Banking on Baltimore.
Yet the super warehouse store can prosper even in the inner city, as evidenced by the remarkable success of Big "B" Food Warehouses, a seven-store chain that operates in the lower income neighborhoods of Baltimore. Since opening their first super warehouse market in a former Sears auto center in November 1982. Herbert Beckenheimer, Bernard Meizlish and Howard Burden have transformed five supermarkets into super warehose stores. In the process, the trio has built company sales from $15 million in 1981, to a projected $70 million in 1984.
More than one-third of this additional business is expected to come from the firm's most recent unit, a 48,000-squarefoot market opened in January. The former Two Guys store that Big "B" transformed into a super warehouse market is expected to do more than $500,000 a week. During the unit's initial 10 days of business, volume was more than $1 million. From brown's to Big "B"
Herbert Beckenheimer has been operating conventional supers in inner city Baltimore since 1955. Originally called Brown's Supermarkets, these stores averaged 18,000 squre feet. Perishables, particularly meat and seafood, were the forte of the markets.
"We have always sold choice beef, top-quality pork and brand-name chickens. Our quality is as good as, or better, than supers that operated in affluent communities," says Beckenheimer. "I have always been annoyed by people who say that inner city stores offer lower quality products and worse shopping conditions. In our case, nothing could be further from the truth."
So when Beckenheimer decided to go the warehouse route, he vowed to include perishables departments equal to those in his conventional markets. An opportunity to experiment with a radically different concept presented itself through a former Sears, located less than 10 blocks from the original Brown's Supermarket.
"We backed into our Big 'B" concept, says Meizlish, the company president. "When the Sears went out of business, many supermarket operators were interested in the site. If we didn't take it, somebody else would have. Since it was so close to our conventional store, we decided that we must do something different there. The warehouse grocery concept supported by extensive perishalbes departments seemed like a good alternative."
Beckenheimer acquired the auto center section of Sears, and transformed 20,000 square feet into the selling area of the newborn Big "B." By developing a maze layout that forced shoppers through the perishables and by merchandising the departments, as in a conventional super, the trio created a winner that boasted weekly volume in excess of $400,000. Enthused by this success, Big "B" decided that the super warehouse approach, and closed the units too small to adapt. Within a year, Brown's was an operation of the past and Big "B" was the way of the future.
Throughout this period, Bekenheimer, Meilish and Burden kept ever-watchful eyes on a Two Guys store that had gone out of business less than a mile from the Sears site. After months of negotiating with the landlord, they were able to obtain a lease on 48,000 square feet of the more than 100,000-square-foot unit. Although the site was uncomfortably close to their highest volume market, the trio saw potential because the store was in a neighborhood that would attact white as well as black shoppers.
After signing the lease in October, the Big "B" executives started working long hours to get the store open as soon as possible. Since the Two Guys discount store had no refrigeration, the entire unit had to be remodeled to accommodate the supermarket. Big "B"spent approximately $1.7 million on the unit. Forcing People Through Perishables
The executives did all the planning and design themselves. "We knew what we wanted, so it would have been foolish to pay a design firm to talk us out of our plans," says Burde, Big "B's" director of operations and a former Food Fair executive. Central to the layout is maze similar to the Sears store.
"You can influence the sales mix tremendously by the way you lay the store out," Meizlish says. "By forcing people to go through the perishables departments, you encourage them to make that purchasing decision, particularly when the sections are stocked and mechandised well."
The primary objective of the Big "B" triumvirate was to generate more than 50% of sales from the perimeter. They have accomplished this through the number of perishables departments in the store and the quality and low prices of the products within the sections. Grocery, including dairy, frozen and bulk foods, accounts for 47% of sales, about $235,000 a week. Dry grocery alone represents a mere 30% of sales.
The most impressive department is meat, which accounts for 28% of sales. The personal province of Beckenheimer, the meat selection may be more extensive than any store in Baltimore. Ranging from provimi veal to corned pig tails, fro fresh Cornish game hens to chicken gizzards, the meat department appeals to a wide realm of tastes. Personalized service and cleanliness are underlying reasons for meat's strong sales.
"Several years ago, I saw a sign in a restaurant that said, 'The kitchen is open for your inspection,'" Beckenheimer says. "That impressed me. So I decided to allow shoppers to see our work areas. In the Two Guys store, the entire meat cutting and wrapping operation can be viewed by shoppers as they select meat from the case. Also, our pizzas are made on a table directly behind the pizza display so people can watch us create them. No prep area is hidden."
The fresh sausage kitchen located first in the meat lineup exemplifies Beckenheimer's philosphy. A window directly behind the case permits consumers to see the sausage being manufactured and allows the sausage man to see if any customers desire service. Beckenheimer also installed a 24-foot service poultry case and even in the self-service meat area, an employee is always on the floor filling the case.
To encourage higher ticket purchases, most meat items are displayed in large packages--2 to 5 pounds. In many cuts, the larger the meat package, the lower the price per pound. For example, ground beef in packages of 3 or more pounds sold for $1.42 per pound in early February while packs with 1 to 3 pounds were priced at $1.58 per pound. A sign in the meat department explains, "We package your meat in big packages for Big 'B' savings."
