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A battle that's all in the family.

Imagine this scenario. You own a profitable group of six conventional supers that control the market in and around a town of 50,000. You have been operating the stores for decades, earning a good profit by stressing quality perishables, brandname groceries and service. Then, a super warehouse store opens in your bucolic community, attracting more than a half million dollars in weekly business and seriously eroding sales at your best units. What do you do?

"You fight the warehouse store with all the tools at your disposal," says Dan Coborn, president of Coborn's, Sauk Rapids, Minn. Yet Coborn is in a unique situation. He also owns the Cash Wise warehouse store that has been stealing sales from the conventional units. Despite this apparent conflict of interest, he and his company are doing everything within their power to compete against their own warehouse store.

Coborn got himself into the conflict in hopes of keeping his market free of competitors using the super warehouse concept. The concept, pioneered by Cub stores in Minneapolis, rapidly gained acceptance all over Minnesota and the Upper Midwest. With a population of 50,000 and a comfortable pricing structure, St. Cloud was ripe for Club or another bear of a warehouse store to move into. The effect on Coborn's conventional supers would have been dramatic.

"If we didn't do something along the lines of a warehouse store, somebody else would have," says Coborn. So with the aid of Fairway Foods of Northfield, Minn., Coborn's developed its own variation of the super warehouse store. In November 1982 the firm opened a 55,000-square-foot-warehouse market in Waite Park, a St. Cloud suburb. Volume at the Cash Wise currently runs about $650,000 per week.

Even though Cash Wise attracts shoppers from a wide marketing area because of its format and its proximity to Interstate 94, the store did have a significant impact on sales at the Coborn's units in and around St. Cloud. At the downtown store on Fifth Avenue, weekly volume dropped by $20,000 to $100,000. New Direction

Originally opened in 1963 several blocks from the campus of St. Cloud State College, the Fifth Avenue store had not received a facelift since 1970. And because of the extensive wrought-iron grillwork and harsh fluorescent lighting featured in the store, it was not aging well.

"Our Fifth Avenue store was getting zinged by Cash Wise," says Coborn. "We were in the problematic situation of competing against ourselves. Also, the managers of the conventional stores were confused about the direction the company was heading, so we decided to prove that we were still committed to conventional supermarkets."

Pleased with the decor package that Fairway's designers had created for Cash Wise, Coborn's contracted with the wholesaler to redesign the interior of the Fifth Avenue store. Coborn's instructions to Fairway's designers, Dave Ahrens and Val West, were simple. "We requested a first-class conventional supermarket with all the amenities that involves," says Coborn. Along with pleasing the college trade, Coborn's wanted to expand the store's appeal to attract the affluent people who lived in the surrounding neighborhood.

Given a free hand, Ahrens and West decided to experiment with some design concepts they had always wanted to try. These concepts included extensive use of dark blue and some unusual variations in ceiling heights.

"Coborn's wanted this store to be distinctive, to prove to customers and employees that they still believed in conventional supermarkets," says West. "They wanted a first-class package, and allowed us to determine what we wanted to do regardless of expense. We didn't take advantage of that and design a super expensive store, but we did do some things that would have been impossible if the budget was too restrictive." The total cost of the remodeling came in at $1 million. Deli Makes a Statement

In the remodel, more than 9,000 square feet were added to the unit, bringing it to 28,500 square feet. The extra space was used to create a deli and a bakery and to expand the produce section.

The deli--designed to appeal to the college students who shop the store as a combination of fast food outlet/conveninence store/supermarket--was the most significant change incorporated in the remodeling. Since the grand reopening in August 1983, the deli has been consistently building sales volume under the watchful eye of William Coborn, who supervises meat and deli for the family firm. Deli currently accounts for 3.2% of sales, or $4,160 a week, at a pleasing gross margin.

"Deli is positioned first, so we wanted it to make a statement as to the new image of the store," says West. The designer chose navy blue to accent the deli, explaining, "I've always wanted to use navy blue in a store simply because nobody has ever done it. Using a dark color gives a designer an extra dimension to work with when doing the floors, ceiling, walls and so on." West chose Atlantic Blue panels from the Uptown Collection of high gloss colors marketed by the Masonite Corp., Dover, Ohio.

