Remodeling: a choice for the times.
Rogers Markets in Fort Wayne, Ind . , used to remodel its stores every seven or eight years. But in recent years the frequency of its remodels has increased to about five years. "New stores today are so expensive that if you already have a good location and can afford to spend $200,000 to $500,000 to remodel your existing store, it makes more sense to do that than build a new store," said William Rogers, president of the 12-store company.
Rogers is not alone. Throughout the supeffnarket industry, the frequency of major remodels has gradually risen during the past decade. According to FMI, during 1987 the amount of time between a store's last major remodeling to its current remodeling ranged from three years to 8.5 years. However, in 1980 that range was from five years to 10 years.
There also has been an increasing number of stores being remodeled each year. FMI reported that during the past few years, almost 10% of stores underwent a major remodeling, compared with only 6% during the early 1980s.
Many of today's remodels are in lieu of store construction, primarily because of increasing building costs. But that isn't the only factor that has resulted in the rise in remodels. Other contributing factors include a diminishing number of good store sites, increased competition and changes in store decor.
The lack of suitable real estate has been a major concern. in many market areas. "Good sites for new stores are few and far between in many areas," said Mike Lawler, director of corporate engineering for Roundy's, Pewaukee, Wis. "Retailers often have no choice but to upgrade the facilities they already have."
Heightened competition in many market areas has also caused operators to remodel their stores more often. "The grocery business is much more competitive today than in the past," said Bob Kirkpatrick, corporate manager of store concepts, Super Valu, Eden Prairie, Minn. "It's a high stakes game, and retailers need to protect their investment. Remodeling can help them do that."
In addition, the look of super markets has changed more dramatically and more rapidly than in the past. For instance, the introduction of European-style curved-glass cases caused a major change in the appearance of service departments.
"For years the cases in the deli and bakery looked the same. so retailers could get away without replacing them that often They never looked outdated," said Lawler. " Then the European cases came along and created a whole new look. Everyone felt they should have them to make their stores look more upto-date. Many people remodeled and included these new cases. who might not otherwise have done so for quite a while.
The cases aren't the only things that have changed the supermarket's appearance in recent years."The decor package is so much different today." said Rogers. "You used to be able to keep the same decor for a long time. But now it's a whole new look, and you have to change to keep up with the times."
The wave of buyouts and mergers in the industry has also contributed to the increase in remodels, In some cases, the acquired stores underwent major remodels. For instance, when Farm Fresh, Norfolk, Va. , took over Giant Open Air in September 1986, the company began remodeling many of the Giant stores, particularly the older units.
However, in some cases, the remodeling work is kept to a minimum, especially with newer stores. That's also true with an extremely large acquisition, such as Vons' purchase of Safeway's southern California division, which consisted of more than 160 stores. The task of remodeling all of those units was simply too large to be undertaken. In fact, just converting the stores' logos was an extremely timeconsuming process.
Likewise, when Tampa-based Kash n' Karry took over 24 Florida Choice stores from Kroger, the company chose not to do major remodeling. "We changed the exterior signs and did some paint touchups to make the colors more similar to our existing Kash n' Karry units, but we didn't do major remodels," said Tony Conboy, a company spokesman. However, Kash n' Karry did remerchandise the stores to make them conform as much as possible to the layouts of its other units. "We wanted some uniformity in our planograms and product mix," said Conboy.
On the other hand, when Goodings, Altamonte Springs, Fla., acquired six Florida Choice units, the company chose to fully remodel the stores. According to Laurel Gebben, the company's spokeswoman, "The remodeled supermarkets will offer a wide variety of departments that were not previously available in the former Florida Choice stores, such as a scratch bakery, gourmet delicatessen, salad bar, cheese shop, wire service, florist, pharmacy and cosmetics section."
Goodings is not the only operator including a large number of new departments in its remodels. The addition or expansion of service delis, including hot to heads up most retailers' remodeling lists. "In recent years, we've found that we really need to allocate much more space to our full-service delis, particularly our Chinese hot foods sections," said John Combs, general manager of 11 -store Bel Air Markets, Sacramento, Calif. "Consumers are simply looking for and expecting to find more deli products."
Service seafood is also becoming an important element in many remodels. "There didn't used to be a lot of fish departments in this area," said Lawler of Roundy's. "But lately the retailers here are getting into fish. In a lot of remodels the owners are adding fish departments because of the customer demand."
Other departments commonly being added or expanded during remodels include service bakeries, service meat counters and video rental sections. And, in many instances, produce is being allocated additional space "The number one reason customers shop a particular store is perishables, particularly produce. And this is especially true in Florida with our aging population, which puts a lot of emphasis on healthy foods," said Tom Miller, president of Crescent City, Fla.based Miller Enterprises, which operates 10 supermarkets. "So in our remodels we're giving more room to the produce department so that we can increase the variety of items we carry."
