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For Roger Lowe Jr., v.p. and c.e.o. of Littlefield, Texas-based Lowe's Supermarkets, and his teammates, the focus every day is on "making the quick nickel vs. the slow dime" at the 90-plus stores he runs in three Southwestern states.
Independent Ron Brake, who operates two urban-area Food 4 Less units in the Portland, Ore. market, banks on his stores' ability to satisfy the needs of a variety of ethnic customers, especially the Asians, Latinos, and Eastern Europeans who call the state home.
In a crowded Midwest market, the axiom that Leo Braido, director of sales and marketing for St. Clairsville, Ohio-based Riesbeck's Food Markets, lives by is as follows: "There are no 'one size fits all' solutions to competing with Wal-Mart or the many other alternatives that exist today."
During last month's NGA Executive Management Conference in Palm Springs, Calif., Lowe, Brake, and Braido, along with other food industry professionals, were invited to share their insights on how to compete and profit in today's retail environment -- an environment that many describe these days as a "sea of sameness."
No matter their differences in market positioning or approach, these retail merchants agree that successful independents must focus not on what's convenient for the home office, corporate buyers, or warehouse delivery drivers, but on merchandising, selling, and catering to the individual needs of customers in each of the communities they serve. As operators such as these make clear, this is not as easy as it sounds.
'Lowe'-down and lean
Established in 1964, Lowe's Supermarkets operates five distinct formats in Texas, New Mexico, and Arizona, the majority of which are price-impact stores. That's a market stance that leaves little margin for error.
"Our biggest challenge in price impact is to offer low prices and still make money," explains Roger Lowe Jr. "We've created a hybrid EDLP (everyday low price) and Hi-Lo format with a Hispanic focus, and it's been extremely successful." The stores are supplied by Amarillo, Texas-based Affiliated Foods.
Lowe says that operating a successful price-impact format starts at the top. "For us, the key is to keep management and overhead costs low, and become efficiency experts," he says. "We're also technology-driven, and push to be as paperless as possible."
The structure is lean, but the dividends are real. "We have no corporate buyers on staff," notes Lowe. No buyers on staff, for a 90-store chain? "We allow our warehouse to be a warehouse, and they do the buying for us," he explains. "We focus on selling."
Colleagues are also "often surprised" to learn that Lowe's does without district managers. "Instead we designate area managers. These folks are responsible for running a store, yet they oversee a total of eight stores in their marketing area. They work alongside our associates and customers every day, and don't lose touch with retail."
Less gives Asians more
They may not be the fanciest stores in the Portland market, but Brake's Food 4 Less units sure can be profitable when "run as close to the rules as possible," says Ron Brake, who also serves as chairman of Seattle's Associated Grocers and is a member of the co-op's Northwest Price Impact Group, a consortium of 17 stores generating combined annual sales in excess of $275 million.
When Brake opened his first Food 4 Less in 1992, he wasn't concerned about offering customers the latest in store decor, neon lights, and terrazzo tile floors. He was more interested in generating volume by offering customers exactly what they wanted to buy, at prices that would keep them coming back.
In fact, the cement floors at his Portland Food 4 Less don't seem to bother his customers a bit. Nor does the store's 5.5 percent labor cost give anyone pause. His key: getting inside the minds of his customers.
"The store caters to a growing Asian population," notes Brake. "And our focus is on understanding their wants and needs. Part of our success comes from the good working relationship we established early on with Chinese/American Chamber of Commerce. Plus we hire from within the Asian community. We also meet with our vendors regularly to make sure they understand our customers' needs."
The payoff: "We've gained tremendous loyalty from the Asian community. Even though our store is quite large, we're viewed as 'the neighborhood market.'"
"Half of the products in our produce department, I can't even spell," laughs Brake. "But our customers want these items -- and they get them, fresh and at low prices, every day."
Value more important than price
"Successfully competing is a continuing journey without a destination," says Leo Braido of Riesbeck's Food Market, an employee-owned company operating 15 stores located primarily in southeast Ohio and in the northern panhandle of West Virginia.
Braido strongly believes that independents must craft and follow a strategy of differentiation in the face of such an onslaught. Among the many ways that Riesbeck's differentiates itself from competitors is an EDLP program for grocery, frozen foods, and dairy.
"Currently we have over 10,000 items in the EDLP program. Our goal when it comes to pricing is to be within 6 percent to10 percent of the competition in grocery, dairy, and frozen foods," says Braido.
"We realize that today's consumer is bombarded with messages about price everywhere they go. To address this issue, we've developed an incremental promotion program, comprising mainly one-day sales events designed specifically to induce potential customers to come to Riesbeck's. Our goal is to introduce them to the things that make Riesbeck's different from where they routinely shop."
Among those "things that make Riesbeck's different" from the chains: "Our stores are well known for providing high-quality perishables and outstanding customer service. Yes, we still carry out groceries for our customers. Additionally, we're extremely involved in our community, and participate in a number of local projects, including food drives, home shows, and the United Way."
Concludes Braido, "Independents and regional chains must remember that 'price is price.' Value is the total shopping experience."
Independent Retailing Editor Jane Olszeski Tortola can be reached at [email protected].