Stores of the month revisited: is this America's most ingenious market?
"The store was a star performer for many years, but recently it's been suffering along with the neighborhood," says Helene Nemeth, the owner. "When the store was built, Dolton and Harvey were good, blue-collar communities with hardworking men and women raising families. It has changed dramatically as the factories around here save shutdown."
Located in a low-income suburb bordering Chicago's South Side, Model Mart is in area affected by spreading urban blight. During the recent recession, conditions drastically deteriorated as factories in Chicago and Gary closed, leaving much of the population unemployed. The store's situation has been further clouded by the opening of a warehouse store several miles away in Indiana, where there is no sales tax on food. "I'm more discouraged than ever, and I've been in this business 30 years," Nemeth concludes. Paving a New Path to Success When Progressive Grocer visited Dayton, Ohio, in August 1960, the Midwest was booming. As people worked for the 1960s ideal of owning a house and having two cars in the garae, the manufacturing muscle of the country was flexed to its fullest. Ohioans were expeiencing unprecedented prosperity, and so were their supermarkets, including the Salem Lane Foodtown operated by Wilbur E. Stump.
The most unusual feature of the Salem Lane store was an arcade of shops directly in front of the checkstand. The one-store owner was able to include a record store, refreshment bar, dry cleaning shop, jewelry repair center and other small business by using an unprecedented alteration--he converted the traditional window front into a fourth wall.
By April 1983, Stump had built a chain of 19 supermarkets in Dayton and Columbus and became regarded as the quality retailer in these nearby cities. Then, last spring, Stump deciced to retire. He sold his nine Columbus stores to an outside party. The 10 Dayton units were reserved for his loyal employees. "Mr. Stump wanted to sell what he had built to the people who had helped him build it," says Joseph Bennett, president of the company.
Over the years, though, the economic and competitive conditions in the market had changed. Although the upscale approach to selling groceries was applicable as late as 1974, when Stump opened a 42,000-square-foot superstore, the recession of the late 1970s caused a long-lasting alteration in the buying habits of Dayton consumers. Strapped for cash, customers who had preferred full-service supers turned to warehouse markets.
"To remain competitive in this trade area, we decided to operate warehouse markets as well as conventional stores," Bennett says. "We turned one of our units into a U-save warehouse store, using the county market concept. We have full perishables departments, but we sell groceries at a 12% to 15% gross."
Since being converted last summer, volume at the U-save unit has jumped from $50,000 to $140,000 per week. Based on this success, a 32,000-square-foot unit is scheduled to open as a warehouse market in November. If this unit is as successful as the first, the Salem Lane Foodtown could also become a modified warehouse store, Bennett says. The Right Stuff--Then and Now Despite the plethora of well-known chains operating in metropolitan Los Angeles, one of the most well-represented Southern California companies in the Store of the Month files is Dales Food Marts, headquartered in Sun Valley, Calif. In June 1961, Dales Panorama City store was featured. Its northridge market was profiled 10 years later.
"We received a plaque from the city of Northridge congratulating us on being chosen as Store of the Month," recalls David Dale, 62, president of the 22-unit chain. The company utilized the Progressive Grocer honor as a competitive tool, informing consumers that the magazine of supermarketing felt Dales operated a better store than Ralphs, Vons, Alpha Beta and other well-known competitors.
"That store is one of a kind," says Dale. "We planned that market to appeal to an upscale clientele. We had a wine cellar, a 24-foot service fish case, a prime beef section, an international foods deli and more. Northridge is the type of community where you an put $40 bottles of Dom Perignon on an end display and sell six cases of it."
The store's volume has growh from $90,000 to $270,000 per week despite increasing competition in the San Fernando Valley. The main threat has come from a huge Ralphs store directly across the street. "Ralphs opened their largest store to date across from us six years ago, and our volume has been climbing ever since," Dale remarks.
