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This year marks the 70th anniversary of Rodhe's IGA. Lauded as among IGA's best, the Rodhes have during the past two years faced challenges that might have caused other retailers to jump ship. Yet the family weathered the storms, and business today is as strong as ever.
Likewise, Al Lees is a single-store operator who has beaten the odds. By differentiating from the competition and continuously investing in people, Lees has come to be viewed by many as one of the wisest grocers of our time.
Then there's Neil Golub, president and c.e.o. of Price Chopper Supermarkets, who began his career in 1950 as a part-time clerk. Golub, whose 106 stores operate in six northeastern states, is respected by the industry for his commitment to the education of the company's 23,000 associates.
And deep in the heart of Texas lives the Lawrence family. After 75 years in the business, the Lawrences view competition as nothing new. "Each generation has experienced its own version of Wal-Mart," Kyle Lawrence says. "In his day, Grandpa successfully battled Safeway, and 20 years ago my dad and uncle took on Albertsons. Today it's Bentonville."
While their geographic regions, company size, and competitors vary, one thing these independents, along with the others profiled below, have in common is their devotion to people, respect for the business, and an underlying commitment to win. Here are their insights on how to effectively compete in an industry increasingly dominated by national chains, as well as some object lessons on not just how to survive in the supermarket business, but also how to thrive.
Rudy Dory Newport Avenue IGA Plus Bend, Ore.
Last year was, to say the least, memorable for retailers Rudy and Debbie Dory. The main road in front of their store was closed for 44 days, shrinking the number of vehicles that passed the entrance of Newport Avenue IGA Plus every day from 18,000 to a mere 2,000. Making matters worse, a 65,000-square-foot Safeway celebrated a jubilant grand opening 10 blocks away.
But those who know them best were not surprised to learn that during one of the most challenging times in their 27-year history, the Dorys never missed a beat. In fact, their 25,000-square-foot store experienced a 1 percent sales increase for the year.
"It wasn't easy," Rudy Dory says. "But our staff rose to the occasion and made the best out of the situation. We took advantage of the downtime, cleaned up our store, and focused on merchandising. It was an opportunity to play catch-up."
Dory, known throughout the industry as an aggressive niche marketer, competes not only with Safeway, but also with Costco and Wal-Mart. "In order for independents to be successful today, we must worry less, but not forget, about the competition," he says. "We must experiment with new products and services, and focus on what we do better than our competitors."
Experimentation has paid off for Dory. "We've certainly found our niche in perishables," he says. "In deli we focus on signature items. In fact, we offer only four commercially prepared salads. The rest are homemade and unique to our store. Also, we offer mainly free-range chickens and Oregon beef in our meat department. Amazingly, during the recent mad cow crisis, we experienced a 10 percent increase in beef sales."
Dory offers sound advice to independents:
--Experiment with new products and services. "Evaluate product offerings. If you choose only to stock a four-roll pack of toilet tissue, that's all you'll sell."
--Determine "choke thresholds" for signature products. "Customers are willing to pay a maximum amount for unique items. Our job is to determine the most we can get out of each specific item."
--Practice event marketing. "Our recent customer appreciation day, held on Dec. 6, was a tremendous success. We offered 20 percent off most items and flirted with $100,000 in sales for the day. And we made money."
--Evaluate advertising. "We don't run price and item advertising in newspapers, and it hasn't hurt sales."
--Partner with a profitable wholesaler. "A strong wholesaler knows how to compete and make money."
--Determine how to "best the competition, not beat 'em."
Gary Hawkins Green Hills Market Syracuse, N.Y.
Grocers from around the world often travel to Syracuse to learn how a 23,000-square-foot supermarket has become one of the industry's best. Perhaps there's a lack of competition in the area? Don't you believe it. Wegmans, Price Chopper, Wal-Mart, Sam's Club, and others are all vying for a piece of the pie.
According to Gary Hawkins, c.e.o. of Green Hills Market, the 70-year-old family-owned grocery is successful for a number of reasons. "We've always focused on building a unique culture at Green Hills. Besides the basics, we offer natural, gourmet, and specialty foods, and the highest-quality meats and deli products available. Plus our scratch bakery has become a signature department in our market. Most important, however, are our people," Hawkins says.
"Recently we added up the years of service represented by our associates, counting only those who had been with us for at least a year. Collectively they bring nearly 1,000 years of service to our organization."
Also driving success at Green Hills is technology. Hawkins says: "We utilize our loyalty card not so much to measure product movement or number of transactions, but to measure weekly customer retention and shrink rates. We want to know exactly how many households shop with us each week."
Another lesson learned from the loyalty card is that there's no such thing as an average customer. "Fortunately we have generations of families that shop at Green Hills. We're located in an older neighborhood; as such, we have a good number of elderly customers. At the same time we attract a large number of people of all ages who drive over 25 miles each week to shop with us."
