Monday, September 29, 2008
Small-Format Food Retailing Memo: Wal-Mart Studying Second Small-Format Grocery Store Concept; Inside Marketside One Week Before the First Stores Open
U.S. & Global Economy Memo: U.S., Global Markets in Flux; Wall Street and Main Street Faced With Uncertainty
Stocks plummet in largest one-day point drop ever (AP)
Saturday, September 27, 2008
Food Trends Memo: 'Let Them Eat Cupcakes:' Cupcakes Are So Popular They Even Beat Out 'Financial Crisis' Says Google Trends
You know, the financial crisis President George W. Bush, Secretary of the Treasury Henry Paulson, Presidential candidates Barack Obama and John McCain, and U.S. Congressional leaders of both parties are saying is so serious that if a $700 billion bailout package isn't passed immediately by Congress, signed by the President and implemented right away could, in the less than eloquent phrase uttered by President Bush at the end of the financial crisis summit meeting he held at the White House on Thursday, result in "This sucker (the U.S. economy) going down."
Based on data from "Google Trends," the analytical tool provided by Google.com, which shows and ranks the most popular searches people are doing on Google, few Americans are "googling" the term "financial crisis" on the popular search engine
Mother Jones magazine was curious if Americans were going to Google in throngs in order to search and find out about the financial crisis which many serious people are saying could be the modern day version of the 1930's Great Depression, which was the most serious economic collapse in U.S. history.
Therefore, last Thursday Jonathan Stein of Mother Jones went to Google Trends and set the function's time period to September, 2008 to see what if anything Americans were searching for more than "financial crisis." By the way, anybody can use Google Trends. We do often.
And guess what writer Stein found Americans were far more interested in learning about in percentages far exceeding searches about the "financial crisis?"
The number one ranked search for September so far isn't the "financial crisis," nor even "economic crisis."
Rather, the overwhelmingly most popular search on Google thus far in September is for "cupcakes," that delicious mouth-sized cake treat that's been becoming one of the hottest food (and more specifically dessert) trends in the U.S. for the last few years.
As you can see in the chart at the top of this story, "cupcakes" (the gold-colored trend line), "sex toys" (green line) and "wizards" (reddish-brown line) are all overwhelmingly far more popular search terms on Google.com in September than "financial crisis" is.
In fact, according to Google Trends, Americans also are interested in the following topics, after the top three above, far more than they are in "financial crisis." Those topics are:
"Bristol Palin": searched for 17.5 times more often than "financial crisis" in September; "Puppies": 24.4 times more; "Vacation": 28.6 times more; "Fashion": 44 times more than "financial crisis"; "Fantasy Football": 44 times more "Baseball": 50.5 times more"; and Sex": searched 292 times more than "financial crisis."
If we recall our history correctly, a few century's ago the very aristocratic former Queen of France was reported to have said in response to a question about what her country should do during its time of severe economic crisis -- so severe in fact that the people were on the edge of revolt -- "Let them (the people) Eat Cake."
In the case of cupcakes and Google Trends' analysis, it appears that in this current financial and economic crisis in the United States, the desire to eat -- and learn more about cupcakes -- is a grass roots movement rather than a top-down dictatorial edict like the one given by Marie Antoinette, who met her fate at the receiving end of a guillotine.
This isn't the end of the story though.
Before you (readers) get bent out of shape about the intelligence and priorities of the American people -- cupcakes and wizards over financial crisis for example -- a Mother Jones reader points out in the comments section of the publication his theory for why "cupcakes" is so much more popular of a searched topic than "financial crisis."
Doing a little research on Google Trends himself, Andrew Hires says the reason "financial crisis" rates so far below cupcakes (and all the other topics we listed) is because Americans using Google are using the search term "bailout" to read and learn about the current financial mess instead of "financial crisis. Here's Mr. Hires' comment on Mother Jones:
"It's because they are all searching for the term "bailout". 5x the cupcakes rate."
Posted by: Andrew Hires on 09/25/08 at 3:43 PM Respond
You will notice in his comment he provides a link to his Google Trends analysis, which does show "bailout" having five times the search trend rate than does "cupcakes."
We tend to agree with him on this. After all, most Americans know there is a financial crisis -- they don't need to look it up on Google. But what they are very interested and concerned about is the Bush Administration's proposed $700 billion "bailout" of the Wall-Street financial firms. Like the man once said about government: "Follow the money." For Americans "the money" (Their tax dollars) is in learning more about the proposed "bailout" rather than searching for generic information about the "financial crisis."
But with all this said, the fact American consumers are so interested in cupcakes is in and of itself a very interesting and potentially valuable piece of data.
If you are a supermarket chain vice-president or director of bakery, an in-store bakery category manager at a supermarket chain or independent, a bakery department manager in a supermarket, an executive of a bakery chain or the owner of a single bakery, or in the baked goods manufacturing business, the response to this information should be rather clear -- MORE cupcakes. Make more varieties, build more in-store bakery cupcake displays, cross merchandise cupcakes in other parts of the store, promote cupcakes...and more. Get on the great cupcake bandwagon, in other words.
It's clear Americans are very interested in cupcakes. We suggest those of you in the baked goods business, at whatever segment or level, make it easier for these very interested consumers to buy and eat more cupcakes.
We'll even suggest a sign to go with one of those in-store bakery cupcake displays we suggested above. That sign would have a picture of Democratic candidate for President Barack Obama on the left and a picture of his Republican challenger John McCain on the right; with an American flag pictured between them.
Below the pictures and the American flag, the text would read: "Let Them Eat Cupcakes."