Dale's biggest regret is that his other stores are not as well situated as the Northridge unit. "We run 10 other markets in the valley, but none have the same type of clientele as that store," he says. The firm's 11 other units are much smaller, and would be classified convenience stores or superettes. Total annual volume for the company stands at $89 million.
"We may have enough stores to be classified as a chain, but we still operate as an independent in this chain-dominated market," Dale says. "We give better service, sell higher quality perishables, keep the store super clean and stay away from price wars. That may sound basic, but it has been successful." Breaking Out of the Mold In the fast-track 1960s, the time frame in which a store could be constructed was important to its competitive posture, particularly when additional stores were opening in the same trade area.
To cut construction time, the Independent Grocers Alliance and wholesalers such as Wetterau Foods of St. Louis developed package stores. As reported in January 1963, these supers were "identical in design and construction, preplanned down to the last trimming knife."
The Capri IGA in Litchfield, Ill., chose the 6,440-square-foot size. "The package stores were a perfect program for the '60s and early '70s," says Randy Vasel, general manager of the three Capri IGA Foodliners. "We used the package concept for every new store we built." The company's last package store was a 9,280-square-footer constructed in 1974.
In December 1979, the original Litchfield store, which had grown to 13,000 square feet, burned to the ground. Instead of choosing another package store, the independent opted to have a replacement store custom-designed by Wetterau.
"With the way the grocery business is today, the independent has to have input into the planning of his store," Vasel believes. "The wholesaler of the '80s doesn't just supply something to his retailers; he must work hand in hand with them toward a common purpose." From Prosperity to Obscurity In the ever-changing supermarket industry, yesterday's success story can turn into today's tale of failure. In July 1964, Progressive Grocer told the Horatio Alger tale of Jimmy French, a small-town grocer who saw opportunity in Oak Ridge, Tenn. French's dream involved the opening of an octagonal store that would become the number one supermarket in chain-dominated Oak Ridge.
French achieved that dream and went on to operate six stores within a 25-mile radius of Knoxville, Tenn. Then, his interest in the business waned and sales in the store slipped. By 1980, two stores had been closed and the four remaining stores were sold back to his wholesaler.
Only one store still does business as French's Market--a 14,000-square-footer. French, 50, died last spring. Solid Growth in the Windy City
When Progressive Grocer reported in May 1965 on the 10th store opened by Dominick's finer Foods of Chicagoland, Dominick DiMatteo Jr. was an independent operator doing remarkably well despite the stiff competition that dominated the Chicago market. Today, Dominick's operates 76 stores in metropolitan Chicago and has vaulted into second place in market share behind the long-time leader, Jewel.
"In 1965, Chicago was a chain market, with Jewel, Kroger, A&P and National all vying for a piece of the food dollar," says Larry Naumann, Dominick's vice president of advertising and public relations. Beginning in 1970, the momentum in the market started to move away from the national chains and toward the local operator. Kroger abandoned the market, leaving 22 stores. Within 18 months, Dominick's had reopened all 22 Kroger units, boosting the local chain's size to 43 stores. Dominick's also picked up Kroger's distribution facility in Northlake, Ill., which provided the capacity for even more growth.
As the years passed, National and A&P left the market. As each of these major chains retreated to greener pastures, dominick's snapped up more desirable locations.
"We were on the scene and could keep on top of what customers wanted," Naumann remarks. "We paid more attention to the basics of selling groceries than some chains did. We gave the people of Chicagoland what they wanted when they wanted it."
Although Dominick's has made no significant changes to the Evanston store profiled as a Store of the Month in 1965 due to site restriction, the company has progressed substantially since opening the i7,000-footer. Dominick's recently opened its first combination store. A Long Way from the Cornfields
When Progressive Grocer last visited Earl Hawkins in November 1965, the Buckeye grocer had just opened his first supermarket, a 17,300-square-footer on the outskirts of Wooster, Ohio. The store had recorded an impressive opening week volume of $85,000 and had leveled off at $50,000.
