which you aren't selling stuff," admits Ukrop, but he likes to look at the business from the customer's point of view.

    In the same vein, Ukrop's reserves a "celebration room" downstairs that can be rented out for catering parties or other special occasions.

    Upstairs there will eventually be a pathway connecting to other shops in the shopping center, once those stores open. "It will have a lifestyle market feel," says Ukrop.

    The retailer has also set aside ample square footage for an expanded employee break room upstairs, which also doubles as a space in which to conduct associate education sessions. That's particularly important in Roanoke, since only a dozen of the store's 215 associates have worked for Ukrop's in the past.

    Management uses a bulletin board to post pertinent information such as the "Cheese of the Month," new product descriptions, and recipients of Ukrop's "Be A Star" awards. "When we catch an associate doing something right, we give them a star," explains Woodcock.

    In addition, a computer station provides access to the company's intranet, UNet, which has been up and running for two years now. Employees can access information about their benefits or read Bobby Ukrop's regular messages on the site.

    Ukrop's is also developing an e-recruiting kiosk, which will be stationed downstairs in the Roanoke store.

    To your health

    Health and wellness is a high-priority item on the education agenda for Ukrop's. This trend has been seen across various demographics, notes Woodcock, but in Roanoke in particular, many customers have been coming in with questions about natural foods and other wellness trends.

    To help address their concerns, the grocer has positioned a natural and organics help desk near the checkout lanes. The help desk, manned by an associate who is also dedicated to the natural food aisle, is further equipped with educational tools, including a Healthnotes kiosk and reference books.

    Ukrop's expanded natural food section features several aisles of organic and natural products, including frozen foods and dairy, plus a section of bulk foods. Some of the more "mainstream," or more popular, items among the mix are also merchandised in the conventional center store, notes Woodcock. Organic produce, meanwhile, is designated in the produce department with special green signage.

    Natural foods are conveniently located next to produce, where Ukrop's has been featuring local products via its "Local Route" program long before it was a trend.

    "We've always done this, but we've been forced to talk about it more because of all the attention in the press lately," says Aronson.

    Since green business practices are also in vogue, Ukrop's is poised to spread the word about its earth-friendly attitude regarding shrink. A sign in the produce department notes that "Ukrop's has contributed over 6,075 tons of produce trimmings for composting." The retailer sells compost in its stores as well.

    Another trend that Ukrop's picked up on early is natural meats. In fact, at one time natural was the only type of meat the grocer offered, under the Ukrop's All-Natural label.

    "But then we realized that any strength taken to an extreme can become a weakness," notes Ukrop, pointing out that some customers still prefer meat with lower price points, regardless of how the animals are raised.

    But for customers who are most concerned about quality, the All-Natural lines are, well, a natural selection. The Ukrop's beef consists of USDA Choice grade from cattle raised exclusively on smaller family ranches. Along with containing no added antibiotics or hormones, the beef is always fed a vegetarian diet and humanely raised.

    The same goes for chicken, in the form of Ukrop's All-Natural Chicken, a program from the grocer's partner Springer Mountain Farms, based in Mt. Airy, Ga. Ukrop's also offers All-Natural Pork and Shrimp.

    Like many other independently owned grocers, Ukrop's still offers full-service meat and seafood.

    "We'll custom-cut any order," says Woodcock, but the chain is also experimenting with new convenience items to appeal to the time-starved set, including Topco's Full Circle brand of wild-caught seafood and a case of value-added items.

    At the center

    Ukrop's is also experimenting with new products -- and merchandising techniques -- in center store, that part of the store lacking innovation at so many grocers.

    Ukrop's is incorporating mid-aisle breaks to give shoppers room to browse the aisles more easily. It has also added a refrigerated case in the snacking aisle, featuring healthy fresh snacking options such as Chiquita cut fruit, veggie dip, and salsa. (Fresh-cut fruit and veggies are also found near the pharmacy.)