And of course, the cupcakes being featured in the display would have three colors of frosting: red, white and blue.
After all, with a financial crisis in progress and the U.S. Presidential election just a little over a month away, consumers need a little food indulgence. (A little wizard and sex toy indulgence it appears as well, according to Google trends.)
Cupcakes can be a very comforting and affordable indulgence. They're sweet treats that don't do too much damage to either the pocketbook or the waistline.
And, as we now know, cupcakes are currently top-of-mind among many American consumers. In fact, we bet at least one or two of the shoppers among the many who will buy the cupcakes on that "Let Them Eat Cupcakes" in-store display will be among the millions who've searched "cupcakes" on Google.
Wednesday, September 24, 2008
Retail Memo: Whole Foods Market, Inc. CEO John Mackey Named One of the Global-75 Most Influential People For the 21st Century By Esquire Magazine
Mackey is featured in Esquire's September issue, along with 74 others from throughout the globe, who Esquire says are the pick of the crop of individuals who have been, are, and will be the most influential people of the 21st century.
Here's what Esquire writes about Whole Foods' John Mackey in its entry about him as one of the most influential 75:
September 23, 2008,
John Mackey: Chairman and CEO, Whole Foods Market, 55 · Austin
"John Mackey didn't invent the organic-food movement. He didn't even invent the original Whole Foods Market, which started as a single store in New Orleans in 1974, four years before Mackey and a partner started their own natural-foods store in Austin. We're okay with that. Some people's importance comes from their innovations; others matter because they are popularizers--they take a small idea and make it big and mainstream. And in so doing, they change the world. That's John Mackey.
He took a cult concept embraced primarily by foodies and hippies--that fresh, local, organic food was better for you than the stuff you bought from the Safeway--and turned it into a national religion. Now, of course, the word organic is being stretched well beyond the original definition of pesticide-free produce, Wal-Mart (!) is diving into the business with both feet, and even the Chinese are growing food that is technically organic--which they then ship to the United States. In the coming century, it is not inconceivable that--due to John Mackey--most of the food we eat will be organic and fresh, if not necessarily always local."
[Here is a link to the entry on the Esquire magazine website.]
John Mackey is the only member of the retail food and grocery industry (in the whole world) named by Esquire to its 75 most influential people of the 21st century list. In fact, he's the only one we can find who represents the food and grocery industry in general -- which isn't so bad since after all we are talking a total of 75 "most influential" people from every field and walk out of all the extremely influential people on the planet.
Mackey is listed in Esquire on its first page of the top 75. He shares that first page with the American dynamic duo of politics, Bill and Hillary Clinton; Member of parliament David Cameron, the leader of Britain's Conservative Party and the man many are calling the next Prime Minister; the California-based novelist and writer Michael Chabon; and former Russian President and current Prime Minister Vladimir Putin.
The others, in addition to John Mackey, rounding out the first ten listed are: Ratan Tata, the chairman of Tata group, India's largest corporation; theoretical physicist Lisa Randall; microbiologist and entrepreneur Greg Ventner; Tony Hayward, the CEO of British Petroleum Co.; and the collective "The Future of the World," which Esquire describes in that entry in this way: "Think we're all going to hell in a handbasket? Think things can't possibly get any better? The 43-year-old political economist and environmental activist begs to differ. You can find out who that 43-year old political economist and environmental activist is here. The one Esquire depicts as representing the future of the world.
[You can view the list of all 75 of Esquire's most influential people of the 21rst century here.]
[Additionally, you can view a slideshow of the 75 here.]
Below is what the editor's of Esquire say about there search and naming of the 75 most influential people of the 21st century:
The 75 Most Influential People of the 21st Century
"We set out to find them across every field of endeavor, the people who are bending history right now. It was an impossible task, but the result is a determined, defiant, earnest, brilliant, philanthropic, space-going, smoking-hot group, and together they are writing the first chapter of the rest of our lives."
For Whole Foods' CEO John Mackey, at this point in time in the 21st century, he finds himself and his company recently experiencing (in its latest quarter) a 42% plunge in net income, the lowest stock share price in modern history for Whole Foods, having recently has to fire 40-plus headquarters employees, and with the U.S. Federal Trade Commission continuing to breath down the grocery chain's neck regarding its acquisition last year of rival Wild Oats Markets, a deal Mackey says he wouldn't do again if he had a chance to rewrite history.
Never before in his trail-blazing food retailing career does John Mackey need all that influence more than he does right now.
Ethical Foods Memo: Pro & Con On California's Proposition 2; Which Would Eliminate the Use of Battery Hen Cages in the State's Egg-Farming Industry
Small-Format Food Retailing Memo: Wal-Mart to Open Small-Format, 'Small-Mart' Marketside Stores in Arizona on October 4
As our readers know, we've covered Wal-Mart's Marketside format ('Small-Mart's being a term we coined for the stores) development extensively, beginning in September of 2007.
The Arizona stores are the first for Marketside units for Wal-Mart. Wal-Mart thus far plans to open two Marketside stores in Southern California, one in San Diego and another in the nearby city of Oceanside, according to our sources. Wal-Mart has not publicly announced the two California locations.
Additionally, we've reported Wal-Mart has plans to open more Marketside stores in Arizona -- besides the first four opening in 11 days -- as well as doing the same in Southern California, along with opening some of the small-format grocery and fresh foods markets in Northern California, particularly in the San Francisco Bay Area. Also, Wal-Mart has looked at opening a Marketside store in the Reno area, in Northern Nevada.
