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How Different Companies Approach the Growth Challenge

How Different Companies Approach the Growth Challenge

By David Merrefield
VP, Editorial Director

This year isn’t very old, but it already seems apparent that 2007 might be titled “the year of recovery.”

We’ve seen several manifestations of that in this space and in these pages this year. Specifically, the “recovery” is traditional supermarket operators’ maintenance of business, and recovery of business, that was previously ebbing away to other channels of trade.

A more tangible sign of renewed interest in traditional food retailing may be indicated by the good turnouts at a couple of industry events already held this year: the Food Marketing Institute Midwinter Executive Conference and the National Grocers Association convention. Show attendance can be seen as a leading indicator of industry players’ confidence in the future of their own businesses.

In any event, the shape that business recovery takes, along with the tactics supporting it, vary greatly from one company to the next. To see what several companies are doing, and how disparate methods to seek growth can be, let’s take a peek at several news articles and features that have appeared in SN lately.

Roche Bros.: This company takes a decidedly slow-growth outlook to building business. The family-operated chain now has 17 stores, with another to open later this year. This company is disinclined to add stores at a faster pace and would consider the rate of even four or five per year to be much too rapid. See more about this Massachusetts-based company on Page 1 of this week’s SN.

Save Mart: In contrast to the go-slow approach, this company is taking a big leap of sudden growth through the acquisition of no fewer than 132 Albertsons LLC units. Added to Save Mart’s current roster of 124 stores, that will more than double the size of the company to 256 stores in one fell swoop. The deal is expected to close in March. As might be expected, though, Save Mart anticipates going slowly when it comes to making changes such as those involving personnel and banners at the stores it intends to acquire. This California company’s plans were outlined in SN Jan. 22.

Schnuck Markets: This company has joined the growing roster of supermarket retailers that are facilitating future growth possibilities through an everyday-low-pricing program. This Missouri-based chain intends to cut prices on some 10,000 Center Store products. Among other operators that have made price cuts of a similar kind lately are Raley’s, Stop & Shop, Giant Eagle and Wegmans. The price initiatives at Schnucks were highlighted in SN Jan. 22.

FreshDirect: Smaller operations such as this Internet retailer can seek public funding to underwrite growth possibilities. It has long been speculated that FreshDirect, now privately held, is an ideal candidate for an initial public offering. That hasn’t happened, but the talk about the possibility illustrates what’s possible for smaller operators. (Incidentally, and off the tropic, one very clever aspect of FreshDirect’s operations is to print individual customers’ names on the label of random-weight products.) Fairway Market, another small operator, recently attracted investment capital to sponsor a modest growth agenda. These New York City companies were mentioned in SN Jan. 15 and 29.