The 68-year-old Hawkins currently oversees a five-store operation boasting annual sales exceeding a $50 million. He says, "My company has made some money in this business over the years. As I saw it, I had the choice of giving the money to the government in taxes, or building new stores. I settled for stores."
A 38,000-square-foot super in MEdina, Ohio, is Hawkin's most recent tax credit. Opened in October 1982, the unit is doing almost $200,000 a week. The highest volume Hawkins Market, in Mansfield, did $14 million in 1982.
The size of the original store was increased to 32,000 square feet in 1972. "Our first store opened in a cornfield, but Wooster has moved out," Hawkins says. After the remodeling and the construction of a shopping center next to the store, volume increased by 150%. Annual sales currently run $11 million.
Hawkins continues to believe in the most unusual feature of his original store--two separate produce departments. While one is a typical interior section, the other is a 1,200-square-foot open air room. This radical merchandising approach attracted farmers in 1965 and still works today, as evidenced by the indoor and outdoor produce departments at the new Medina store.
"We no longer get the 22% produce distribution, but that's because we now have bakeries, delis and so on," Hawkins says.
"Back then, we were produce people learning to run a grocery store--today, we know how to run every department in the market." A Tradition of Prestige
When Jack Straub opened his newest store in St. Louis' Mason Woods shopping plaza--profiled in November 1966--a local newspaper called it "the Most Beautiful Grocery Store in America." The ambiance of the fully carpeted market with the first sliding automatic entrance and exit doors in a St. Louis food store was geared to attract residents of St. Louis' wealthier neighborhoods. Straub's stressed quality perishables, impeccable service and credit. It was the essence of the carriage trade store.
The most unusual aspect of Straub's four stores today is that they continue to offer credit to their carriage trade clientele. "We don't try to compete with the 40,000-foot superstores or with the 20 different box stores in our market," says 72-year-old Jack Straub. "We offer our customers prime meat, personally cut, and have an array of products unmatched in supermarkets three times our size. St. Louis is a tough, saturated market, but we've done well no matter how intense the competitive situation has been."
As in 1, the service meat department makes a major contribution to volume and profits. At the Mason Woods store, meat accounts for 28% of the weekly voulme of $67,000, or approximately $19,000 a week. Seventeen years ago, the entire store's volume stood at $16,000 and meat represented 26% of that total. Serving Straub's meats continues to be a sign of prestige for many of the nouveau riche of St. Louis.
Having a Straub's charge account is also prestigious. Says Straub, "We have always had an excellent reputation--people are proud to have a charge account at Straub's." Forty percent of the volume at the four stores is done on credit. According to Straub, the company hs $650,000 in accounts receivable at hte end of each month; 78% of that is collected by the final day of the month, with the remainder received within the first few days of the following month.
"The way we operate is a bit old-fashioned and unusual for the '80s, but it continues to be good for us. We just finished our fiscal year at the end of August, and it was the best volume and profit year we ever had," Straub says. Floating on 50 Feet of Peat
Sometimes, when standing all alone in the parking lot of his 11,250-square-foot store in Weston, Mass., Henry Acconcia has that skinking feeling. But not because business is going badly. As a matter of fact, volume at Triple A Foods could not be better, having jumped from $30,000 a week in July 1967 to $125,000 weekly in 1983. By all reasonable measures, Acconcia should be walking on air.
"We haven't had any trouble inside the store but outside we've had one big problem--the parking lot is sinking," says Acconcia, who owns four stores in the affluent suburbs west of Bostob. "This little plaza was built on peat. We are actually floating on about 50 feet of peat. The parking lot has sunk about tree feet since the store opened."
Inside operations have remained virtually unchanged. Service fish continues to perform well, and produce has remained prepackaged because there is not enough footage for a bulk operation. Says Acconcia, "We can't make the store any bigger because of the zoning. It just becomes more crowded and difficult to operate. That can be frustrating." Many retailers would gladly have Acconcia's problem of too much business and too little room. His store boasts $15.24 in weekly sales per square foor of selling space. A Design With Staying Power
'We have not made many changes during the past decade," says Bob Graves, owner of Graves shop 'n Save in Presque Isle, Maine, which was profiled in January 1971. "When you have a store that's nice enough to be a Store of the Month, you don't need to change things, especially in a quiet community like Presque Isle."