To satisfy black customers who account for approximately 60% of the shoppers at the new store, poultry and pork are stressed. Big "B" even has two separate section stocked with lower priced pork products, such as sliced pig's feet, ham hocks, neckbone, and pig ears.
Black consumers are also big buyers of fish. Beckenheimer stressed seafood in his conventional stores, and has continued to do so in the super warehouse markets. Most fish is merchandised on ice and sold whole. Most are priced at under $1 per pound.
The main change in the meat and seafood mix at the new store has been the addition of higher priced products to appeal to more affluent shoppers. Beef movement is substantially higher, as are sales of shrimp, crabmeat, fish fillets and other costly items. Management feels that maintaining the proper product mix is essential to the store's future.
As Burden explains, "When you operate a store that sits between two different types of neighborhoods, you're walking a tightrope. Although it should not be this way, the fact of the matter is that the whites wont't shop you if too many customers are black and the blacks won't patronize the store if there are too many whites. If you racial mix goes above 70% to 30% either way, problems can develop."
Savings are as evident in the perishables departments as in grocery. During a recent week, a 50-pound bag of potatoes was $3.99, smoked picnic shoulders were 59 cents a pound, and chuck steak sold for $1.58 a pound. Big "B's" philosophy is to keep retail at a minimum on price-sensitive products. The low margins on these items are compensated for by higher prices on other products. While Velveeta is sold at a rock bottom price, imported Swiss cheese is priced as in a conventional super. Preparing for a Million Dollar Opening
Although Beckenheimer, Meizlish and Burden maintain tight control on the stores--visiting each units almost daily--it was still important to select top-notch people to manage the various departments in the new location. The principal factors influencing the selection of the departmental massive product movement and to manage large numbers of employees. For example, meat Manager Bob Bauer supervises 30 butchers and the front end manager oversees 75 checkers and baggers.
To make sure that employees knew what was going on during the critical first weeks, Big "B" used a novel staffing approach. Although 185 people were hired from the applicant pool of 2,000, only 90 were sent to work at the new market. The remaining new workers started at other Big "B" stores, and experienced employees were transferred to the new unit. "Considering the amount of business we did, we had very few problems," says store Manager Monty Adams.
To convince consumer to shop the new store, Big "B" mounted a massive advertising campaign utilizing television, radio, newspaper and direct mail. Central to the ad program is a jingle explaining the virtues of Big "B" with a background of finger-snapping music. One Baltimore disc jockey commented on the air that the jingle would easily make the top 10 if it were a song.
"We needed to get name recognition, and felt that radio advertising was a good way to reach a lot of people, particularly in the black community," Meizlish says. The radio spots were run on stations that feature music popular with inner city youngsters. Adds Burden, "You wouldn't believe all the people that sing the jingle while they shop."
During the week prior to the grand opening of the new store, Big "B" ran 68 30-second commercials on Baltimore television and radio advertising was expanded to stations tuned into by whites. More than $65,000 was spent on electronic media ads prior to the opening.
While this advertising expenditure seems lavish for a company that operates in a very small portion of the Baltimore market, the Big "B" triumvirate feels it was essential to build name recognition, even in communities they do not serve. The company would like to break out of the inner city and open Big "B" Food Warehouses in areas with a different demographic mix.
"We have remained in the inner city so far because that is the trade area we know best," Beckenheimer says. "The Two Guys store is our first step out of the central inner city, and if it is successful we will be looking for additional sites in and around Baltimore."
1 PRODUCE: As soon as customers enter the store, they are funneled into the produce department, which sits into the produce department, which sits in the left front corner. While the salad and vegetable items are displayed in refrigerated cases, most fruits are not. However, by installing a plastic window between produce and the grocery aisles and pumping cold air into the department, the entire section is kept slightly refrigerated, maintaining product quality without the cost of total refrigeration. The 120 or so produce items include specialties such as asparagus, bok choy and fresh garlic. The store even has a fresh orange juice machine. Produce accounts for 8% of sales, about $40,000 a week.
2 BULK FOODS: A new department for Big "B," bulk foods has proven so successful that it was expanded from 250 to 325 items less than one month after the grand opening. "Although we had never carried bulk food we decided to go into it in a big way here," says Burden. Bulk food represents 2% of sales, or approximately $10,000 a week. Grains, pasta, drink mixes and other items are displayed in barrels that turn down the center of the aisle. Candy and nuts sit in plastic chutes along the side where the first gondola would be in a typical store. All containers meet USDA guidelines. Signs above barrels says, "Barrel of savings," and "Scoop your own."
3 DAIRY: Consisting of 84 feet of multi-deck and 36 feet of rear feeding cases, dairy takes up the entire left wall of the store. Cold air from the cases helps keep produce and bulk food refrigerated. A divider, keeping in cold air, runs all the way to the back aisle. The most unusual aspect of the dairy department is the bulk egg section. Burden says, "People enjoy selecting each individual egg almost as much as they like picking steaks." To encourage bulk egg movement, the bulk eggs are priced 11 cents lower per dozen than prepacked eggs. Dairy and frozen foods together account for 15% of total volume.