Service centers have also begun receiving consideration in remodeling plans. "There's more demand today for in-store services, such as banking, copying and postal services," said Kirkpatrick of Super Valu. "So some retailers are adding service centers with these features."
Frozen food departments are being expanded in many remodels, although most operators pointed out that even with additional space, there is rarely enough room to house all the new frozen items"Frozen food is the fastest growing product category in the store today," said Miller. "So we have no choice but to provide more room for that department."
Not surprisingly, these new and expanded departments don't come cheap, which accounts for the steadily rising costs of remodeling. According to Progressive Grocer's 1988 Annual Report, the average cost of remodeling in 1987 for an independent store was $166,100, compared with $63,600 in 1977.
Many operators said an investment of at least $250,000 is required to see any real payback in terms of increased sales. Others said it's nearly impossible today to do a major remodeling without spending close to $1 million. However, as Kirkpatrick of Super Valu pointed out, "How much you put into a remodel directly translates into how much you get out. Generally, the more you spend, the higher your sales increase will be. And a more aggressive remodel usually has more holding power than a patchwork job."
Some retailers try to find ways to cut costs on remodels, but it isn't always easy. And certain cost-cutting measures may end up costing more money in the long run. "Some people try to stay away from things like the sophisticated refrigeration equipment that's available today, because it's costly. They stick with their old equipment," said Combs of Bel Air. "But you have to consider the fact that in the long run, the new equipment will save you money on utility bills."
One company that has successfully trimmed some of its remodeling expenses is Red Apple, based in New York City. By using its own staff of craftsmen, including carpenters, electricians and refrigeration technicians, the company has significantly cut construction and remodeling costs. For instance, a remodel that cost Red Apple about $600,000 would have cost the company 40 % more if outside contractors had been hired, according to Roy Cohen, executive vice president.
Because remodels can be so costly, the store's location has to be worth the ex"We've spent $1.2 million to $1.3 million on our last few remodels," said Combs. "And you can't gamble with that kind of money unless you have a good location to star with."
Open for business
An even bigger obstacle than the expense involved in remodeling, however, is the fact that most stores remain open during the process. The result is generally chaos, for employees and customers alike, and lost business as shoppers go elsewhere for their groceries.
"Sure, we lose some shoppers during a remodel," said Miller. "But most customers will put up with the commotion as long as you let them know what's happening and put up signs asking them to excuse the store's appearance. It's also a good idea to have employees available to help customers locate products dunng the remodel. I think a lot of shoppers actually enjoy watching the progress during a remodel. After all, human beings are curious animals," he said.
Keeping a store open during a remodel also wreaks havoc with tradesmen. "The carpenters and electricians have a tough time working around customers and equ ipment, " said Joseph Ancona, co-owner of Ancona's Market in Ridgefield, Conn., which recently underwent a remodel. "And they can't come in and do the whole job at one time. When you keep a store open during a remodel, you really have to work on it a section at a time."
Although most operators acknowledge the difficulties involved in nunning a store during a remodel, the altemative, they said, is worse. "Why teach your customers bad habits?" asked Ancona. "If you close your doors, you just give them an excuse to shop at your competitors' stores."
And recovering lost customers can be a tough job. "Most major remodels are going to take at least five months, and that's too long to allow our customers to shop somewhere else. Once they're gone that long, chances are they won't come back," said Combs of Bel Air. "If I could do a major remodel in two months, then it might be worth closing the store. But it's impossible to do that amount of work in only two months."
In addition to the prospect of lost customers, there are other practical considerations that prevent operators from closing the doors during a remodel. "Your rent or mortgage payments don't go away," said Rogers of Rogers Markets.
Most operators anticipate that remodeling will continue to be an important part of their strategic plans"Competition is only going to increase," said Miller. "To remain competitive, we're going to have to continue to update our stores. And if the industry continues to change as rapidly as it has recently, the stores will have to be remodeled more often to keep up with those changes."
Lawler of Roundy's pointed out that in the near feature, the economic climate will have a lot to do with the number of remodels. "If we see a dip in the economy as so many people are predicting, then both remodels and new store construction will probably slow down for a while," he said. "But in the long run, I think we'll actually see more remodels. Many market areas today are overstored and that's offly going to get worse. The overstoring will reduce the amount of new stores, but it will increase the number of remodels. "
It played in Peoria
When Kenneth Storey decided to do a full-scale remodel and expansion of his 15,500-square-foot Piggly Wiggly store in the small town of Warren, Ark., some people said he was crazy. They argued that many of the departments that Storey intended to add to the store, such as florals, hot foods and fancy cheeses, would never fly in the rural area of southern Arkansas.