The 18,000-footer was the "acknowledged leader in store design in northern Maine," when it was built in 1970. From the potato and onion patch directly inside the entrance through the 20-foot service deli in the right rear corner to the baked goods section last in the traffic flow, the supermarket was designed and merchandised to please the people of Presque Isle for years to come. And it has.
"The biggest change has been our increase in volume," Graves says. The Shop 'n Save's weekly business has jumped to $143,000 from $50,000. Sales have been particularly strong since January 1982 when Graves switched to the Everyday Low Price Program developed by his wholesaler, Hannaford Brothers Company of South Portland, Maine.
The only major addition to the store ocurred in June 1983, When Graves squeezed in a 50-item salar bar. "I had a produe table doing nothing in the backroom, so I decided to transform it into a salad bar. I took an ad from Progressive Grocer, showed it to a local carpenter and told him to build me a salad bar that looks just like that," Graves says.
In September 1983, Graves improved his competitive position by buying a 14,000-square-foot store on the opposite side of town. He hopes to maintain its volume of $85,000 without losing sales at his original store. One-Stop Shopping at Its Best
'The shoe repair is still there, and so is the dry cleaner, in-store bakery, service fish case, floral shop and so on," says Earl Wallace, senior vice president of 19-store Angelo's Supermarkets Inc., headquartered in Rockland, Mass. "The only department we no longer operate is the cafeteria. We leased that to Godfather's Pizza."
The 44,000-square-foot Angelo's market in Hanover, Mass., had nine service departments and a healthy weekly volume of $150,000 in December 1971. The store was an early tennt on a 75-acre complex then planned to house a regional shopping center.
The Hanover store's weekly volume currently exceeds $300,000, a substantial upswing considering that the surrounding community has growth little in the past 12 years. The store has benefited tremendously from the pull of the 70-store regional mall that now sits adjacent to it, and from the increasing appeal of one-stop shopping.
The unit was totally remodeled last year, with special emphasis on produce, where Y-shared tables replaced the standard cases. Also, a 16-foot salad bar with 60 items was installed.
Angelo's newer stores are even more spacious. "You need 60,000 feet today because perishables departments must be much more pronounced. People like to feel as if they are in a different store when they shop the various departments. To create that type of atmosphere, you need a lot of space," Wallace says. Angelo's newest supermarket, in Marshfield, Mass., is 60,000 square feet. Radials ARe Good for Tires!
Canal Villere's radical experiment in supermarket layout, profiled in January 1972, involved an aisle arrangement that radiated in a sunburst type effect away from the checkouts, encouraging customers to meander through the store.
The New Orleans firm's 39,000-foot store in Metairie, La., was closely watched by the grocery industry to see if this unusual approach would succeed.
"Customers initially liked the radial concept, but in the long run it caused more problems than it was worth," says Herman Hohensee, division vice president of the 52-store chain, a division of the National Tea Company. "We used the concept in three or four more stores, then abandoned it."
According to Hohensee, the main problem with the radial layout was that it disoriented shoppers, who were accustomed to standard gondola runs. The radial concept also limited gondola footage. As the selection of items carried in the stores expanded over the past 12 years, the limited footage caused mounting space difficulties.
During the remodeling of the Metairie store in 1981, the gondolas were arranged in standard perpendicular lines. The perimeter departments, which included floral, deli, bakery and pharmacy, were extensively renovated, helping the store reassume its role as one of Canal Villere's highest volume supermarkets. A Decade Of Expansion
When Progressive Grocer profiled Cosentinos in August 1973, the four Cosentino brothers had parlayed a fruit and vegetable stand into an 18,000-square-foot supermarket doing an annual volume of $2 million. In 1983, Cosentinos expects to take in $14 million.