Hawkins is sold on the value of communication. "While we're far from having all the answers," he says, "I believe that meeting with our staff on a regular basis and involving them in our strategy is crucial. I don't think grocers can ever communicate enough."
John Lucot Giant Eagle, Inc. Pittsburgh
As the e.v.p. of strategy, planning, and development for Giant Eagle, Inc., John Lucot is well aware of the challenges faced by today's independents. A 30-year veteran of the Pittsburgh-based organization, Lucot works diligently to enhance the success of the company's 222 stores, 84 of which are independently owned.
"Clearly new competition is coming on fast and furious," Lucot says. "Everyone's trying to find their niche and operate as cost-effectively as possible, including our independents."
In the ongoing battle for market share, Lucot is proud of the way Giant Eagle's independents have performed. "I characterize our independents as having a will to win," he says. "While they take advantage of our loyalty card, education and training, and numerous marketing programs, they also seek out ideas elsewhere. By their very nature they're proud, competitive, and they understand the importance of getting close to the customer."
He adds: "So many of our independents go above and beyond the call of duty and are entrenched in the very fabric of their communities. They're active, visible, and involved for all the right reasons--not just some of the right reasons. In my eyes, they carry badges of honor and serve as the unofficial mayors of their towns."
Irrespective of who actually owns each store, Lucot stresses that his company maintains a singular focus. "Retail's the game we're in," he says. "We treat all stores the same whether they're corporately owned or independent. For us it's all about building the Giant Eagle brand."
Kurt Rodhe Rodhe's IGA Millersburg, Ohio
Nestled in the heart of Ohio's Amish country is Rodhe's IGA. Now celebrating their 70th anniversary, the Rodhes believe that their family business has encountered no greater challenges than those of the past two years.
Battling a new Wal-Mart supercenter and enlisting a new wholesaler after Fleming's demise simultaneously placed a tremendous burden on the company. But, with the dust having settled, third-generation grocer Kurt Rodhe believes his company is as strong as ever.
"The Fleming situation made me realize that you can never take things for granted," Rodhe says. "Never did I think we'd ever be in the market for a new wholesaler. Call me naive, call me pleased or satisfied. We had a great partnership with Fleming's Massillon Division, and I never dreamed it would come to an end. Nonetheless, we had to make the best of a costly situation."
Making the best of it included becoming part of Marketplace Advertising Group, L.L.C, newly formed by a group of local retailers, most of which fly the IGA banner. Last summer 10 IGA owners operating 16 stores in northeast Ohio hired former Fleming sales counselor Mike Lee to manage their advertising and promotional activities. "There are obvious advantages to being part of a group," Rodhe says. "The efficiencies will improve all of our bottom lines."
The Rodhes also enhanced their operation by adding a pharmacy to the 50,000-square-foot store. "We knew that a pharmacy would help to drive overall sales," Rodhe says, "but we didn't know enough about it to open one ourselves. That's when we approached a local independent in town known as Millersburg's 'favorite pharmacist.'"
Investing $40,000, the family built an in-store facility that's leased to the pharmacist. "It was a defensive move that's kept us in the game," Rodhe says. "Since opening the pharmacy, our customer count is up and HBC sales have increased by 30 percent."
Rodhe offers the following advice for competing effectively against Bentonville:
--Use the resources of the National Grocers Association and the Food Marketing Institute, and continue to learn.
--Be willing to adapt and change. "It's hard to determine what to do first," Rodhe says. "While you can sharpen pricing strategies, you must look at what you're doing well and do it even better. For us that meant offering the best-quality meat, produce, deli, and pharmacy departments in our market."
--Review operating costs weekly and reduce them as much as possible without sacrificing service. "It helps to withstand the onslaught for a while," he observes.
"As we prepared for our anniversary celebration, I came across some old company documents," Rodhe says. "On our first day in business back in 1934, our total sales were $29.63. Also, I found a newspaper ad from the mid-'50s. We were giving away a 1954 Ford—and chuck roast was advertised at just 38 cents per pound."
Chuckling, Rodhe observes, "You know, maybe this business hasn't changed that much over the years."
Jack Clemens Clemens Family Markets Kulpsville, Pa.
According to Jack Clemens, exemplary people are what has allowed his company to compete in a crowded eastern Pennsylvania market that includes Acme, A&P's Super Fresh, Genuardi's, Wal-Mart, Giant, Costco, and BJ's, to name just a few.
"There's no doubt that the associates of Clemens Family Markets are responsible for our success," he says. "In my view they're more important than any products or services we could ever offer to customers."
As chairman, president, and c.e.o. of the 21-store chain, Clemens believes that one of his most important jobs is to ensure that his associates are treated well. "Every day I confirm that our managers are practicing what I preach," he says.