The Deli product mix is aimed at the store's college clientele. The section starts off with a hot case that holds about eight products, such as goulash, a hot tuna dish, fried chicken and barbecued ribs. The deli also sells sandwiches, bags of popcorn and hand-dipped ice cream cones to customers who want to eat something immediately.

The biggest success in deli has been the in-store pizza station, where pizzas are prepared for people to take home and bake. A table reserved for pizza preparation sits behind a plexiglass shield similar to the cake decorating stations in many stores.

The store sells 500 pizzas a week. Pizzas are sold from a self-service case adjacent to the preparation area. the varieties available include mushroom, sausage, pepperoni, vegetarian and a French bread pizza similar to the Stouffer's frozen product. A combination pack holding an 8-inch and 16-inch sausage pizza sells for only $4.19, about half the price at a pizzeria. French bread pizza retails for $1.09.

The remodel also had a large effect on produce. Whereas the store had previously sold only a limited selection of prepackaged fruits and vegetables in a tiny department, the expanded produce section affords enough room for a wide selection of fruits and vegetables, all in bulk. Bulk selling is desirable in the Fifth Avenue store because students like to buy fruits and vegetables in ones and twos. Produce has jumped to 8.5% of sales from 6.8% since the remodeling.

A small bulk foods section was positioned between produce and dairy. "College students love those natural snacks," says Store Manager Don Lenzen. "The bulk foods have been selling so sell that we're thinking about increasing the lines of products we display there." The section stocks 39 bulk items, ranging from long-grain brown rice to jelly beans. The store also sells peanuts and roasted sunflower seeds in bulk, moving 200 and 70 pounds, respectively, of these snack products every week.

Dairy was positioned in an alcove in the right rear corner to draw shoppers through deli, produce and bulk food. The natural wood and pastel decor creates a comfortable shopping environment that helps dairy attain 11.5% of sales.

Customized point-of-sale fixtures are suspended above the well-type case in dairy and over the well-type cases in the meat department. Grooves in the wood-like fixtures permit hand-lettered signs to be slid into place, so the store can point out price specials without hanging a lot of signs on the dairy and meat cases.

"We were striving for a clean, unclutered look," says designer Ahrens. "As part of our effort to differentiate Coborn's from Cash Wise, we utilized decor touches that made the store look classy." For example, point-of-sale materials are used tastefully and with discretion, while in Cash Wise signs are used almost everywhere to point out prices.

A change from exposed fluorescents to recessed lighting helped create a classy tone in the store, greatly contrasting with the exposed fluorescent lighting common in warehouse markets.

The store designers use some different ceiling elevations and treatments to create the "uptown look" of the supermarket. The most unusual ceiling treatment is in the frozen food section, which runs down the center of the store.

West says, "We had to break the store up some way, so we positioned frozen food in the center and designed an interesting ceiling treatment to set it apart." West dropped the ceiling to 10 feet from 14 feet and then created a "racetrack" within the ceiling drop by elevating the center of the drop directly over the aisle. Blue wallpaper that matches the blue stripe on the floor covers the interior face.

The most striking difference between Coborn's and Cash Wise is at the front end. Service is paramount at the Fifth Avenue store and absent at the warehouse market. While shoppers at Cash Wise must bag their own groceries, customers at the Fifth Avenue store can have their purchases wheeled out to their car. A parcel pickup system was installed as part of the remodeling. With that system, carts full of groceries are pushed to an open window, where a carryout boy places the bags in the customer's car.

From beginning to end, the shopping experience at Coborn's Fifth Avenue store is rich and pleasant. While shoppers at the warehouse store must sacrifice conveniences for the sake of savings, those at Coborn's conventional store on Fifth Avenue get everything they could want in an environment that is first-class. And customers are responding. Since the remodeling was completed, sales at the Fifth Avenue store have climbed to nearly $140,000 a week, 22% higher than sales before the Cash Wise opened.
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Title Annotation:Coborn's supermarket chain vs. the Cash Wise Warehouse Store
Author:Tanner, Ronald
Publication:Progressive Grocer
Date:Aug 1, 1984
Previous Article:A strong stand for small business.
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