"You've got the big box stores on one end, the smaller independents in the middle and on the other end the pharmacies, convenience stores and others also selling groceries," Ken Hubbard says in describing today's Birmingham, Alabama retail food and grocery retailing market.
Over the last 10 years, Wal-Mart, Inc. has been building and opening Supercenter after Supercenter in the Birmingham market, making it the number one seller of food and grocery products today in that market, according to locally-compiled statistics.
In addition, discount retailer Target has been adding stores in the market as has the very successful Florida-based Publix supermarket chain. Then there's longtime region market share leader Bruno's supermarkets, which is growing once again, and the famous southern USA's Piggly-Wiggly chain, along with all of those other format retailers Ken Hubbard describes.
Then there's Hubbard's own seven-store Western Supermarkets, the hometown multi-store independent grocer. Despite all this competition, including from mega-Wal-Mart, Hubbard, like numerous of his fellow independent grocers throughout the U.S., is surviving and doing well.
Hubbard's Western Supermarkets is surviving and even thriving by focusing on those key things a locally-based food retailer can do best, which include offering superior, personalized customer service, along with product selections customized to local shoppers needs, tastes and desires. The independent generally knows these local consumers best because he lives and works among them daily.
A key to Western Supermarkets' success is that it customizes elements of the design and merchandising of each of its seven stores based on the neighborhoods they're located in. For example, a number of the stores feature extensive wine selections, which draw customers not only from the neighborhood, but also from throughout Birmingham and even neighborhing cities. Western Supermarkets publishes two wine newsletters as part of its wine merchandising program, the Wine Celler, pictured above, and another newsletter named the Grape Press, which you can view here.
Another example of this localized merchandising is that three of its seven stores have "The Original Soupman" gourmet soup bars in them. There are numerous other examples of this neighborhood marketing and merchandising, which is one way the multi-store independent competes with the big chains without trying to match them on price.
This prescription--service, niche marketing and localization--is the same formula allowing thousands of multi-store and single-store independently-owned and operated supermarket retailers to continue to succeed in the U.S. despite the continued competitive pressure from big discounters like Wal-Mart and Target, warehouse clubs like Costco and BJ's, giant national supermarket chains like Kroger, SuperValu and Safeway, and mega-regional chains like Piggly-Wiggly, Bruno's and Publix in the Birmingham, Alabama market.
Birmingham-based Western Supermarkets is 60 years old this year. Ken Hubbard, who worked for the local supermarket chain's original owners as a bag boy in 1960 while attending college, and a partner bought the company in 1987. A little later Hubbard bought out his partner, becoming the sole owner of the seven-store hometown mini-chain.
Roy L. Williams, a staff writer for the hometown Birmingham News newspaper, profiled Ken Hubbard and Western Supermarkets in yesterday's edition of the paper. Below is that profile of the 60-year old successful multi-store independent grocer in a market full of white hot competition, with numerous retailers of various formats all after a bigger share of shoppers' food and grocery dollars.
Western Supermarkets hits 60-year milestone: 7-store chain puts focus on service
By Roy L. Williams: Birmingham News staff writer
Ken Hubbard earned some of his tuition to the University of Alabama in 1960 by working as a bagger at Western Supermarket's Five Points West store.
Today, Hubbard is now sole owner of the seven-store chain that this fall will mark 60 years in business - a milestone that comes amid the toughest operating environment seen in decades for the grocery industry.
Hubbard, who along with former partner Ed Goodwin bought the company from co-founder Inos Heard in 1987, says Western is managing to weather what he calls the toughest economic storm of his career, brought on by stiff competition from bigger rivals and soaring gasoline and wholesale food prices that have pinched grocery margins.
"Despite it all, we've been blessed to experience overall same-store increases over the last year or so," said Hubbard, who bought out Goodwin in 1996.
He didn't release sales numbers for the chain. Darwin Metcalf, Western's president and chief operating officer, said Western's value-oriented FoodSmart stores in the Festival Center on Crestwood Boulevard and Keystone Plaza on U.S. 31 in Pelham have especially benefited as consumers have grown more cost-conscious.
Hubbard acknowledged that Birmingham's grocery landscape has changed over the past decade since Bentonville, Ark.-based Wal-Mart Stores Inc. began adding supercenters that sell groceries. The world's biggest retailer has commanded the No. 1 market share for groceries in the area Birmingham for several years now, according to the Shelby Report, a Georgia-based grocery industry research firm.
In addition, discount retailer Target and Florida-based Publix Supermarkets have expanded their presence in Birmingham in an attempt to wrest market share away from long-established players such as Western, Bruno's Supermarkets and Piggly-Wiggly.
"The grocery market in Birmingham is much more fragmented than it used to be," Hubbard said. "You've got the big box stores on one end, the smaller independents in the middle and on the other end the pharmacies, convenience stores and others also selling groceries."
Recent months have added the challenge of surging prices for grocery staples such as milk, eggs, rice and items made from corn. Consumer prices for food items have been rising at the fastest pace in 17 years, putting pressure on operators.
Western has managed to survive by sticking to its roots, said Jack Taylor, the Joseph S. Bruno professor of retailing at Birmingham-Southern College.
"Bruno's used to be like that when run by the Bruno family," Taylor said, referring to the Birmingham-based grocery chain that once dominated the area's grocery business. "When Bruno's was bought out by KKR (an investment firm) in the early 1990s, that's when the chain began to struggle."
After a period when it was controlled by a sister firm based in South Carolina, Bruno's operations are again based in Birmingham. After the return to Birmingham, executives pledged to strengthen service, refocus the product assortment and improve the decor in the chain's stores.
Unable to compete on size, Hubbard said Western has focused on customer service. Half of its full-time employees have been at the company 10 years or more and all of the general managers of its seven stores have been with Western at least 20 years, he said.
Taylor said Western "isn't the cheapest store," but staying small allows the chain to focus on meeting customer needs.
"I bet the meat market managers at Western know regular customers by name, something you can't get at the big chains," Taylor said.
Western has also focused on making each of its seven locations cater to the communities they serve, Metcalf said. Western converted a store at 7737 Second Ave. South into a concept called The Village Market to meet the needs of East Lake and Roebuck residents who wanted a neighborhood market, he said.
"It's more of a market concept," Metcalf said. "It's not so much what we carry there, but how much. We may carry turnip greens or fruits by the pallet load at certain times."
The Mountain Brook location at 2717 Culver Road is known for its wide assortment of 3,000 wines, which draws patrons from as far away as Mobile and Huntsville.
Hubbard, whose son Brett serves as Western's director of deli and floral departments, said he is confident Western will be able to weather its latest economic storm.
"We plan to be here for a long time," Hubbard said. "We have no plans to add any new locations. We will just focus on continuing to provide better service at our existing locations.