Monday, June 2, 2008

Independent Grocer Memo: Four Oregon Independent Grocers Are Symbolic of the Success of the Independent Food Retailing Sector in the United States

Cary Lowe, owner of The Produce Patch in Bend, Oregon USA helps customer Suzanne Johannsen with her groceries Wednesday afternoon. Lowe recently converted his seasonal produce business into a year-round grocery store and is one of several small neighborhood markets in Bend. “The main focus for us is to be the best quality store in town,” he said. (Photo: Anthony Dimaano. Courtesy: Bend Bulletin.)

As we often write about here on Natural~Specialty Foods Memo, despite the growing power of national and regional supermarket chains in the United States--along with international retailers like Ahold, Germany's Aldi, the United Kingdom's Tesco and others building large food retailing chains in the U.S.--the multi and single-store independent food retailing segment continues to not only survive but in most cases thrive in the U.S.

The success of independents is due to a variety of reasons.

First, independent food retailers are local marketers and merchandisers supreme. The history of the independent grocer--be it a mainstream one or niche operator in the specialty, gourmet, ethnic or natural foods spaces--is one of a local resident of the community who also happens to own one or more grocery stores in his or her community and nearby cities.

Often these stores are family-owned. Independent grocers also are increasingly coming from the ranks of entrepreneurs. While these stores might not be family-owned--they are often owned and operated by individuals or partners who create, build and sustain a family-oriented environment among employees and customers.

Second, independent food and grocery retailers understand the communities they do business in not only because they live in them but also because they play a major role in them. Go to most U.S. cities and ask who is on the city or town council, who the leaders of the local Chamber of Commerce and civic clubs are, and its more than likely the name of a local grocer or two will be among them.

Independent grocers also tend to be the first members of a community to support local charities, schools and other community organizations with donations, food drives for the hungry, letting local Girl Scout troops sell cookies out front of the store, holding free health fairs, and so much more.

Third, independents are the original local marketers and merchandisers. Long before the terms "buy local" and "sell local" were formally coined (the hottest concept among numerous chains at present), U.S. independent grocers were doing just that: buying fresh produce from local farmers if available and selling it in their stores; stocking specialty, gourmet and natural foods items produced locally, often being the first of any retailer to do so.

For example, numerous successful specialty and natural foods companies got their start by first getting there brands and items on the shelves of independent grocers in the cities where they operated, then leveraging the success in these stores to then get into chain supermarkets.

Bare Naked Granola, which was recently sold to mega-food company Kelloggs by the two young Connecticut, USA entrepreneurs who started the brand some years ago, got its start on the shelves of local multi-store independent Stew Leonard's, when shortly after creating the granola product the two owners waited outside the store for Stew Leonard, the company's founder and president, with a bowl of the granola and a carton of milk. Leonard arrived, the two young granola-makers convinced him to taste the product, he liked it and gave them a multi-case order, which sold out in a week or so in his store. As they say: The rest is history.

Lastly, independent food retailers are innovators and customer service experts. Specialty and gourmet foods started out not in chain stores but in independent food stores. Natural and organic foods were introduced in America by independent natural foods retailers and Co-ops. It took years after before even the most progressive chains started carrying what were then called "health foods."

The list of innovations by independent grocers in the U.S. goes on: fresh, in-store prepared foods, imported specialty foods, specialty wine merchandising, building communtiy meeting rooms in their stores, creating child care centers in-store to make mom's shopping easier, taking credit cards in-store (the first loyalty card was introduced by an independent rather than a chain as well), and so many more firsts.

In terms of customer service, independents shine. When chains started having customers carry out their purchases to their cars themselves unless they asked for help, many independents did the opposite, creating a policy that their stores would carry out all customer purchases unless the shopper ask the clerk not to. This provided numerous independents with a competitive advantage, since many consumers would even rather pay a bit more for groceries if that happens to be the case and have them carried out to their cars for them.

Home grocery delivery also was invented by independent food retailers. In the 1950's through the 1970's most independent grocery stores and supermarkets took customer orders over the telephone and then delivered them to the customer's home. This started to go away with many independents in the 1970's, but others just kept on doing it, some eventually changing to a fax-based and then Internet ordering process. Others brought it bakc using the newer technologies.

Today's online ordering and home delivery grocers, along with chains like Safeway and SuperValu that offer the service in parts of the U.S., are just using a variation of something independents have generally always done in the U.S.

We could go on about the innovations in merchandising and customer service independent grocers have made in the U.S.--including being the leaders in specialty, gourmet, natural, organic and local foods marketing, merchandising and selling.

However, today's Bend Bulletin newspaper, based in the Oregon USA city of Bend, has a short piece in which it talks about how that Pacific Northwest city's independent and smaller-sized grocers are competing--and often winning--against national and regional chains.

The piece profiles four independent grocers: A small-store independent grocer, a small-store natural foods operator, a larger-size natural foods grocer, and a produce/specialty foods market.

Each of these three food retailers, despite their respective niches, have various things in common. The one element all three have in common in spades is they have created loyalty among their customers. This is a loyalty that goes beyond price and convenience; its brand building.

Read the Bend Bulletin piece's summaries of the four Bend Oregon independents: Devore's Good Food Store, Riley's Market, Nature's, and the Produce Patch (pictured at the top of the piece) here. There's also a slideshow at the link where you can view photographs of the four stores.

The innovation, attention to customer service, and loyalty creation these four Oregon independent food and grocery retailers have achieved is symbolic of what the thousands of successful independents are doing across the U.S., from California in the west, Georgia in the south, to Pennsylvania and New York City in the east.

Although it isn't easy being an independent out there, especially in the current down economy, U.S. independent food and grocery retailers as a whole are doing better currently than at anytime in history. That says much about innovation, a focus on community, customer service and building loyal customers one at a time, doesn't it?

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