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In his brief time with The Fresh Market, Rick Anicetti – who joined the Greensboro, N.C.-based specialty grocer as its new president and CEO in September – is taking a long, hard look “under the hood at all aspects of the company” to unearth “tangible opportunities in a number of areas.”
One of these areas is center store, which Anicetti, a veteran of Delhaize America’s Hannaford and Food Lion banners, intends to reinvent through a “phased approach” he plans to incorporate into remodels beginning in 2017, according to comments he shared during a third-quarter earnings call last week with the investor community.
The reason for his focus on revitalizing the fresh-focused chain’s center store game plan is simple: For the amount of space it takes up, The Fresh Market’s grocery sections are falling woefully short of their sales potential. “Center store represents a significant portion of real estate and is the least differentiated in terms of production – product selection, customer facing appeal, and compatibility with our brand,” Anicetti explained in his inaugural call with investors as the chain’s new chief executive.
During the question-and-answer period, he noted that center store is “about 40 percent of the space [in the stores] … And that 40 percent of the space is generating currently about 20 percent of sales. So we think on a per square foot basis, it’s not generating the kind of performance that we would like to.” In some ways, he continued, “we’ve drifted more toward appearing and looking like a supermarket, which is not our heritage. And I think we need to reinvent the kind of product offering that we see springing up in that space that is far more supportive, both [of] the brand and our fresh offering on the perimeter.”
As to what the reinvented sections might look like, he offered few specifics, but indicated that “a lot of the work I envision… is about beginning to leverage that space differently in an effort to drive greater baskets. And all of this comes as a result of increased and better differentiation.”
Noting that The Fresh Market’s center store sections tend to average an insufficient $200,000 per week per store, industry observer Burt Flickinger, of New York-based Strategic Resource Group, expressed confidence that Anicetti, whom he identified as “one of top two or three turnaround officers in all the United States and Canada,” would be able to increase customer counts.
Flickinger pointed out that The Fresh Market had in the past underspent significantly on capital expenditures, getting inadequate returns for the money it did spend, as well as receiving “a lot of regrettable advice” on store equipment and design, resulting in such problems as stores that are too dark. When it comes to fixing such issues, Anicetti “knows exactly what to do,” noted Flickinger.