They were wrong. Since the completion of the remodel last October, sales in the store, which now measures 24,500 square feet, have jumped more than 20 % .
"We had started talking about remodeling about two years ago because the store really needed to be updated," said Paul McFarland, store manager. "Then we got the chance last year to take over some space next to our store, so we decided to go ahead with a major remodeling. We also Teamed that a new competitor was coming, so we pushed through the remodel to get it done before the new store opened. "
The remodel, which involved the addition of several new departments, the expansion of existing departments, a new decor package, a new floor and major renovation of the ceiling, cost Storey about $350,000. But the investment has paid off handsomely. The store's customer count has risen significantly since the remodel. According to McFarland, the number of weekly shoppers has jumped from about 8,500 prior to the remodel to nearly 12,000. "We're drawing customers now from three different counties, which we didn't do before the remodel," he said. "There's nothing else like this store anywhere in the area, so people don't mind traveling a pretty good distance to get here."
Evidence of the remodel is apparent even before one enters the store. The exterior of the entire strip shopping center where the Piggly Wiggly is located was painted and a new facade was put up. The facelift also included a considerable amount of landscaping. "Sometimes people remodel the interior of a store and forget to consider the outside," said Gary Duncan, division manager of the Monticello, Ark., division of Piggly Wiggly. "But the exterior is just as important because that's what makes the first impression with customers."
The entrance of the store was also changed. "It used to be over to the side, but we moved it to the center," said McFarland. "Now customers can see the whole store when they come in."
The first department customers encounter is florals. "We didn't have a floral department before the remodel, so we weren't sure how customers would react to buying plants and flowers in a supermarket," said McFarland. "We decided to put it right up front where shoppers would get used to seeing it."
The strategy appears to have paid off. According to McFarland, sales of 'florals have been better than expected. To tie in with the floral department, a gondola run of greeting cards and gift wrap was added during the remodel. This section is located just behind florals. "We've been doing a very good business with these items," said McFarland.
Just beyond florals is a wall of values, which was added during the remodel. "We felt that this was a good contrast to florals," said McFarland. "We want people to see that we now carry plenty of fancier items like fresh cut flowers, but we also want them to know that it doesn't mean our prices are high."
In the right front comer of the store is the new deli and bake-off bakery, which were made possible by the additional space taken from the neighboring pharmacy and discount store. "We weren't sure how the bakery and deli were going to do, since we didn't have them before," said McFarland. "But customers have just been thrilled to death with them."
The deli's hot foods section, which includes 15 to 20 items cooked in the store, has been particularly successful. "We have several factories in the area, so we do a big lunch business in the deli with the factory workers," said McFarland.
Next to the service deli counter is a selfservice case containing pizzas, sauces and cheeses. "We weren't sure what to expect from these items, but they've done surprisingly well," McFarland said.
The additional space from the stores that Piggly Wiggly took over was also used to expand the produce department, which runs along the right side of the store. "This allowed us to increase our selection," said McFarland. "Customers appreciate the increased number of items that we carry ."
The extra space was also used to expand the produce prep area. "This was a real help," said McFarland. "Before the prep area was just a cubbyhole."
McFarland pointed out that while some additional produce cases were purchased, the old cases were able to be repainted and used. "This helped to save us quite a bit of money," he said.
A dropped ceiling above the produce cases in the center of the department helps dmw attention to the area. In addition to the ceiling treatment, the store's new decor package includes an updated color treatment, large color photographs and new lettering, identifying each department. The design firm of Randall Rickets was responsible for the decor. "We thought about using some neon lighting in the store," said Duncan of Piggly Wiggly."But we decided that might be too extreme a change. We wanted the store to have an updated look, but we didn't want to scare off customers."
Another department added during the remodel was the pharmacy, located in the right rear corner. "It+'s run by the same people who used to run the pharmacy next door," said McFarland. "We lease them the space now. We felt it was an advantage for us to have the pharrnacy located inside the store, but we didn't want to attempt to run it ourselves. We felt it was better to leave that to people who really know the pharmacy business."
Along the rear wall of the store is the meat department, which includes a section of frozen meats and smoked meats, as well as a selection of' self-service seafood. "The meat department is in the same location that it used to be, but we enlarged it about 30 % , " said McFarland.
Both the dairy and frozens departments, located on the left side of the store, were also enlarged during the remodel. As in produce, the existing dairy and frozen food cases were repainted, and several new cases were added to each department.
