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Brand Ensemble Performs at United Supermarkets

Brand Ensemble Performs at United Supermarkets

United Supermarkets fine-tunes its multi-banner approach to growth. “In a perfect world, we could put all three supermarket banners in some communities and still not compete with each other, and we’re still looking for ways to make that  happen.” — Robert Taylor, CEO, United Supermarkets

United Supermarkets is taking a step back as it approaches its 100-year anniversary.

As the Lubbock, Texas-based chain continues to fine-tune its multiple formats, it is going through a chainwide “branding exercise” to help it define what each of its banners means to each community in which it operates, Robert Taylor, chief executive officer of the 51-store chain, told SN.

Besides the conventional United Supermarkets banner it operates at 37 locations, the company also has the upscale Market Street format at 10 stores and the Hispanic-oriented Amigos United banner at three, as well as a single United Express convenience store.

Robert Taylor“As we grow our banners, we want to understand what each one means, what its niche is and how it can best serve each specific location so that each store resonates with the local community,” Taylor (left) explained.

“In some communities, we’re the only store in town, which means we can’t be a niche marketer — we have to be all things to all people.

“In other communities, it’s just us and a supercenter. And in a market like Dallas, where we are competing with Kroger, Safeway and other conventional chains and alternative formats, it means we have to be something different, so service is our primary calling card there, plus we work hard to make sure every team member is very knowledgeable about everything in the store.

“In a perfect world, we could put all three supermarket banners in some communities and still not compete with each other, and we’re still looking for ways to make that  happen.”

More United News: To Build 'Next Generation' Market Street

United was founded in 1916 in Oklahoma. In 1949 the company purchased two stores in northwest Texas, and Jack Snell, son of founder H.D. Snell, then bought them from his father and formed a separate company. (The Oklahoma stores were ultimately sold to Associated Wholesale Grocers, Kansas City, Kan., in 2008.)

United operates all 51 of its stores in Texas. It grew westward from stores close to the state’s Oklahoma border to Lubbock in the 1950s, to Wichita Falls in the 1960s and into Amarillo during the 1970s through a series of small acquisitions in each market — before expanding south to the suburbs of the Dallas-Fort Worth area in 2003.

United operates from two distribution centers in Lubbock and Roanoke, Texas. It also distributes to c-stores  and operates manufacturing plants  for prepared foods and ice.(Photos: United operates from two distribution centers in Lubbock and Roanoke, Texas. It also distributes to c-stores  and operates manufacturing plants  for prepared foods and ice.)

Its Metroplex stores are located in several bedroom communities surrounding Dallas and between Dallas and Fort Worth, though it has no locations inside  either city.

United opened its first niche-format store, Market Street, in Wichita Falls in 1998; its first Amigos United in 2006 after testing the concept under the United Supermercado name, also but coincidentally in Wichita Falls; and its first United Express in Lubbock  in 2011.

United operates from two distribution centers in Lubbock and Roanoke, Texas. It also distributes to c-stores  and operates manufacturing plants  for prepared foods and ice.The company has remained family-owned, with Jack Snell’s son Robert Snell serving as chairman and Robert Snell’s nephews, Gantt and Matt Bumstead, as co-presidents.

Though the company has been considered an acquisition target, the family has no interest in selling, Taylor said, “and people have stopped asking.”

What has enabled United to survive for 96 years, he noted, “is the sincere commitment to treating our guests right, along with our team members and the communities we serve. We’ve always been open about giving back to the communities and taking leadership positions in community organizations.”

That has never changed, he added, “because the family has always been good about bringing in people that understood its vision and saw the operation the same way it did,” he explained.

Organic Growth

United has also remained conservative in its approach to store expansion, Taylor pointed out, concentrating solely on organic growth since 1991 except for two stores it acquired in mid-2006 — locations it closed 18 months later.

“This company has always considered acquiring stores risky,” he explained. “We have always believed we can sustain our culture more effectively if growth is slow and methodical.”