Below is the report from Fresh & Easy Buzz. Natural~Specialty Foods Memo is working on an analysis piece regarding the Marketside stores opening on October 4. We hope to have it published soon.
From Fresh & Easy Buzz: Wednesday, September 24, 2008
Breaking News: Wal-Mart to Open its Four Marketside Food and Grocery Markets in the Phoeniz, AZ Metropolitan Region on October 4
As we've been reporting on Fresh & Easy Buzz for months, Wal-Mart, Inc. has planned an early Fall, 2008 opening of its small-format, combination grocery and in-store fresh, prepared foods Marketside stores in the Phoenix, Arizona Metropolitan region.
Wal-Mart has now announced and confirmed on its http://www.marketside.com/ website the specific date the four Marketside grocery markets will open in the Phoenix Metropolitan region cities of Gilbert, Mesa, Chandler and Tempe.
All four Marketside stores are set to Open on Saturday, October 4, just 11 days from today, according to the announcement on the Marketside website. [Click here to see the announcement (look in the right corner) on the website. Click here for maps showing the location of each store in the four Arizona cities.
Click here to read the rest of the story from Fresh & Easy Buzz.
[Editor's Note -- the photos: The photograph at the top is of the Wal-Mart Marketside store in Mesa, Arizona. The picture was taken in late August, 2008. The second photograph shows what the inside of a Marketside store looks like (at least a small portion of it). Additionally, the aprons the three clerks in the picture are wearing are the Marketside store employee uniforms. The photo is from the Marketside.com website.]
Monday, September 22, 2008
Small-Format Food Retailing Memo: Two Dozen Florida USA Shoppers Who've Been Waiting Two Years For An Aldi Store to Open Get Their Day On Thursday
Sunday, September 21, 2008
Food Safety Memo: Number of Chinese Children Sickened By Malamine-Contaminated Milk Doubles to Nearly 13,000...and Probably More
New Product Trends Memo: Less is More: Salt & Pepper-Flavored Ready-to-Eat Snacks One of the Hottest New Product Trends in the Snack Foods Category
Friday, September 19, 2008
Small-Format Food Retailing Memo: This Independent Combines C-Store Convenience With Fresh Foods, Groceries and A Secret Weapon -- Lots of Beer
Another independent, entrepreneurial retailer has decided the small-format hybrid convenience-grocery format might just be the future of food and grocery retailing. And like all good independents, Navid Tony Hoomanrad, who recently opened his Hyde Park Market neighborhood-oriented grocery and convenience-style store at 4429 Duval Street in Austin, Texas has added his own niche element to the format.
Hyde Park Market features a combination of traditional convenience store items, along with fresh produce (including organics), upscale Boars Head brand deli items, a refrigerated case devoted to quality ready-to-eat prepared foods items like Green Cart brand sandwiches, a selection of basic, specialty and organic grocery products, non-foods including a selection of hardware items, and Tony Hoomanrad's secret merchandising weapon -- beer -- and lots of it.
The independent grocer's strategy for his Hyde Park Market was to create a neighborhood store that was neither a traditional convenience store or a typical neighborhood grocery store. His goal: Offer in a small-format what he calls a "one-stop shop for fresh foods and grocery products that rivals anything found in a much larger supermarket. On a limited assortment scale of course.
He also believed offering an incredible variety of beer brands and styles could serve as a unique point of differentiation for his store, along with giving it a reputation for offering something special from day one. It also helps that Austin is a major beer drinking town.
Grocer Hoomanrad says he met with each of his eight beer distributors, ultimately deciding to order every domestic and imported beer brand, variety and packaging option -- single beers, 6-packs, barrels, you name it -- each one of them offered.
The result: currently Hyde Park Market is offering 525 different types of beer -- from Budweiser and Miller to craft beers and imports. In fact, although the store has only been open for a short time, it's believed to offer the second-most varieties of beer for sale than any other store, of any other size, in the city of Austin.
And remember, Austin just happens to be home to two of the biggest and best upscale food retailers (headquartered in Texas), both major beer category players, in the United States: Whole Foods Market, Inc. and upscale HEB Central Market.
No minor beer sellers these two retailers are, especially at their respective flagship stores in Austin. According to a local beer distributor who's in a position to know, Whole Foods' top beer selling store in Austin has about 450 varieties of beer, while Central Market clocks-in at about 360 or so.
The distributor says the only-recently opened Hyde Park Market isn't the number on beer variety retailer in Austin...yet. But it's close. That honor goes to a specialty beverage retailer named Specs, which offers about 550 varieties of beer, he says.
But grocer Hoomanrad is only 25 varieties behind Specs, which has been around for much longer, for the honor of the retailer offering the most varieties of beer in beer-drinking Austin, Texas.
And since the beer distributor says Tony Hoomanrad asks his beer sales reps each time they're in the store if they've got in anything new that his store isn't carrying -- and usually orders whatever beer it is if they do -- we wouldn't be surprised if Hyde Park Market, one of the latest entrants into small-format hybrid grocery and convenience store retailing, very soon becomes the number one beer variety seller in all of Austin -- along with offering lots of fresh foods, groceries (including specialty and natural) and other grocery store products, along with a mix of traditional c-store items (including a fueling station outside), all blended into a hybrid formula in a small-format store.
Thursday, September 18, 2008
Small-Format Food Retailing Memo: Giant Food Stores To Open its First Small-Format, Hybrid Convenience-Grocery Store: 'Giant To Go'
Giant Food Stores, which is owned by the the Dutch supermarket company Royal Ahold just as its sister company, Landover, Maryland-based Giant Food is (the chains are operated separately though), plans to build its first Giant To Go combination convenience and grocery store, which will be 4,442 square feet, at a new retail development called Richmond square at the northwest corner of Fruitville Pike Road and route 722 in Landcaster, Pennsylvania.
