Faced with today's challenging business environment, independents probably couldn't be blamed if they concluded there is no way to survive consolidation, the further proliferation of supercenters and the tight labor market.
But many retailers are successfully dealing with these challenges.
They are getting to know their shoppers better. They are upgrading perishables departments and promoting their niches. Many are forging closer ties with wholesalers.
Ultra Mart, a seven-store independent in Menomonee Falls, Wis., is thriving, despite recent merger-related activity in the market. "It's an ever-changing retail dynamic market," said Robert Farrell, president and chief executive officer of Ultra Mart.
Advance planning and catering to customers' needs have been Ultra Mart's saving grace. "We've become a much better student of our marketplace and our customers in anticipation of changes," Farrell said. Where its stores are facing new competition, the chain is spending more on customer research and outside consultants.
Ultra Mart officials also visit other independents that have faced new competition from Wal-Mart, Bentonville, Ark., and Meijer Inc., Grand Rapids, Mich. They also price product "extremely sharp" and build on what Farrell rates as its top strengths: perishables and service. "Instead of focusing on every weakness, such as nonfood, we look at our strengths and make them even greater," he said.
Garrett Enterprises, Atchison, Kan., is handling supercenter competition by upgrading fresh sections, including major emphasis on home-meal replacement. Although some of its Country Mart and Thriftway stores have separate cold cases in front of the deli for HMR, Dennis Garrett, president, wants to take the successful program to the meat department.
"We're trying to develop meal centers in the fresh-meat department," he said. The planned stand-alone cases would feature ready-to-cook meat combinations. Garrett's current HMR program in the stores' delis features about five ready-to-heat entrees, along with sides and desserts in a cold case. "We've received a good response on those and they're high ring items for families," Garrett said.
Most IGA stores are also concentrating more on HMR. "This year, many of our IGA retailers are upgrading and remodeling their stores to provide improved meal solutions and better shopping environments," said Duane Martin, vice president of retail at IGA. In addition, IGA stores are refocusing on "merchandising products as meals" to improve sales, he said.
One sign of IGA's renewed focus on HMR: its stores' purchases of food-service equipment tripled in the past year, according to Bill Hayes, publisher and editor-in-chief of IGA Grocergram.
Independent operators' fighting spirit and willingness to change are also keeping them in business. "I have a little trouble rolling over and dying for a big company. If they want to put me out of business, they're going to have to put me out of business," said Jack Shakoor, owner of Shakoor Enterprises, Boonton, N.J. A&P, Montvale, N.J., is building a Super A&P next to Shakoor's 16,000-square-foot IGA store. Shakoor also faces competition from Kings Super Markets, West Caldwell, N.J., and Edwards Super Food Stores, Carlisle, Pa. "We'll lose some business initially, but hopefully will keep some. It's possible that we would remodel and focus more on perishables," Shakoor said.
Independents with good facilities, knowledge of the area and fair prices can successfully compete against the large chains, Shakoor said. "I'm not the cheapest guy, but I'm not embarrassed about my prices," he said. Shakoor's frequent-shopper program that passes weekly price allowances on to customers will also help him retain customers, he added.
Independents also say their ability to compete hinges on the level of assistance they receive from wholesalers. "Their [wholesalers'] focus has to be the independent grocer," said Jay Weber, owner of Weber's IGA in Sedona, Ariz. "Without that, we're really at a disadvantage."
"There's no question that the big are getting bigger, but there is no better time for the independent," said Mark Batenic, senior vice president for sales and business development at Fleming Cos., Oklahoma City. "It just means the independent can react far faster than any large national chain."
Wholesalers are helping independents compete with store-brand programs, remodeling assistance and location of ideal facilities in high-rent areas, among hundreds of other programs, Batenic said.
Independents are also depending on distributors to help them handle year-2000 computer problems, according to Martin.
Other independents are battling supermarket/supercenter competition with more consumer research and customer-loyalty programs.
"Our main challenge is just to stay in touch with our customers, to know what they want," said David James, president of the 24-store E.W. James & Sons in Union City, Tenn.
So, E.W. James will add a loyalty program in about 19 stores by the end of the year when new cash registers are installed. Five of its stores already have loyalty programs in place. Meanwhile, a consumer affairs representative who contacts customers on a regular basis helps the chain stay up to speed on customers' needs.
Garrett said his stores' loyalty program took off faster than expected. About 80% of all store sales are made with the card, since the program started last spring. Although the program focused solely on discounts at first, Garrett has quickly moved to the next step of rewards for using the card, such as cash gift certificates based on spending at the store, and turkey and ham giveaways during the holidays.
In addition to loyalty cards, retailers are using more consumer research.
Garrett uses a local university for demographic research, in addition to its loyalty-card program.
But that is not enough, James said. E.W. James & Sons is using ACNielsen data to determine in which categories the stores are "losing business" to its competition in the region. Then the chain manages the category better, ensuring that it "has the product there that the customer wants and we're competitive."
Independents are also promoting their small-town, country image more. IGA's "Hometown Proud" slogan is showing up everywhere, including national television ads and prepaid calling cards. IGA is also building on this theme with the recent addition of a Hometown Perks loyalty card, its Hometown Kids program, and Hometown Pets, a "store-within-a-store" pet products section.
Last summer, Thriftway Shop n Bag, Philadelphia, also launched a $2 million TV advertising campaign promoting "neighborhood values." "Independent retailers have a special edge through their unique flexibility. They can each offer their own tailored brand of the home-town shopping experience -- an experience customers can't get with the national chains," said Bob Tegge, manager of advertising accounts at Fleming Retail Advertising Services.
Some independents are facing especially tight job markets.
Garrett Enterprises is retaining employees with more attractive benefits packages and treating them as members of a team.
Employees are encouraged to give input and Garrett's training and retention programs have been updated. This year, the five-store chain hired its first human resources manager.