That has meant opening two or fewer stores a year in most years, Taylor said — though it opened five stores, including one conversion, in a 15-month period in 2008 and 2009, he noted. Since then, the company has added only one new store — the United Express convenience store that opened in May 2011.

“We’re comfortable with approximately two stores a year, and that’s the pace we want to set,” Taylor explained.

United has sought to expand the appeal of its Amigos United banner to reach a broader Hispanic demographic.(Photos: United has sought to expand the appeal of its Amigos United banner to reach a broader Hispanic demographic.)

Though new-store growth has been slow, United has moved forward with a lot of store refreshment efforts and upgrades. Taylor said the chain contemplates three upgrades this year, encompassing new fixtures and expanded bakeries and delis, with additional seating for customers in the deli area.

It also plans to open its third Market Street in Lubbock early next year, with another Market Street scheduled to open in late 2013 in Flower Mound, one of the bedroom communities close to Fort Worth.

United has sought to expand the appeal of its Amigos United banner to reach a broader Hispanic demographic.It’s also looking at a new conventional United location in Amarillo next summer, “and we’re working on a fourth Amigos United, though we have no target location or date yet,” Taylor said.

The rate of growth of Market Street and Amigos United will probably be faster than the rate of growth for the United banner, he pointed out. “We’ve found a nice, non-traditional niche with Market Street; and the growing Hispanic demographic in Texas will dictate that we grow the Amigos format.

“But when an opportunity arises, we still want to grow the United banner, though it’s fair to say that will be a smaller part of our future growth.”

Any growth United might consider would have to be within 200 miles of one of its two distribution centers in Lubbock or Roanoke, Texas, Taylor noted.

However, though there are no major cities within 200 miles of each distribution center that United is not already in, “there are a lot of smaller communities we could enter,” he added.

He said the company is not limiting itself only to potential sites in Texas. “If an opportunity were to open up within 200 miles of one of our distribution centers, there’s no reason why we’d be bound by the state border,” he said.

“But we’ve got a lot of work to do to make an impact in some places where we already operate before we move into other markets, so we don’t anticipate any significant new market entries for the foreseeable future.”

The company partners with local growers in every United Supermarkets store.(Photo: The company partners with local growers in every United Supermarkets store.)

Sales at United’s 51 stores were $1.4 billion in the fiscal year that ended Jan. 28, and are projected to grow about 2.5% this year,  Taylor said.

Sales have been fairly healthy because of the Texas economy, he pointed out, “which has probably not been hurt as much as the economy in some other parts of the country, in part because of the oil industry, which has kept the economy here more stable. Texas has also had an influx of businesses coming in because of the favorable tax situation.”

Sales have been growing at a faster pace at the Market Street stores than at the other formats, he pointed out, “but part of that is because the population growth around those stores has been phenomenal.

“With population growth very limited in west Texas, it was essential for us to put Market Street stores in growing markets, including six in the Dallas area and two, with one more coming, in Lubbock, which is also experiencing population growth.”

Taylor joined the chain in 2007, when United acquired his company — R.C. Taylor Distribution Co., based in Lubbock — and named him vice president, logistics. (That company continues to operate as an independent distributor focusing on convenience stores.)

When Dan Sanders left United as CEO in 2010 (to join Supervalu), Taylor was named to succeed him.

After operating with a single 500,000-square-foot distribution center in Lubbock for years, United added a 200,000-square-foot facility in Roanoke — near Fort Worth — in the fall of 2010, which is still operating below capacity, Taylor said, “though it can be expanded to 600,000 square feet if needed.”

At about the same time, the company acquired a pair of manufacturing operations “to be more self-dependent,” Taylor explained: Praters, which sells frozen holiday dinners, and an ice plant.

United has subsequently added fresh dinners and cut-fruit-and-vegetable platters to the Praters offering; it also uses the Praters plant as a central commissary for the delis at its retail stores, Taylor said.