The small-format hybrid convenience and grocery store will be the first of its kind for Giant Food Stores, which operates about 140 supermarkets under the Giant Food Stores, Martin's Food Markets and Foodsource banners in Pennsylvania, Maryland, Virginia and West Virgina. Royal Ahold owns chains that operate about 700 supermarkets in the U.S.
At 4,422 square feet, the Giant To Go market actually is in part what we define as a micro small-format food and grocery store (under 5,000 square feet), although because it will be part traditional c-store (which at 4,422 would be as large or larger than an average one) and part grocery store, we will call it small-format.
The c-store cum grocery store will feature fresh produce and meats, a deli which will include grab-and-go ready-to-eat and some ready-to-heat prepared foods, an in-store fresh bakery and an assortment of basic shelf-stable food and grocery items, along with some of the food and non-food products typically associated with traditional c-store merchandising.
The 4,422 square foot hybrid convenience and grocery store also will have an 8-pump gasoline fueling station outside.
A Giant Food Stores' spokesperson said the Giant To Go store is a prototype for the chain. If it's successful the company is likely to build more of the stores in its market regions.
Construction of the Giant to Go small-format combination convenience and grocery store at the Richmond Square retail development -- which is a "village -style" designed 30,000 square foot retail and residential mixed-use development featuring stores and offices on the ground level and apartments on top -- hasn't started yet.
However, the Giant Food Stores' spokesperson told Natural~Specialty Foods Memo plans call for construction to start soon, with a target opening date for the store by the end of the first quarter of 2009.
Other retail tenants in the new Richmond Square center will include a bank, two restaurants (Asian and Italian), a dry cleaners and a couple others, along with the office buildings, according to its developer.
The Richmond center is a part of a larger development at the location. That development includes single family homes as well as additional retail and office space.
Giant Food Stores' new Giant To Go combination convenience store-grocery store format fits into what we classify as the "hybrid grocery-convenience store format."
It's a cousin to but different than small-format grocers like Tesco's Fresh & Easy, Safeway's "The Market," Aldi, Sav-A-Lot, Wal-Mart's Marketside, Trader Joe's and Giant Eagle's Giant Eagle Express, for example. It's closet to Giant Eagle Express, which unlike the others listed above adopts some elements of traditional c-store merchandising in its concept. All of the formats listed above are convenience-oriented though, which is an element they too borrow from c-store retailing.
Giant To Go also is different than what we've termed the small-format "eco-convenience" or Econvenience hybrid convenience-grocery stores. These stores which we've written about --such as Green Spot and Conscious Convenience -- combine elements of c-store retailing and grocery retailing but also take major elements from natural products retailing, having a "green" or environmental focus to the stores.
Wawa food stores is a good example of a store we think Giant Foods' Giant To Go is likely to emulate in many ways. As we've written about, Wawa is a hybrid convenience and grocery market which puts a major merchandising emphasis on fresh foods -- produce and prepared foods particularly -- along with selling basic groceries and specialty items. The stores also have fueling stations and sell some traditional c-store items as well. Interestingly, Wawa is based in Pennsylvania just like Giant Foods Stores is.
Another example is Parker's Convenience Stores, which we wrote about earlier this week.
We simply call these chains -- Wawa, Parker's and a few others -- hybrid, upscale convenience and grocery markets or stores. This is where we think Giant to Go will fit in the small-format, convenience-oriented food and grocery retailing revolution happening in the U.S. and elsewhere globally.
Giant Food Stores has developed numerous upscale design and merchandising features for its Martin's Food Markets banner (and its newer Giant banner supermarkets), including attractive upscale-looking departments like produce, deli/prepared foods and bakery, along with top-quality natural-specialty foods, fresh meat, produce and prepared foods merchandiing programs. As a result, it can export this expertise to Giant to Go in whatever doses it thinks are appropriate.
Dutch Royal Ahold-owned Giant Food Stores of Carlisle, Pennsylvania is now joining the other participants in this revolution with its new Giant to Go format. It seems "GIANTS" are even going small (format). Stay tuned, as there will be many more new entrants to the party.
Small-Format Food Retailing Memo: First 'Urban Fresh by Jewel' Small-Format Food and Grocery Market Opens Today in Chicago's Lincoln Park Neighborhood
Wednesday, September 17, 2008
Small-Format Food Retailing Memo: 'USA Today' to Open 'USA Today's' Travel Zone Convenience-Oriented Micro Small-Format Stores in Airports in America
Well, it's not really a joke that's going around.
In fact, it's not a joke at all. We just made it up for an opening paragraph.
Gannet Company, which owns USA Today (the newspaper), today opened its first USA Today's Travel Zone micro small-format retail store inside the Detroit USA Metropolitan Wayne County Airport.
A second micro-small-format USA Today's Travel Zone store is to open before the end of the year in New York's LaGuardia Airport, along with not one but two stores opening in the Indianapolis, Indiana USA Airport in November of this year, according to Christy Hartsell, who is the director of brand licensing for USA Today. Additional stores are planned in other airports as well.
Hartsell says the airport stores will feature a wide variety of products, including beverages, snacks, candy, sundries, reading materials (lots of display space for USA Today the newspaper we expect), travel-related items and other related goods. The stores also will feature prepared foods items in the form of ready-to-eat grab-and-go-style snacks.