"We've expanded the store five times since then--it's now 30,000 feet," says Phil Cosentino, the brother who oversees produce at the San Jose store. "We keep adding departments and products, such as our new fresh pasta section. There is always another item consumers will buy if you merchandise it properly."
Addressing new developments, Cosentino talks in terms of months, not years. For example, the fresh pasta section was put in three months ago and has taken off. The brothers are planning to add a machine that makes ravioli.
In August 1983, the store began to scan bulk produce by having an employee apply a UPC label at the produce weighing stand. Cosentino hopes to use the scanner information to fine tune his buying and merchandising of the more than 400 fruits and vegetables carried.
Produce accounts for 24% of sales, about $65,000 weekly, compared to a weekly volume of $8,461 in 1973. Produce display space has doubled and sales have increased almost eightfold.
Has anything unusual happened since the Store of the Month article appeared? "That feature got us placed on the itinerary of every Japanese grocers group that comes to the states. We've given over 100 tours since 1973,c says Cosentino. Expansion in the Fast Lane
'If you like grand openings, move to Houton," said store Manager Mike Alexander when Progressive Grocer profiled Randall's then newest store in Jersey Village, Texas, In June 1979. Few companies have maintained as frantic a pace of grand openings as Randall's. As of the end of 1983, Randall's operated 24 supermarkets, compared to 10 in June 1979.
"We have always wanted to move fast, and in the pat few years we have been in a good financial position to do it," says Randall Onstead, vice president of buying and merchandising.
Along with expanding the number of stores operated, Randall's has also been significantly increasing the size of the new units. From the 36,000-square-foot Jersey Village store, the company's usual store size expanded to 42,000 square feet through the acquisition of four Handy Andy markets in 1979. Pleased with the results achieved from this extra footage, Randall's further increased the size of its prototype store and the newest units range between 52,000 and 55,000 square feet.
"We needed more spasce to add new departments and products and to do a better job of merchandising what we already carried," says Onstead. Much of the expansion has been in health and beauty aids and general merchandise. A pharmacy, a nutrition center and, in four locations, an in-store bank have also been added. Target volume for the "super combo stores" is $300,000 a week compared to the $200,000 expected from the older units. Onstead says all new stores have met of topped the projections. Two Stores Prove Better Than One
The September 1979 Store of the Month article entitled "Fighting Retailer Buys Out His Boss" explained how Dave Trottier opened a Smitty's tore in Springfield, Mo., more than 1,000 miles from the company's base in Phoenix. The 67,000-footer was so successful that Trottier was able to buy out the 51% share of the operation onwed by Clyde Smith, his former boss.
Shortly after the article broke. Trottier bought out his main competitor, a Schnuck's Market three miles away. "Schnuck's was having trouble with the store because it was 220 miles away from their base in St. Louis," Trottier says. "I knew the store would complement my original unit, so I acquired it. Two stores are almost always better than one."
Especially when you operate markets as well merchandised as the Smitty's units. "We did not remodel or change the physical layout of the Schnuck's. All we did was sput in our mass merchandising techniques," Trottier says. Sales at the 27,700-square-foot unit have taken off, from $60,000 weekly before becoming Smitty's to $230,000 a week by the end of 1983, a 283% increase.
The new Smitty's has done no damage to the volume at the original unit. Trottier believes it has contributed to an increase by making Springfield consumers and potential shoppers from outlying areas more aware of the Smitty's concept. Weekly volume at the original store has jumped from $250,000 in September 1979 to over $400,000 in October 1983. Annual sales for Trottier's stores have skyrocketed from $13 million to $32 million in just four years.
"We've been able to capture an 18% share of the market with just two stores because we have a formula that appeals to the people of Springfield. And we expect to become an even bigger factor. Now, we're looking for a location to build a third store," Trottier says.
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|Date:||Jan 1, 1984|
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