Company Formats: United, Market Street

Following is a closer look at each of the company’s formats:

• United Supermarkets,  which average 42,000 square feet, though they range from 15,000 square feet to 60,000 square feet. They are located in small to mid-sized communities in west Texas and the Panhandle.

“We like that banner,” Taylor said, “and we’re working hard to maintain its reputation.”

The United stores were built on the promise of “ultimate service,” as outlined in the company’s mission statement, Eddie Owens, the chain’s director of communications, told SN. “That’s the cornerstone of everything we are about in all banners and what we perceive as the differentiator in all our markets.”

The United banner stores are geared to the communities they serve, he noted, so that locations in communities with large Hispanic populations, for example, offer a broader selection of Hispanic products, and a United store in a rural area incorporates a True Value hardware aisle inside the store.

The company also partners with local growers in each United store, and it works with each school district to meet the needs of its specific students, Owens added.

• Market Street, whose stores range from 69,000 square feet to 74,000 square feet and combine a conventional grocery offering with extensive specialty items, organic and gourmet products and expanded prepared food offerings.

“It was a pretty innovative format for west Texas when we opened the first one — and quite a stretch for United,” Taylor recalled. “But we saw what was happening in Europe and other parts of the U.S. and what that kind of store could bring to a market that it couldn’t get otherwise.”

United opened the first Market Street in Wichita Falls in 1998, followed by a second store in Lubbock in 2006. Since then it’s opened one more location in Lubbock, one in Amarillo and six in the suburbs around Dallas.

The company hopes to expand Market Street with slightly smaller stores — something around 60,000 — “because that will give us more real-estate opportunities, particularly in the Dallas-Fort Worth area,” Taylor said.

However, the next Market Street, set to open in Lubbock early next year, will be on the larger end of the size spectrum, at 71,200 square feet.

According to Taylor, the format is continuing to evolve, with the new Lubbock store set to include an expanded selection in the service deli; an expanded meat and seafood offering; the largest beer and wine department in the chain; expanded center-store selections of pet supplies, baby foods and seasonal items; and double the seating capacity in the deli area, including indoor and outdoor seating for 250 people and free Wi-Fi connectivity.

The new store will also feature four checkstands devoted exclusively to foodservice, up from two at existing stores; plus the chain’s first two-lane drive-through pharmacy, compared with a single lane now.

The company also plans to change the merchandise presentation “quite a bit,” Taylor said, with less emphasis on private-label goods and more on organic, natural and bulk foods — “possibly because of the impact of Whole Foods,” he acknowledged, “but also because people are moving toward those types of products.”

The layout will also change, he added, with a single entrance that leads shoppers into the produce and floral area, which will be moved up front from the back of the store, plus a large circular dining area to the left of the entrance that will include a hot food counter, coffee  bar and dining room.

The company will also strive to create destination points throughout the store so customers feel they are moving from one clearly delineated department into another.

As existing Market Street stores are remodeled, the layouts will be changed accordingly if possible, Taylor said.

Some of the specialty items originally available only at Market Street have found their way into other United formats, he added. “For example, organic bananas were originally sold only at Market Street, but demand developed in communities without a Market Street, so we added them, along with limited selections of other fresh organic products,” he said.

“We also found that the Lighthouse private-label salad dressing we sold at Market Street had a broader demand, so we’ve taken the top two or three SKUs in that line and made them available at our United banner stores,” he added.

The company operates three enhanced convenience stores, called A Taste of Market Street, on the parking lots at locations in Lubbock, Coppell and Frisco — though it doesn’t count them separately in its store count, Taylor noted.

“Our original idea was to operate a non-traditional convenience store on the parking lots, with a broad offering of prepared grab-and-go foods along with traditional convenience items,” Taylor explained.

“However, we learned that even if you open a store with fresh offerings on a site in front of a store, your guests will still expect it to have more traditional convenience than upscale food items.