Here's how Ms. Hartsell describes the strategy behind the USA Today's Tavel Zone stores:
"USA Today is synonymous with travel and convenience. Therefore, "USA Today Travel Zone stores create a new opportunity for travelers to get the news and information they need when away from home."
Makes sense. USA Today (the newspaper) is synonymous with travel because it is everywhere travelers go. And it's synonymous with convenience because its editorial style is to feature shorter stories than most newspapers do, along with designing the paper and its website for quicker reading.
USA Today (the newspaper) won't actually operate the stores. Rather, Under a license agreement, HDS Retail, the world’s largest travel retailer with more than 4,000 stores in 18 countries, will operate the stores, says Ms. Hartsell.
She says USA Today wanted to create an extension of its brand and therefore decided the micro small-format convenience-oriented stores located in airports would make a good fit based on the USA Today brand image.
What we think
We certainly see numerous synergies between USA Today (the paper) and the stores, particularly with having them in airport locations.
Additionally, we think the stores offer numerous cross-marketing and merchandising opportunities with the newspaper -- both its online and print additions.
USA Today (the newspaper) has long associated itself with travel. The paper version is available all over America's airports, is left for free in front of the doors in most medium-range to higher-end hotels, and offers lots of content about travel and weather conditions for its readers, including business travelers.
The online edition is full of travel related content as well, along with being involved with numerous travel-related content providers and travel companies.
We think the combination of offering consumables, reading material and sundries, along with other goods, in the stores also is interesting. While numerous airport stores do this already, they don't have the potential tie-ins with a newspaper like USA Today (the store) has the potential to exploit via USA Today (the newspaper).
For example, ads for the micro small-format airport stores can be placed regularly in USA Today (both the paper and online editions), along with coupons for discounts (and introductory free) beverages and related items.
Promotions can be conducted as well using the paper as a marketing venue, especially the online version. For example, how about buy a beverage and snack at the store, get a free copy of USA Today (the paper) promotion to start. Ads and coupons placed in both the print and online editions.
The potential for good marketers is near endless really.
Of course, the success or failure of the stores will depend on executing the retailing fundamentals: location, merchandising and price, along with a few other key variables.
USA Today does have an experienced retail operations partner in HDS Retail North America.
We think it's an interesting development though. It also shows the differentiation and growing fragmentation of retailing in the U.S., particularly when it comes to consumables, even if just a few categories within the larger definition. In other words, consumables are increasingly -- in one form or another -- becoming an overall category that nearly every retail format is taking a bite out of, so to speak.
Be it Target selling perishable and shelf-stable food and grocery products in its discount stores, Cost Plus World market selling wines and craft beers (and specialty foods) in its import format stores along with furniture, or Home Depot selling beverages and some snack items in its big box home stores and Office Max doing the same in its office supply big boxes, there's a whole lot of consumables retailing going on -- and not just in food and grocery stores.
NSFM Editor's note: Please note we've coined a new term: micro small-format retailing. We checked extensively and haven't found it used by any other publications or others to date. If you've seen it used, send us a copy of the publication.
And, stay tuned, we've found some other examples of what we are calling micro small-format retailing, including food and grocery.
Our definition: Since small-format food food and grocery retailing generally is defined as stores from about 5,000 (very small-format) -to- 25,000 (high end) square feet. We define micro small-format in food and grocery retailing as about 5,000 square feet and below.
In other types of retail formats, such as drug stores, its all relative. For example, a 5,000 -to- 15,000 square foot drug store is considered average size today. Therefore a micro small-format drug store would be one less than say about 5,000 square feet in our analysis.
The USA Today travel-oriented airport convenience stores are considerably smaller than 5,000 square feet, by the way.
Small-Format Food Retailing Memo: A Professional Chef Turned Grocer Creates A 'Sub-Urban' Small-Format Fresh Foods and Grocery Store in Maryland USA
The U.S. economy may be going to hell in a handbasket (or perhaps shopping cart), with banking failure after banking failure, fast-rising unemployment, soaring food and gasoline prices and other assorted economic maladies, but even such tough times aren't stopping entrepreneurs from opening small-format food and grocery stores.
A case in point: Andre Cavallaro, the former executive chef at the popular Addies restaurant in Rockville, Maryland USA, recently opened a small-format food store, Sub*Urban Trading Company, in nearby Kensington, Maryland.
The food store, which is designed to look like a modern version of the old general store, takes a "green" positioning stance, offering organic fresh meats and produce, along with natural, organic and specialty food and grocery items, with a major emphasis on "locally-produced" products.
natural and specialty grocery items include oils, condiments, marinades, salad dressings and items in numerous other categories. Natural and specialty perishable items are sold in themarkets as well.
Here's what Katie R. from Kensington, Maryland recently had to say about the store in a review on the yelp.com review website:
"The best word I can think of to describe sub*urban trading co. is 'yum'. Then I guess I would use amazingly fresh, organic, and friendly.
But whether I am biting into a warm rustic blackberry tart made with the ripest blackberries for breakfast or a slice of wild mushroom and goat cheese tart for lunch, all I can think of is yum.
How lucky Kensington is to have this new gourmet carryout owned and run by the friendly and knowledge pair, Andre and Alison Cavallaro.
Not only are there fresh pastry items everyday, but produce, dairy, meat, fish, baking items, and a few choice cookbooks. The fresh meats look so inviting - some marinated with fresh herbs; some small portions cooked to go. Many items are supplied by local farmers so it is worth the drive."