4 MEAT: Meat accounts for an incredible 28% of sales, about $140,000 a week, principally due to the buying and merchandising acumen of Beckenheimer. The lineup starts with an 8-foot case for fresh sausages, featuring items such as sausage with celery seed, manufactured behind a window so customers can watch the sausage making. A 24-foot service poultry case, stocked exclusively with chicken, follows the sausage. However, Beckenheimer has been disappointed with sales from the poultry case and is considering removing it. Self-service poultry, priced 10 cents per pound lower than service, is the first item in the well-type meat case and is selling remarkably well. To increase the average transaction, almost all meat is sold in 2-to-5-pound packages. "By wrapping the meat in large packages, we save on labor, and pass that on to consumers through lower prices," says meat Manager Bob Bauer.
5 SEAFOOD: Representing 2% of sales, about $10,000 a week, the 32 feet of seafood does well despite the low icome level of the store's clientele. Most fish is sold whole at an extremely low price. In February, bluefish was 77 cents per pound, oyster trout was 98 cents and flounder was $1.68. Customers select the fish, the hand it to a seafood employee, who beheads the scales it. The section has a small service case stocked with fillets, shrimp, crabmeat and other more expensive products. Bay scallops were selling at an amazingly low $2.98 per pound during a recent week.
6 GROCERY: As a result of the maze layout of the store, customers cannot enter grocery until they reach the far rear corner, and have passed five profit-producing perimeter departments. This enables management to keep grocery distribution at 30% of sales. Says Meizlish, "It's not that we dislike selling groceries, but we make a lot more money on perishables." Big "B" carries 3,500 dry grocery items, but still has the product selection available in most stores. "We definitely have all the commodities that people expect to find," Meizlish says. Groceries are arranged on the warehouse shelves as they would be in a conventional store so shoppers can easily find what they are looking for. All ends are stocked with the advertised specials. Burden says, "We don't hide our specials. We want customers to see the savings."
7 DELI: The store's extra footage allowed the owners to put in an extensive deli, much larger than the delis at other Big "B" markets. The section begins with a 12-foot self-service case filled to the rim with store-made pizzas and fancy cheeses. The cheese is cut in a variety of sizes ranging from less than a half pound to 20-pound wheels, and is arranged in a haphazard manner to create an aura of abundance. Cheese's position next to the service case makes pilferage almost impossible. The 24-foot service deli starts off with 60 different sandwich meats, followed by a selection of 30 salads, including seafood specialties such as macaroni and shrimp. Deli distribution is approximately 3% of store total. 8 HOT FOOD: "Hot food is a big item in the neighborhoods in which we operate," says Burden. "In some of our stores, we have people who come in to buy breakfast, then come back for lunch, and even return to pick up something for dinner." Hot food, which accounts for 3% of volume, is so important that Big "B" management treats it as a department distinct from deli. The selection includes fried and barbecued chicken, fish and crab cakes, sausages, meatballs and about 10 other items. Borrowing from the fast food industry, the store even sells an egg, ham and cheese muffin and stuffed baked potatoes. A 23-item salad bar, at $1.88 per pound, sits across from the hot food. A small standup counter allows shoppers to eat on the premises.
9 FROZEN FOOD: By utilizing well-types cases for the majority of the frozen food, Big "B" is able to stock a selection comparable to most supers, while still having space for extra items. Wire bins on top of well-type cases hold the store's selection of general merchandise, mostly housewares, glassware and gadgets. The 70 feet of doored cases across from the well-type cases are filled primarily with TV dinners, chicken, fish and other more expensive frozens.
10 PHARMACY: "I'd say that pharmacies probably do better in inner city stores than in supers in the suburbs," says Ellen Yankellow, director of pharmacy operations. "There is not much competition for one thing, and people don't go out as much, making it more appealing to pick up their prescriptions while doing their grocery shopping." The pharmacist and her helpers also sell all the health and beauty aids, which are positioned behind a service window to cut down on shoplifting. Pharmacy and health and beauty aids together account for 4% of sales, about $20,000 a week. The store offers a 10% discount on prescriptions for children under 10 and senior citizens. 11 BAKERY: To show customers the spic and span cleanliness maintained in the bakery, the entire prep area is within the view of customers shopping the 32 feet of service cases. Supplied by Wetterau's bakery division, the bakeoff products are top quality. So far, the section is doing particularly well with breads and rolls--including hoagie buns, hot og rolls and steak rolls, priced at 88 cents for a six-pack. Bakery represents 2% of sales.
12 FRONT END: During the first month in business, volume was so strong that management added two more talking scanners, bringing the total to 16. Although the triumvirate does not feel scanners speed the checkout process, they are enthusiastic about the information available from the machines. The store is scanning all meat as well as groceries. To speed people on their way, a parcel pickup service is offered. "We need to empty those shopping carts and get them ready for the next customer," says Beckenheimer.
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|Title Annotation:||Big "B" Food Warehouses|
|Date:||Apr 1, 1984|
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