Minyard picks up the pace.
"We were winning the sprints, but losing the cross-country race," says Bob Minyard, president of Monyard Food Stores. "We were making short-term profits, but were not positioning ourselves for the future. That has changed. We're now in the race for the long run."
Minyard's competitors--Skaggs-Alpha Beta, Safeway, Kroger, Alberson's and Tom Thumb/Page--are some of the snappiest chains in the country. All are frantically building superstores and combination units, positioning themselves to be major factors in the marketplace. Everybody has left the starting line.
The 54-unit Minyard Food Stores, the local boy among these national and regional chains, expects to come out near the top. The company is making its move with superstores featuring pharmacies, service fish, fresh pizza and cosmetic counters, plus warehouse stores that offer a massive selection of merchandise at minimal margins. The company will open six superstores and one warehouse market in 1984, and plans to continue that pace through 1985.
Although the firm is not averse to building conventional and warehouse stores, the superstore is the main format that its strategy calls for to win the Dallas race. Its first entry, a 46,000-square-foot prototype with seven service departments, opened in North Richland Hills in June and is already meeting success. Three months after the opening, a time when many supers are struggling to regain their grand opening volume, the Minyard unit is doing more than $400,000 in weekly business, ahead of projections.
A Switch in Momentum
Minyard's new aggressive campaign began in 1980, when a new warehouse was completed in Coppell, Texas, several miles from the Dallas-Fort Worth airport. The distribution center contains 327,000 square feet of warehouse space, plus a 42,000-foot corporate office. With the warehouse in place, the company--acting through Minyard Properties, its real estate subsidiary--started to aggressively pursue retail sites.
"We developed a strategic plan to reshape the company," says Minyard. "The plan specified that we should fill voids in the marketplace, acquiring sites within communities where we were underrepresented. It also called for a major effort to improve the nucleus of people employed by the company. You cannot have successful growth without good people."
During the initial year of the plan, high interest rates limited Minyard in building new stores. But in 1982, when rates started to dip, the chain got the urge to build. It seriously analyzed all available and viable locations, doing in-depth studies to determine what type of store would be best at each site.
Preliminary site selection analysis is done both in-house, by professionals who work with IBM personal computers, and by reports solicited from outside suppliers. "When spending several million dollars to construct a store, you want to be absolutely positive the site will work," says J.L. "Sonny" Williams, Minyard's executive vice president.
Since the company became more aggressive, it has found a greater supply of possible building sites. "Success breeds success," says Minyard. "Real estate developers have learned that we look at each and every location. We don't put anything on the bottom of the stack and forget about it."
Approximately 30% of the sites checked into are deemed acceptable. Minyard management then analyzes each location to determine what format will work the best there, basing its decision on the population density, growth potential of the community, and the other stores in the trade area.
The North Richland Hills site was considered ideal because it is situated near enough to an interstate highway to make it accessible to consumers living three to five miles away. And it is in a growing neighborhood that would provide a solid customer nucleus. According to National Decision Systems, by 1988, 10,678 people should live within a one-mile radius of the store and 77,245 consumers should live within a three-mile radius. Compared with 1980, those figures show the population within one mile of the store growing by 27.1%, and more than 50% of the households in that group have incomes exceeding $35,000 annually. The population in the three-mile radius would be 19.3% higher in 1988 than it was in 1980.
"This area was perfect for a superstore," says Jim Gordon, district manager. More than 92% of the people live in single family dwelling units and nearly 80% of the households are married couples. Including children, the average age of the people who live within the one-mile radius is 32. In other words, the immediate trade area consists of young families who live in houses and have relatively high incomes--perfect superstore customers.
Service, Service and More Service
Even though several major chains compete in Dallas, price is not as important a factor there as it is in cities like price-war-ravaged Houston. The urban cowboys and cowgirls of Dallas respond to service, quality and selection.
"We differentiate ourselves by the services we offer and the friendliness with which that service is conveyed," Minyard says. Service departments include deli, bakery, a cheese, pasta and pizza combination, floral, seafood, cosmetics, pharmacy and a bank. Carryout service is provided to all shoppers, whether they buy a six-pack of Lone Star beer or six bags of groceries.
The layout and decor emphasize the service departments. Upon entering the store and turning right, shoppers get a triple dose of service. First comes deli, then bakery and then cheese. If they turn to the left, they pass the bank, the pharmacy and a service cosmetics counter. Food service is to one side, non-food service is to the other.
"We gave the service departments high visibility," says Mike Lawler, director of store design. "There are few barriers between our service employees and the customers."
Deli and bakery prep is exposed, allowing customers to see bread baking and a woman making sandwiches. The work table for the floral designer is on the selling floor so that she is accessible to shoppers. A produce person is always in the vicinity of bulk foods to offer assistance.
A major effort is made to keep labor dollars low while keeping service levels high. Minyard does this by incorporating the labor-saving ideas that have helped make its Sack 'n Save warehouse markets successful.
