Produce Retailer

While major supermarket chains tend to grab the industry spotlight, the fact is, about 40% of grocery stores in the U.S. are independently owned, according to retail consultant W. L. Justin & Associates LLC, Alpharetta, Ga.

And that’s often where you’ll find the most innovative thinking.

Stores without massive advertising budgets or corporate marketing machines to carefully hone their images have no choice but to rely on their innate survival skills, which typically include focusing on customers’ basic needs.
Offering outstanding service is one of the most common success strategies for independent retailers.

“The best way for independents to differentiate themselves is quality of service and personalization of service,” says Neil Stern, senior partner in Chicago-based retail consultant McMillanDoolittle LLP.

“The chains try to get there through proxy, such as a loyalty program,” he says. “Independents get there because they really know who their customer is. That’s a real advantage.”

Labor is key

Good service is synonymous with good employees.

“It all starts by hiring the best people we can find,” says Jose Manzano, director of produce for Dorothy Lane Markets, a group of three stores based in Dayton, Ohio.

Manzano credits the more than 700 employees — 100 in produce alone — for any success the company achieves. There’s even a 25-year club made up of employees with a quarter century or more of service.

Manzano himself has logged 49 years, and his wife, Patty, floral manager at one of the stores, has put in 44 years.

A strong employee base also is important at Anaheim, Calif.-based Gonzalez Northgate Markets.

Miguel Gonzalez opened the first of the company’s 34 stores in 1980. It was less than 4,000 square feet and specialized in meat and produce.

 “It’s important to have a tremendously engaged employee base that really believes in the company and in what the company stands for,” says president Oscar Gonzalez, Miguel’s younger brother.

The company has sent more than 200 employees through a community college program in conjunction with the Lakewood, Calif.-based Western Association of Food Chains. And Northgate has sent several management-level employees to a 14-week Food Industrial Management Program at the University of Southern California.

Courteous, knowledgeable employees can be the driving force behind a successful independent supermarket operation, agrees Bill Justin, president of W. L. Justin & Associates.

Many times, the produce  members are first in line as a customer enters the store. That means produce employees “must be friendly, say hello to every customer and form friendships with the customers,” he says.

    
Focus on local needs
The two “purposely different” Village Market Place stores — one in Skokie, Ill., and the other in Carol Stream, Ill. — owe their success to catering to the need of their local customers, says general manager Peter Arvanitis.

In the Chicago market, there’s a need for two things, Arvanitis says: ethnic stores and stores that put an emphasis on fresh produce, meat and deli items.

Chains tend to focus on convenience and shelf-stable items, but many independent owners get into the business by “offering a different perspective on a product people use every day,” he says.

The Skokie store, opened in 2001, serves a large Russian/Eastern European clientele and a heavy Jewish population. The Carol Stream location, opened in 2009, has a more diverse customer base that includes Italians, Greeks and Eastern Europeans.

Produce makes a difference

“Produce is the No. 1 non-price reason people choose a supermarket today,” says Stern of McMillanDoolittle.

Twenty years ago, it was the meat department.

“Produce offers freshness, seasonality and variety tailored to a particular clientele,” he says. “There’s so much you can do with produce.”

Dorothy Lane stores typically comprise 20,000 to 35,000 square feet, and about 10% of the floor space is devoted to produce. The selection is good, not huge, Manzano says, but he is quick to fill customers’ special requests.

“We have the only certified organic produce department in the Dayton area,” he adds.

Most Northgate stores range from 30,000 to 45,000 square feet — large enough to offer a good selection, but small enough to maintain a friendly atmosphere, says produce director Ali Moezzi.

Produce departments range from 10,000 to 12,000 square feet and offer 300-350 items, including a good selection of traditional Mexican specialties.

Up to 85% of the chain’s customers are from Mexico, but the demographic is changing as other ethnicities start to patronize the stores in search of fair prices, good quality and extensive selection of Hispanic items.

The produce is so fresh that the stores offer a five-day guarantee, during which time a shopper can return any items for a refund with no questions asked.

Gonzalez sees the produce department as “one of our stakes in the ground against our competition.”

Village Market Place shoppers are more interested in finding a good selection of fresh fruits and vegetables than they are in having myriad brands of ketchup or household cleaners to choose from, Arvanitis says.

Peter Arvanitis’ cousin, George Arvanitis, visits the Chicago International Produce Market every day and decides what to buy based on availability and market prices.

It’s important to know your top 20 produce items and how they change during the seasons, Justin of  W.L. Justin & Associates advises.

“The allocation and placement of these 20 items has a tremendous effect on sales and profits,” he says.

Unique offerings

Offering unique items is another way for an independent store to differentiate itself, says Manzano of Dorothy Lane Markets.

In early December, one of the stores conducted a test launch of a special Naples pizza that’s prepared to order and cooked onsite in 2 minutes or less in a 1,100º F oven.

The stores feature top-of-the-line products, and the bakery and deli make everything from scratch.

“We do not purchase any salads already made,” he says. “We don’t scoop out of 5-pound containers.”

Exceptional products don’t come cheap, though.

“We don’t try to compete on price,” Manzano says. “Customers know what to expect — great products and great quality throughout the whole store.”

Northgate stores do emphasize “fair prices,” and that’s an advantage in tough economic times, when other stores have had to cut back and retrench, Gonzalez says.

“The tough economic environment has opened a significant opportunity,” he says, as cash-starved consumers seek out quality and value at a fair price.

Other strategies

Other success strategies for independents include maintaining proper stock levels throughout the store — especially during prime shopping hours — posting proper signage and offering aggressive pricing, Justin says.

Store owners agree that operating an independent supermarket is by no means a 9-to-5 job.

“You should be there every day — every minute of the day,” Arvanitis says.

“When you’re there, you’re able to see what’s working and what’s not,” he says.

You can observe how employees interact with customers and what customers want that you may be missing.

“It’s hard work,” he says, “but it’s a way of interacting with people, and that kind of makes it fun.”