    Like other smart retailers, Ukrop's is employing curved shelving in center store aisles to highlight specialty foods. Its gourmet selection includes the Joe's Market brand, a new high-end private label line named after its gourmet shop, Joe's Market, in Richmond.

    In another innovative turn, the grocer is redefining the way products are grouped. For instance, a "Beverage Center" pulls all of the packaged drinks together, regardless of brand or maker.

    While Ukrop's is experimenting with many product groupings throughout the store, one department where Ukrop's has a long heritage is in-store bakery.

    The company operates a division called Ukrop's Food Group Bakery, which also offers pies and tarts, pound cakes, breads, and bagels to other supermarkets in the eastern United States.

    Although most shoppers today still have a sweet tooth, health concerns have even influenced tradition at Ukrop's bakery, and the operator has created a line of all-natural baked goods that doesn't sacrifice taste.

    Community connections

    Even given all of this above-average selection and service, perhaps the biggest challenge for Ukrop's is how to succinctly communicate its distinct proposition to potential customers in the Roanoke market, and demonstrate how it stacks up against rivals in that market. One of those competitors, Greensboro, N.C.-based Fresh Market, might prove to be a tough challenger, since it also specializes in fresh foods and European-style merchandising.

    "As we react to the latest trends, we have to tell our customers what we're doing," notes Ukrop. "What do we emphasize?"

    It's no small feat to get that message right. But to help the effort, Ukrop's is smartly building connections in the community where it can. For example, the retailer took its time in hiring a pharmacist who will "be there for the long haul with our customers," notes Aronson. At its recent "Meet the Pharmacist" event, around 70 customers showed up.

    Another ingenious tactic surfaced when the store's opening was continually delayed. "We had already hired 70 full-time workers," notes Woodcock. "Since they couldn't work yet, we encouraged them to get involved in volunteer efforts in the community." Many people went to work at the Rescue Mission, a local organization that helps the homeless. Since its opening, the Roanoke Ukrop's has also agreed to regularly donate leftover food to the Rescue Mission.

    Such efforts are a testament to the grocer's commitment to making Roanoke Ukrop's country.


    The waiting game

    Eager to bring its value proposition to Roanoke, Va., Ukrop's originally set out to open its first store in the market in 2005. The retailer was presented with an ideal setting to make its debut, as the anchor of a new, European-style retail development called Ivy Market being built by local developer Painter Properties. The plan was to allow Ukrop's to have lower-level parking and an escalator, by which associates could escort shoppers down with their shopping carts (Ukrop's prides itself on offering carryout service).

    However, the site -- at one time notorious as "Hobo Junction" among locals -- was prone to flooding, which made for obvious construction challenges. Painter Properties had to clear many zoning and environmental hurdles to get the site approved and to then proceed with building.

    After two years of waiting, Ukrop's finally had the chance to introduce its flavor of food retailing to Roanoke, which is about 187 miles from its hometown. Unfortunately, it hasn't met the neighbors yet, because it's at present the only store open for business in the outdoor shopping center. More shops are said to be on the way. (A Walgreens was slated to open by the end of September, but it too has experienced construction delays, according to local reports.)

    Tech tools

    For a small operation, Ukrop's Super Markets, Inc. clearly sees the big role that technology plays in today's retailing environment. Its in-house tech team has developed solutions for employee services, customer services, and operations efficiencies. Some of its coolest gadgets include:

    --"Ukrop's Valued Customer" program, which allows customers with UVC cards to get special discounts. Ukrop's was one of the first retailers to launch a customer loyalty program. More recently it's begun using a Savings Spot kiosk, which was developed by an external vendor, that lets card users easily retrieve special offers and shopping history when they enter the store. "We've been mainly leveraging our loyalty card information to improve the shopping experience," notes Scott Aronson, v.p. of marketing and analysis.

    --UNet, an intranet where employees can access information about their benefits, or read c.e.o. Bobby Ukrop's regular messages.

    Ukrop's Create a Cake kiosk, which simplifies the cake-ordering process.

    By Jenny McTaggart
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