Utilizing his experience as a chef, Cavallaro is making fresh, prepared foods a major part of the market, which opened in August. Each day the store features ready-to-eat in-store fresh, prepared food items -- four different selections for lunch and one offering each evening for dinner. All are chef-quality prepared meals made by Cavallaro.
A Natural~Specialty Foods Memo reader who recently talked with Cavallaro tells us the four main statements the small-format food store makes are -- environmentally-friendly, organic, fresh and local.
All paper products used at the store are recycled, all plastic products used in the foodservice operation are corn-based and biodegradable, and all of the fresh produce and meats sold in the store are organic and, when possible, locally sourced.
A central feature of the market are its fresh, prepared foods to go, sales of which our reader says seem to be picking up since the store opened a little over a month ago. Cavallaro hopes to become a destination venue, where shoppers will stop in after work and pick up dinner to take home from his daily rotating menu, along with visiting regularly for take-home or take back to the office lunches.
The market is designed to be a neighborhood store; a store locals will shop daily if possible in the European tradition. Although we doubt if the owner would mind customers from outside the neighborhood.
In fact, our reader says Cavallaro had a strong following when he was executive chef at the restaurant in Rockville, Maryland, saying she expects numerous take-out prepared foods customers will stop in from there and elsewhere once they learn about the small-format combination natural, specialty and fresh, prepared foods market.
For example, Heather C from Rockville, Maryland, another reviewer on yelp.com offers positive comments about the store's fresh, prepared foods, along with other aspects of the market:
"I absolutely LOVE LOVE LOVE this place!!!!!
I've been in a couple times since they've opened and have been so pleased with the atmosphere, the ambiance, the employees/owners, and obviously the products they sell.
The former chef of Addie's, Andre Cavallaro, and his mother Alison Cavallaro, run this "green" and organic minded market. They focus on all organic, sustainable, and local products. On top of all that, all of their bags, to go containers, cups, "plastic" silverware are made from either corn or recycled products and are all biodegradable!!!
I read Libby's response, and often times I shop at Safeway and organic eggs cost $4.99 and to tell you the truth, don't even know where they come from. So I'm happy to buy my eggs at Sub Urban.
I've been telling everyone I know about this place and highly recommend it to whoever reads this!! Check it out, you won't regret those awesome peach turnovers baked fresh every morning or those kick a** savory tarts!!! (I had the beet and goat cheese one the other day....OMG!)
As we often write about, small-format stores offer much opportunity in terms of geography -- they can be located in urban, suburban or rural area -- and format. Such stores can be more upscale natural-organic-specialty like Sub*Urban Trading Company, no frills, deep disconters like Aldi or Supervalu, Inc.'s Sav-A-Lot, or in-between markets like Tesco's Fresh & Easy Neighborhood Market, Wal-Mart's soon to open Marketside and the hundreds of independently-owned small-format food and grocery stores operated by individuals, family's and partnerships throughout the U.S.
Small-format food stores, because of their smaller size and lower cost to get started, also offer an opportunity to independent and entrepreneurs that otherwise would be unable to open a traditional size supermarket because of the expense of doing so. They also are the perfect fit for natural and specialty foods stores offering a specific focus like fresh, prepared foods.
We're seeing a revolution in the U.S., as we frequently write, in small-format food and grocery stores across all formats -- from hard discount -to- upscale organic, prepared foods and gourmet (or a combination of all those) -- despite the poor economy.
The good news is that if these stores can make it now, they can make it nearly anytime. Additionally, if they do make it now, the stores will be well positioned to thrive once the U.S. economy turns around. This is particularly true for natural and specialty foods'-oriented small-format food and grocery markets.
Monday, September 15, 2008
Small-Format Food Retailing Memo: Savannah, Georgia USA's Parker's Convenience Stores: Taking Hybrid Convenience-Grocery Retailing to Upscale Heights
From the Natural~Specialty Foods Memo Editor's Desk: On September 13, we wrote this piece, " Small-Format Food Retailing Memo: The 'Eco-Convenience' Hybrid Store Trend Continues to Emerge: 'Locali Conscious Convenience' to Open First Store," about what we've identified as an emerging trend in the convenience-oriented food and grocery retailing industry -- a retail format we call the eco-convenience or Econvenience store.
This format combines some of the traditional elements of convenience store retailing like limited assortments of basic grocery items, fueling stations and foodservice but takes things in a "green" direction, including taking on the format and merchandising elements of a mini natural foods store.
The eco-convenience format also features far more food and grocery products in general, especially healthy, natural and organic items, than the traditional convenience store does. It also doesn't generally offer tobacco products for sale, which are key sales generators in traditional convenience stores. Further, rather than selling basic beer and wine brands, the eco-convenience stores tend to go more upscale and specialty, offer some conventional products but putting an emphasis on craft beers and specialty wines.
The upscale hybrid convenience-grocery store
Long before the emergence of the eco-convenience store trend however -- as well as long before the emergence of hybrid small-format food and grocery stores like Tesco's Fresh & Easy Neighborhood Market, Giant Eagle Express, Safeway Stores' "The Market" format and Wal-Mart's Marketside, the first stores of which are set to open in a few weeks in four cities in the Phoenix, Arizona Metropolitan region -- their was, and continues to be, what we call the upscale hybrid convenience-grocery store.
This format is best typified by Pennsylvania-based Wawa, Inc., which operates about 400 upscale hybrid convenience-grocery stores in the eastern Unites States. Wawa stores offer fueling stations and tobacco products like traditional convenience stores do, along with offering a limited assortment of basic grocery items (Wawa's limited assortment is more extensive than the average C-store).