In what ways does the company express appreciation for its employees? "We believe in rewarding our people, especially for outstanding customer service," Clemens says. "I personally review all customer comment cards, and I'm able to thank associates for their good deeds. Also, besides recognizing associates in our newsletter, The Clemens Communicator, we've implemented a WOW program. When associates receive a WOW card, they're entitled to an extra 10-minute break. Their card is then entered into a monthly drawing for a $100 gift certificate."
He adds: "We also offer a discount program to associates for shopping at our stores. Each payday associates receive a voucher that's tied to their part-time or full-time status, and the number of hours they worked during the pay period."
That family-friendly philosophy has helped the independent to prosper during a struggling economy and the industry's most competitive times. Armed with a respected e.v.p. and c.o.o., Mark Batenic, the Clemens family added three stores to its arsenal last year and will continue to invest in existing locations.
"This year marks the largest capital expenditure in our history," Clemens says. "We've always made it a practice to reinvest in the business in an effort to keep our stores modern and up to date. It's a practice that's certainly paid off."
And there's still room to grow. "Currently we see growth opportunities in the areas of pharmacy and dollar departments," he says. "And while our plan this year calls for opening additional stores, our No. 1 priority will continue to be our people. For us it's all about family."
Jere and Tere Lawrence Jay and Kyle Lawrence Neal Hoover Lawrence Brothers Sweetwater, Texas
When J.M. and Thelma Lawrence began selling groceries in 1929, little did they realize the legacy that they would someday create. What began as a corner market in Cisco, Texas has today evolved into a thriving 23-store chain that effectively competes against H-E-B, Albertsons, United Supermarkets, and Wal-Mart supercenters.
Now under the leadership of a third generation, the company is celebrating its 75th anniversary--a milestone that stirs pride and emotion in the close-knit Lawrence family.
"It's certainly a tremendous achievement," president Jay Lawrence says. "Thanks to the two generations that came before us, our family and our 750 associates couldn't be more proud."
Lawrence, along with his brother, Kyle, and brother-in-law Neal Hoover, operate the family's 19 conventional stores and four Save-A-Lots. The operation is supplied mainly by Associated Wholesale Grocers in Oklahoma City.
Family members stress that proper succession planning has been key to their success. "The best thing we ever did was to participate in NGA's Entrepreneurial Institute," says Jere Lawrence, father of Jay and Kyle. "After enjoying years in the business, my brother Tere and I realized that in order to perpetuate our company, we'd have to give up some control."
Tere Lawrence adds: "The NGA program allowed us to study family dynamics and estate planning, plus it helped us to identify our individual strengths. It also provided a format for working out issues that could become a burden if ignored."
"Because each of us has our particular niche," Kyle Lawrence explains, "we're able to work together harmoniously."
Working together has resulted in big dividends for the family, which has fine-tuned the operation over the past year by instituting a program called Management Awareness.
"Basically the management team of each store has a list of jobs that translates into an employee list," Jay Lawrence says. "In developing that list, we studied 350 separate functions that are performed in a supermarket on a daily basis. That allowed us to determine exactly how many hours it takes to run a store."
He continues, "As a result, we've saved 1 percent on payroll, we're operating better stores, and we're taking better care of the customers."
The Lawrences believe that having faith in God, in each other, and in their associates is the common thread that ties all generations together.
"Above all," Jere Lawrence says, "we are committed to God and country, and to being a family."
Neil Golub Price Chopper Supermarkets Schenectady, N.Y.
Neil Golub is recognized in boardrooms across the country as one of the industry's most inspiring leaders. Golub, who operates 106 stores in New York, New Hampshire, Massachusetts, Connecticut, Vermont, and Pennsylvania, believes that to be successful, today's independent must work more intelligently and realize the competition will never go away.
"Certainly hard work, unique facilities, consistency, and creating theater are vital to maintaining a customer base specific to each community," Golub says, "but I believe nothing is as important as employee training and education. It serves as the foundation to success."
To that end Price Chopper, which through an ESOP is 55 percent employee-owned, has invested substantially in the education of its 23,000 associates. Not only has the company developed its own career development center and Price Chopper College, but it also sponsors an outside scholarship program that enables recipients to work for the company while attending college.
"We also partner with the State University at Albany," Golub says. "Our midlevel managers participate in a three- to four-month program and receive college credit for improving their business and management skills."
Perhaps Golub's wife, Jane, a former teacher, has most influenced the executive's views on education. "Jane taught for 20 years before officially joining Price Chopper," he says. "In 1986 she became involved in the World of Difference project that was sponsored by our company and the Anti-Defamation League. Since then her contributions have been endless."
Golub adds: "Currently Jane's responsible for our demo and vendor income programs. She handles a host of opportunities that can often get lost in a big company."