For example, the first case in deli is filled with already-made sandwiches and prepackaged salads such as cole slaw and potato salad. Shoppers in a hurry can pick up these products without waiting for service. During slack periods, deli employees package the salads and put them in the case, increasing productivity. To save on the time it takes to custom-slice deli items, five of the most popular products are presliced and sold for 20 cents less per pound than sliced to order meat.
But corporate officers remember that whatever they do to upgrade the service level, the success of the approach depends upon the store's employees. Minyard says, "You must take care of your employees or they won't take care of your customers."
The Minyard pledge, written by Chairman of the Board M.T. Minyard many years ago, states, "We will conduct our business with strict adherence to the 'Golden Rule' in all relations with our customers, employees, suppliers and the public at large....to treat you as we would like to be treated."
The store manager is the cog in the well-oiled machine and by the time an employee becomes a manager, he or she is well-trained and can run the machine smoothly. As Minyard says, "Our store managers are not hired--they are raised." The average store manager is 35 years old.
Minyard believes that combination store managers must have different talents than those who manage conventional markets. "A combination store manager must be organized," he says. "He or she must be a delegator, not a worker. They (the managers) use their brains instead of their hands."
Larry Williams, manager of the North Richland Hills store, joined the company 10 years ago as a carryout boy and has worked his way up to his present position. Today he is in charge of a business with annual volume exceeding $20 million. Williams estimates that 80% of his working hours are spent dealing with employees and customers. He spends 30 hours a week interviewing people for jobs, which is not an easy task in an area with a scanty unemployment rate of 3.6% keeping the number of candidates low.
"Every store and fast food establishment in town has a help-wanted sign out, so we must make a major effort to attract people to our store," says Williams. "We do that by informing potential employees that it takes a certain quality of person to work for Minyard Food Stores. We communicate that in the interviewing process."
In preparation for the holiday season, the store is adding 32 employees to its current 198. Williams has contacted local high schools, asked employees to suggest friends and neighbors, and so on. Even the register tapes are used in the hiring program--they say, "Minyard is currently hiring for all positions."
To boost morale companywide, Minyard publishes a monthly magazine entitled "Minyard Country News." New stores are profiled, employees who have achieved distinction at work or at social or sporting activities are mentioned, and innovations being tried are detailed. With all the activity in the company, there is a wealth of information to write about.
For example, the Sack 'n Save warehouse market along Highway 83 is using the first computerized pricing system in the country. All produce prices are displayed on electronic signs that can be changed by computer. The store has also introduced the first dry cleaning service within a supermarket in the Dallas trade area. Two stores are testing procery cart safety belts, which are designed to keep children in the seats of carts.
All of these innovations make Minyard Food Stores an exciting place to work and, the company hopes, to shop. Good people are joining the company, guaranteeing that the new locations will become stores that will help Minyard pull ahead in the cross-country race.
1 DELI: "The influx of people moving here from the North are making delis an important part of supermarkets in Texas," says Bob Self, director of deli operations. "Our challenge is to please these transplants, yet still adapt the sections to appeal to local consumers." The deli accounts for 2.5% of sales, approximately $10,500 a week. There is a seating area where they can enjoy a cup of coffee or a sandwich. This area has more of the appearance of an outdoor cafe than a supermarket deli.
2 BAKERY: "By combining scratch and bakeoff, we have developed a successful mix for the bakery," says George Timms, director of bakery operations. Three-quarters of the products are prepared from scratch. The store does well with cakes, merchandised both in the service case and in doored cases. "People buy a lot of frozen cakes to take home, defrost and eat. By freezing these cakes ahead of time, we save on labor." The bakery has 18 employees and pulls in about $8,000 a week, or 2% of sales. All baked goods are displayed in large wicker baskets, instead of metal trays. The baskets slide into the case. Gourmet chocolate chip cookies, made with imported chocolate and priced at 79 cents apiece, have done well, as have rolls, bagels, croissants and other bread items stocked in self-service bins.
3 FLORAL: A doored case filled with refrigerated flowers allows people to buy a nice bouquet in the same store as a food. A sign says, "Don't wait for a special occasion to say 'I love you.'" Most floral products, plants and accessories are displayed on risers. Beige-patterned wallpaper and indirect lighting set a subdued tone.
4 CHEESE CASE: A four-sided cheese house merchandises imported and domestic cheese, snack sausage, freshly made pasta and storemade pizza. An employee is always present to counsel shoppers or, when not serving customers, to prepare fresh pizza. An average of 600 pizzas are sold every week at prices ranging from $2.99 to $3.79 apiece. "The cheese case is where we experiment," Self says.