However, the retailer also sells fresh produce in its stores, including some organic produce, offers a limited selection of natural, organic and specialty food and grocery products, and puts a major emphasis on quality fresh, prepared foods (foodservice) rather than the typical "belly filler" fair the traditional convenience store sells. Premium coffees, quality fresh baked goods and other premium and specialty offerings are a part of the Wawa stores' merchandising mix.
Wawa also does all this in what is a far more upscale designed retail store than that of the traditional convenience store.
Wawa is a pioneer in this niche, having converted its stores to this more upscale hybrid convenience-grocery store format in the 1980's. It's continued to refine the approach, and in the case of many of its newest stores it's going even more upscale in design, look and merchandising.
Parkers Convenience Stores
Wawa isn't alone in pioneering this format. Another pioneer in upscale hybrid convenience-grocery store retailing is Savannah, Georgia-based Parker's Convenience Stores, which we've written about before in Natural~Specialty Foods Memo.
Parker's primary hybrid convenience-grocery store banner is Parker's Convenience Stores (interior pictured above), an upscale version of the traditional convenience store with elements of a specialty foods store tossed in the mix. Quality foodservice is a major emphasis in the stores.
Parker's takes an even more upscale specialty-gourmet retailing approach in one of its banners, Parker's Market Urban Gourmet store (pictured above), which if you've been to or seen interior pictures of Safeway's "the market by Vons" in Long Beach, California, looks similar in many ways.
Parker's opened its first Parker's Gourmet Market convenience-oriented grocery-convenience market in Savannah, Georgia long before Safeway created its "The Market" format. The first and currently only small-format Safeway-owned "The Market" format store opened in Long Beach in May of this year.
Today's edition of Convenience Store News has a well detailed and written piece about Parker's Convenience Stores. The article, written by Barbara Grondin Francella, discusses Parker's format philosophy, operations and future plans, among other things. The story fits into our current "Small-Format Food Retailing Special Report" theme. Therefore we are reprinting the piece about Parker's from today's Convenience Store News for our readers. Read it below:
Twice as Nice
By Barbara Grondin Francella
Convenience Store News
September 15, 2008
Greg Parker's philosophy about convenience marketing took root during his first retailing experience in 1975, when at age 21 he built a c-store in Midway, Ga. -- and installed expensive paneling on the walls and pricey carpet on the floors.
Customers, he said, would walk in and gasp, "Wow! What is this?"
"I knew nothing about retailing back then, but I knew people like to feel special," Parker related. "That has been the differentiating aspect of our company culture. In everything we do, we try to elevate the customer experience."
The flavor of that c-store with auto service bay, which Parker built as an offshoot of his father's small Amoco Oil distributorship, can be found in the upscale, foodservice-driven Parker's Convenience Stores today. Back then, the young entrepreneur equipped the store with a kitchen, where then-teenager Amy Lane, who is now Parker's chief operating officer, made hamburgers and fries, hot dogs, salads, sandwiches and full, made-to-order breakfasts.
"I didn't think it was so novel at the time," Parker recalled. "I just thought I'd need to create alternate profit centers."
After opening that first store in 1975, Parker didn't take a day off, including Christmas, for three and a half years. "I didn't have time to go see what others in the industry were doing. Now, if I hear of something great happening, I don't hesitate to hop on a plane and go visit."
Still, Parker knew instinctively that developing an outstanding experience for the customer was crucial. "When I was opening my fifth store, my brother said, 'You may be making this too nice for this town.' But I thought, 'You can never go wrong delivering more than people expect.'"
That strategy has worked very well for 33 years. Savannah, Ga.-based Parker Companies' 25 Parker's Convenience Stores; Parker's Market gourmet store; Parker Oil Co., a distributor of BP, Chevron and Parker's own Supron brand gasoline; three Spin City Laundromats; an Urban Attic self-storage facility and a real estate business, tallied more than $150 million in sales last year.
Parker's Convenience Stores, a mix of urban, suburban and rural sites each unique in look, offer standard convenience items and a not-so-standard menu of homemade Parker's Market-branded sweets, sandwiches and salads, some made in the store, others at a commissary store and delivered each day. Gourmet coffee, milk shakes, walk-in beer coolers, 79-cent Quench Zone fountain drinks with chewy ice and "the cheapest cigarette carton prices in town" are presented in an upscale environment."
We rationalize our portfolio of stores and spend when we think we need to," said Parker, who noted the company is very good about keeping its stores up to date.
"It's very important to reinvest in your best performers," he added. "You don't want to be just a harvester. There is a time to sow and a time to reap, and you need to be thoughtful when you are doing both. I have an intense desire to sharpen the saw."
Despite the tough economy, Parker has three new locations slated to open this year in Savannah and Blitchton, Ga., and Bluffton, S.C.
Parker appears to be one of the many c-store retailers looking to take advantage of business incentives included with the taxpayer rebates in the government's Economic Stimulus Act of 2008. A recent CSNews.com online poll found that 14 percent of retailers were already benefiting from the incentives and 36 percent were trying to find a way to take advantage of the incentives. Interestingly, despite a lot of publicity, 43 percent of retailers said they were not even aware of the business incentives in the rebate program.
"The Bush 'stimulus package' -- and I try not to laugh when I say that -- gives us a 50-percent bonus depreciation," Parker noted. Assets that would typically depreciate over five years, at 20 percent per year, may now, for example, be depreciated at a rate of 50 percent in the first year, with the other 50 percent spread evenly over the five years, giving retailers a 60-percent depreciation rate in the first year.