One of the areas in the store that underwent the most dramatic changes was the video rental department. "We doubled that department, both in terms of space and the number of tapes," said McFarland. Before the remodel, the department housed about 800 videotapes. Now the selection includes nearly 1,600 fides. The department's additional space also allowed for the inclusion of a small magazine and book rack.
The video department was given a special design treatment, including a dropped ceiling, recessed lighting and a new service counter. "The video department has become so important that we wanted to make it stand out," said McFarland. The department's location in the front left comer of the store makes it easy for customers to get in and out quickly.
The grocery department, located in the central portion of the store, was expanded with seven additional aisles. "Now we've really been able to increase the number of items in the grocery section," said McFarland. "And we've been able to try many more new items than we could in the past. We were also able to include a lot more general merchandise, like housewares, which are doing quite well."
The front end was also changed. An additional checkstand was included, and the courtesy booth was enlarged by slightly pushing out the front of the store.
The extra space at the front end also provided room for two motorized shopping carts for handicapped customers, which the store did not have prior to the remodel. "Those cans have probably resulted in more positive customer comments than anything else we did in the remodel," McFarland We have a number of elderly shoppers who use them regularly."
Although the remodel was extensive, the store never closed its doors"Doing the remodel with the store open was a really tough job," said McFarland. "But we did it in stages to make it as easy as possible. We started with the area that we took over from the other stores. When we had done most of the work in there, we took down the wall between the old part of the store and the new part. We also did as much work as possible at night. But overall the customers were prettyenthusiastic about the remodel, despite the confusion. Most of them were really curious to see what it was going to look like when it was all done. I think by keeping the store open during the remodel we might actually have gained some customers rather than lost them."
Focus on deli
The deli department is where all the action is today in supermarkets," said Joseph Ancona, co-owner of Ancona's Market in Ridgefield, Conn. So when he and John Ancona, his brother and co-owner, decided to expand their 20,000- square-foot store, there was never any doubt about what department would be given the extra space.
A total of about 3,000 square feet was added to the deli department, which underwent a complete remodel as part of ale expansion plan. (Additional space was included on a second level to house the office.) "The difference is like night and day," said Joseph Ancona Jr., deli manager. "We have much more space to display product and much more room to work in."
And the customers like it, too. The deli has experienced nearly a 30 % increase in sales since the remodel. In addition, the department's contribution to total store volume has jumped to 12%, compared with 10 % prior to the expansion.
Much of the sales gain has come in the hot foods section, which was expanded considerably during the remodel. "We used to have only a small case with five bays for hot foods. Now we have more than twice that amount," said Joseph Ancona Jr. The hot foods menu consists of more than 30 entrees including tortellini alfredo, baked ziti and several stir-fry dishes.
The expansion of the hot foods menu was made possible by the larger kitchen facility. "The deli kitchen is about four times bigger than it was before the remodel," said Joseph Ancon"We used to have room to work on only one thing at a time, but now we can prepare a number of items at the same time."
The larger kitchen area provided room for a new fryer, cooler, steam oven and large-capacity dishwasher. "The dishwasher, in particular, has been a great addition, " said Joseph Ancona"It's really saved on time and labor. "
Saving on labor is especially important in Connecticut, where the unemployment rate runs below 3% . "Labor is the controlling factor," said Joseph Ancona Jr. "Our deli can accommodate a larger business than it's currently doing, but the shortage of labor is holding us back."
There are four employees in the kitchen who handle the cooking"A while back we tried hiring trained chefs from the Culinary Institute, but that didn't work out too well," said Joseph Ancona Jr. "They had a hard time adjusting to working in a supermarket. Their dishes were high on artistry, but low on volume."
In addition to the expanded hot foods section, the remodel allowed Ancona's to increase its entire deli selection. A new self-service well case includes about 70 different cheeses, storemade pizzas, pasta, sauces and a number of ready-tocook items. A new 32-foot curved-glass service case includes an expanded selection of deli meats and salads.
The department also includes a new soup and salad bar, which features between two and four soups each day and numerous salad items. Baked stuffed potatoes are cooked three days a week, and the salad bar features a number of special promotions, such as make-yourown taco day.
The store's bake-off bakely also received some attention during the remodel. "We used to have a very small kitchen area and rolling racks for the bakery," said Joseph Ancona. "Now the kitchen is much larger, and we added a new proofer, retarder, rotary oven and a large selfservice case."
As a result of the expansion, the bakery's capacity has been greatly increased, which was particularly apparent at Thanksgiving. "We noticed a big difference this past Thanksgiving, compared with the year before," said Joseph Ancona. "Before the expansion, we were baking pies until 3 a.m. before the holiday. But this past year, we were able to do it all in our regular schedule."
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|Title Annotation:||supermarket remodeling; includes related articles|
|Date:||Feb 1, 1989|
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