5 PRODUCE: Accounting for 8% of sales, or $32,000 a week, produce is organized by products appealing the various ethnic groups. All vegetable and salad items are merchandised along the wall of the produce alcove, while fruits are displayed on Y-shaped tables in the center. To hold the 220 plus items carried, the cases along the wall have upper shelves to merchandise small items such as asparagus and mushrooms. Greens, including romaine and Boston lettuce, spinach leaves and parsley, are also a successful product group. Minyard even merchandises broccoli florets and other items cut and ready to be thrown into a homemade salad. People who prefer to take an already-made salad home can fashion one from the salad bar, which contains 21 different items including unusual delicacies such as popcorn shrimp and marinated artichokes. David Westbrook, director of produce operations, says, "We add new items every week and remove others, so there is always something new."
6 BULK FOODS: Inspired by bulk foods' success in the Sack 'n Save warehouse stores, Minyard put a bulk foods section of more than 200 items at this upscale market. Available products range from all-purpose flour at 19 cents a pound to dried peaches at $3.19. The store has some liquid bulk items, and stresses that some of these--the cooking oil, waffle syrup, peanut butter and strawberry preserves--are Kraft products. Bulk food accounts for 1.5% of sales.
7 SEAFOOD: Sporting more than 40 different items from the deep, the 12-foot service seafood case has attracted consumers looking for variety in their protein source. Arley Morrison, director of meat operations, prefers having women employees tending the case. "Ladies converse better with customers who have questions about how to prepare fresh fish," he says. A stack of printed recipes is also present to give consumers preparation ideas. To display so much selection within a limited space, shellfish and fillets are displayed in small circular bunches rather than in straight lines. The seafood brings in $10,000 a week, 2.5% of total.
8 GROCERY: Despite the number of specialty departments in the store, grocery, including non-foods, accounts for more than $235,000 in sales every week, 59% of the store's total. Some grocery gondolas are specialty departments in their own right. Short gondolas across from the floral section hold gourmet products and natural foods. The store even has 12 feet of kosher foods, an anomaly in Fort Worth. Although the store does have 40 feet of generics and a full selection of private label, Minyard is mainly a brand-name merchant. A recent ad featured Dr Pepper soda, Hellman's mayonnaise, Northern tissue, Bold detergent and Green Giant canned vegetables. The only major change since the opening was a doubling of the space devoted to baby food, disposable diapers and supplies. "There were more young families than we had anticipated," says Larry Williams, store manager. General merchandise accounts for 10.2% of sales.
9 MEAT: The store has been doing well in fresh meat, which is merchandised from a three-deck case along the back wall. Morrison says the store features 200 varieties of choice beef, 20 types of pork, 22 different packages of chicken and 15 cuts of 'lite' beef. "Consumers who prefer less fat and cholesterol buy the 'lite' beef," Morrison says. "We recently began calling beef from smaller carcasses 'lite' because people are familiar with that term." Ground meat, offered in a dozen different ways with varying amounts of fat, and in different package sizes, is the backbone of the meat department. The section also merchandises kabobs made out of beef, veal, lamb, chicken and smoked sausage. "Texans love to cook outdoors, and they like the convenience of having shish kabobs already prepared," Morrison says. Meat accounts for 17% of sales, almost $70,000 per week.
10 FROZEN FOOD: Representing 8% of sales, or $32,000 weekly, frozens sell well due to the upscale character of the clientele. The section consists of two back-to-back, well-type cases facing two lines of doored cases. An oval-shaped drop ceiling extends over the well-type fixtures.
11 DAIRY: Located in an alcove setting and beneath three different ceiling heights, dairy has received extensive decor attention. "We have varying ceiling heights in dairy because that is where the HVAC ductwork is located," says Mike Lawler, director of store design. "A lot of the decor touches that look extra fancy combine structural and mechanical aspects with a well-developed design." To add an extra touch, potted plants sit on top of multi-deck dairy cases. Refrigerated beer, a popular item in Texas, is displayed after the dairy products. A sign above the beer display suggests that shoppers try a storemade pizza available in the deli. Dairy accounts for 9% of sales.
12 COSMETICS: In the city that gave us Sue Ellen and Pam Ewing, it's not surprising that cosmetics are almost becoming standard fare in combinations stores in Texas. The entire right wall is filled with self-service cosmetics and in the center of the lineup is a service counter where a young woman advises shoppers on makeup, perfume and so on. Approximately 20 bottles of perfume for sampling sit on top of the service counter.
13 PHARMACY/BANK: The left front corner was reserved for a Fidelity Savings & Loan and a pharmacy. "WE provide absolutely every service that a customer could expect within a supermarket, "Williams says. When the bank is not open, an automatic teller machine gives shoppers a way to obtain cash. Approximately 40 transactions are done daily on the machine. The pharmacy is open from 9 a.m. until 9 p.m., Monday through Saturday. The prescription business has been slow, but is increasing as expected. "A pharmacy builds its clientele more slowly than other departments," says Jim Gordon, district manager.
14 FRONT END: An aisle between the 12 scanners permits shoppers to begin their grocery excursion by heading in whichever way they wish. Says Lawler, "A store this size and with this many departments attracts people for a variety of reasons. We don't want to make somebody who came in for shampoo, walk through meat, produce and other departments to find it."