"If you build something now, you'll pay little if any taxes on it the first year. Because your tax estimates are based on the previous year," he noted. "The next year, your required tax estimates will also be lower. Plus, if you have a strong balance sheet, money is cheap now. Building costs are coming down, land costs are coming down and unemployment is up, so labor costs are coming down. It is a great time to build."
New Parker's Convenience Stores measure 4,400 square feet. Upscale in appearance, they feature tiled floors and walls, have an extensive foodservice lineup, "and outrageously nice restrooms," Parker said. Outside, eight multi-product dispensers offer Supron motor fuels.
"Our brand starts with the architecture, which I believe is our greatest art form," Parker explained. "We outspend our competition when it comes to building our stores in terms of materials, design, lighting and landscaping. We spend between $2 million and $2.5 million per location, not including the land cost."
Parker also typically outspends other retailers outside the store. Parker's Convenience Stores have won a number of landscaping awards, unusual in the convenience business. Parker, who studied botany in college, personally selects a new site's planting materials, sometimes opting for three times as much as called for by the landscape designer.
He recently prevailed in a very public, heated exchange with a local planning commission, which wanted him to remove a 300-year-old tree on a piece of property that will hold a new store soon. The community backed him in his efforts to save the tree.
Lush landscaping aside, each convenience store looks different, although Parker is giving them a few common elements now, with a specific look for all the urban stores, the suburban stores and the rural locations. For instance, all rural stores will have low-country architecture, wood siding and metal latticework over the entrance.
If Parker sees something he likes, he'll incorporate it into a store. One unit, for example, features cutouts of people hanging at angles from the ceiling rafters. They are the work of an actor/student, who was learning set design at the Savannah College of Art Design while working part time at one of the stores. One figure holds a hot dog; another is shooting ketchup across the room to go on the wiener.
Parker recently completed a $500,000 upgrade of Parker's Market. (For more on Parker's Market, see "Parker's Market: Convenience Meets Gourmet," at www.csnews.com.)"
Before this, my wife and I did all the design work in that store," he said. "But we went to the opening of a new restaurant and loved the design and hired the designer [Joel Snayd, of Re:think Design Studio] that night. We do most ourselves, but solicit many opinions."
The new design opened up the floor plan by relocating a gourmet coffee center, which had split the store in two, and added a crowd-pleasing mix of materials and elements, including granite countertops, custom lighting fixtures, blackboards for signage and a wine display area using reclaimed wood and old iron piping.
"I can't build anything cost effective," Parker laughed. "I always overspend. I love being creative and artistic, and I'm as passionate about architecture as I am about c-stores. Everything we do, I want people to think, 'Wow.'"
Many Happy Returns
Whether he's overspending or not, Parker is getting a return on that investment. Parker's Convenience Stores rank consistently in the top quartile of all industry performance measures, and Parker's Market rings up millions in sales each year.
The retailer credits these results to a disciplined approach to controlling expenses and a keen focus on gross profit dollars.
"We have the lowest cents-per-gallon break-even point of anyone I know in the industry," he said. "We really pay attention to the details, and we train our people before they step into the store so we don't suffer as many mistakes. It helps to reduce turnover too."
The company pays higher-than-industry-average salaries, offering bonuses for catching honest mistakes ($10); catching and prosecuting shoplifters ($50); turning in a co-worker for stealing ($500); and recruiting another employee who stays one year ($500). Managers' bonuses equal up to 21 percent of their quarterly salaries. Additionally, a six-month bonus of $1 per hour worked is offered as an incentive to keep new employees.
Parker's benefit package includes health and dental insurance and a medical pre-tax spending plan, life insurance, 401K, paid vacation and a YMCA membership.
Parker relies on state-of-the-art retail technology, including Dresser Wayne's InSite and PDI's Enterprise, Focal Point, Applicant and Virtual University software, to keep firm tabs on inventory, each SKU's profitability and human resource functions. Products are scanned into inventory and at sale; Parker's team makes assortment and space allocations based on that data. "We analyze our baskets," he said. "We understand there are five traffic-generating areas of the store -- checkout, fountain and frozen carbonated beverages, cold vault, beer caves and coffee counter -- and we focus on having the right products in the path of the consumer to increase the opportunity for adjacency sales."
Brandon Hofmann, our marketing manager, is the best in the industry, and he has us focused on gross margin dollar contribution," said Parker.
He also said he is "constantly preaching" about gross dollar margin (GDM) contribution. "We can see what the top GDM contributors are by item and understand the importance of space-to-sales ratios for planograms," he noted. "But the real issue is space-to-GDM contribution."
For example, he regularly uses GDM contribution to rationalize products in the cooler. "We ask ourselves where high-dollar margin products are in the cooler door. Are they at eye level? In door 1? Door 2?"
You'll never find the words "loss leader" in any of Parker's marketing plans. "Why would anyone want to lose money on something? We position ourselves as a low-cost provider in fountain drinks, but it's still about growing the category and having the most pennies in the bottom line. We have the lowest cost on cigarette cartons. Our pack prices are not the lowest, but our three-pack special is."
Outside the box, all new stores sell Parker's Supron brand gasoline. If a c-store operator goes to market with beautiful stores at superior locations, customers don't care if he is selling a major gasoline brand, he said. "When you look at the top performers in the country, including Wawa, Sheetz, QuikTrip and others, very few are selling branded gasoline."
In 2001, when he created Supron, Parker wanted it to feel "like a major brand." Customers' initially reacted to it with curiosity. "We did radio and TV, billboard and bus advertising, and the consumer got familiar with the brand," Parker said.