What's Golub's advice to independents? "Know how to pray," he says, laughing. "And be forever mindful that everyone in the business will be out there fighting for a little piece of the pie. You must determine what you do best to make sure you're getting a fair share."
Lauri Youngquist Knowlan's Super Markets, Inc. Vadnais Heights, Minn.
Last year Lauri Youngquist and Marie Aarthun faced perhaps the greatest challenge in their company's history. The sisters, who operate five Festival Foods and two conventional supermarkets in Minnesota, are former Fleming customers who, like others, were forced to untangle numerous legal and logistical nightmares caused by the wholesaler's bankruptcy. Through it all, however, Youngquist and Aarthun prevailed.
Now aligned with Supervalu, the women have regrouped and are focusing on the people and technology that have allowed them to compete against Cub, Rainbow Foods, and others.
"Knowlan's has always prided itself on being people-friendly," says Youngquist, who is Knowlan's c.f.o. "We provide a comfortable environment for both our associates and customers. We operate as a family unit that is very participatory and nurturing, and makes customer service a top priority."
She adds, "We're an extremely progressive, technology-based operator and are fortunate to have a strong management team that provides the discipline crucial to the success of our technology investments."
The company, which regularly evaluates best-in-class technology used by all retail channels, not just by supermarkets, operates using a perpetual inventory system, computer-assisted ordering, shelf space management programs, price modeling, electronic shelf tags, self-checkouts, and Web-based reporting.
"Technology allows us to operate at maximum efficiency and to run lean and mean in the face of competition from large chains, clubs, and supercenters," Youngquist says.
Chris Niemann Niemann Foods Quincy, Ill.
When Rich Niemann Sr. and his sons, Rich Jr. and Chris, graced the cover of Progressive Grocer nearly two years ago, the family and its associates had 45 stores. Today they own 53.
Niemann Foods is a major force in a competitive Midwest market. Three players battling the Niemanns and their 3,100 associates for market share include Kroger, Hy-Vee, and Wal-Mart supercenters. Operating both conventional stores and limited assortment Save-A-Lots in four states, the family plans to grow both segments of the business during the coming year.
"In our conventional formats we continue to differentiate, especially in perishables," c.f.o. Chris Niemann says. "As we reinvest in existing locations, we're allocating more and more capital to service meat, deli, and produce."
He continues, "Our 20 Save-A-Lot stores provide us with a strong niche format that's perhaps more insulated from supercenter competition. We strictly adhere to Supervalu's program and have had great success. The last two Save-A-Lots that we've opened feature dollar departments that have produced plus sales and good margins."
Technology and a customer loyalty card continue to play a major role in the Niemann organization. "We're marketing directly and more individually to the consumer in ways that competitors find it difficult to react," Niemann says. "For example, we offer discounts and rewards right at the checklane. We believe this is a more aggressive approach to spending our markdown dollars."
And the Niemanns continue to focus on their "associates first—customers second" philosophy. "For us it's proven to be the right approach," he says.
Al Lees Lees Market Westport, Mass.
According to Al Lees, the grocery business is simple: It involves never losing sight of the basics, learning from others, and continually investing in people.
Lees and his son, Albert III, who is president of Lees Market, depend heavily on technology to manage their store. "Our loyalty card is crucial to our business and has helped us determine who we are in the eyes of our customers," the elder Lees says. "But we've never been so dependent on technology that it's caused us to lose sight of the basics."
He explains: "Ten years ago we decided to stay in the food business. We chose not to sell things like lawn mowers, televisions, or books. At that time we realized that we must constantly innovate and offer unique products that customers aren't likely to find at other stores."
That innovation continues today. "Recently we introduced 18 doors of natural and organic frozen foods," Lees says. "Strategically we decided not to incorporate these frozen products into the center store, but we placed them in produce along with the fresh fruits and vegetables, most of which are organic."
In their efforts to further differentiate from competitors, including Shaw's, Stop & Shop, and BJ's, the Lees family continues to invest in people. "My son and I travel quite extensively, and oftentimes we take associates along with us," Lees says. "We get out there and see what others are doing. We then bring home good ideas and modify them to meet our particular situation."
He adds: "Each year we attend the Fancy Food Show and arrange tours of other formats, like Balducci's in New York. Not only does this generate new ideas for our 'country upscale market,' but it also educates our staff and allows us to talk more intelligently to customers. It's an investment in thinking."
Lees feels such an investment can produce significant returns. "When those operating the store at, let's say, 7:00 on a Sunday evening are trained to think and make decisions that help the company, not only will the store survive, chances are it will also thrive," he says.
Asked for advice on competing with Wal-Mart, Lees responds, "I often recall the old African saying, 'When elephants battle, the grass gets trampled.' In this business you must decide what you want to be in the eyes of the consumer. You must project an image that appeals to a certain group, and you must aggressively go after that group."