“So we’ve remerchandised those stores, and we probably won’t use the name A Taste of Market Street beyond the three existing locations. Future convenience stores will open under the United Express banner with more traditional offerings.”

United also recently converted one of its Market Street locations in Lubbock to a 24-hour operation — the first store in the company to be open around the clock.

Company Formats: Amigos, United Express

• Amigos United, which includes two 40,000-square-foot stores in Lubbock and Amarillo and a 40,000-square-foot unit in Plainview, between the other two locations.

According to Taylor, the format has been evolving since the first Amigos United opened in 2006, when the store was geared to a first-generation Hispanic shopper.

“But we realized, after bringing in a Hispanic merchandiser, that we simply did not have sufficient insights initially,” Owens pointed out. “Since then, we’ve recognized that Hispanic shoppers tend to be multi-generational and more acculturated.”

The stores are now geared to a broader Hispanic population, Taylor told SN, with Hispanic items integrated in all categories.

With the Hispanic population in Texas likely to exceed 50% by 2020, “there’ll be a lot of acculturation going on, and the market will demand different things, and we have to be ready for that,” he added.

In some communities with large Hispanic populations, United is already integrating Anglo and Hispanic merchandise to facilitate more crossover shopping, Taylor explained.

• United Express, the company’s first standalone convenience store that opened in northwest Lubbock in May 2011. Taylor said the 3,100-square-foot store is a test lab that combines conventional c-store offerings with some fresh prepared foods, along with gas pumps.

The Express store is on a site that’s ultimately intended for a supermarket, Taylor noted. The company had expected to have a supermarket already open there, “but a more central site became available so we pushed that store back. But we expect to open it in the next couple of years.”

Once the supermarket opens, the company plans to keep the Express store open, he noted, though with a more conventional convenience-oriented selection.

The second United Express is scheduled to open this fall on what will be the parking lot for the new Market Street due to open in Lubbock early next year.

However, United views the convenience format as a way to serve some very small Texas communities ahead of building supermarkets there, Taylor explained.

“There are a lot of Texas communities with populations of just 2,000 or so that are underserved,” he said. “Unlike other parts of the U.S., these are not bedroom communities. In fact, the next community could be 30 or 40 miles away.

“So we envision United Express as a way to make food offerings available in some of those places until we can build a full-scale supermarket there.”

Sidebar: Focus on Health

LUBBOCK, Texas — United Supermarkets here is in the midst of a $1 million investment in the growth of health and wellness programs for customers and employees.

“We hope to lead as a positive example in our industry and the communities we serve by helping our guests find solutions to their individual health needs,” Robert Taylor, chief executive officer, said.

United has expanded its health and wellness department by adding four registered dietitians to its staff to lead programs at store level and internally.

“We’ve always had dietitians,” Taylor told SN, “though in the past they were in more of a support role.

“But we see a real need for them to provide the community with information, more so in west Texas than in the Dallas area, so we utilize their expertise to help provide solutions for people with various dietary needs due to health or lifestyles.

“We’ve also partnered with the Texas Tech University Health Sciences Center and other health groups to put together programs that offer solutions to our guests.

“We’re still working on it because we want options in every category, whether its low sodium, gluten-free or whatever. It provides a service to the community, and it drives store traffic.”

More United News: Market Street to Host Best of Texas

United also implemented a new results-based wellness program earlier this year for employees, based on preventative screenings, to encourage them to maintain their health or improve health risk factors by adopting positive changes in their lives, Taylor said.

Employees who show improvement in health risk factors will receive a discount on medical premiums, he explained.

Since early March the chain’s Market Street locations have offered weekly tours with dietitians to help consumers learn how to best support their specific dietary needs and achieve their personal health goals.

More United News: United Offers iPhone App

The chain has also introduced a new “living well” menu for fresh meals that meet healthy nutrition guidelines set by the dietitians.

In April United said it became the first grocery chain in Texas to introduce the NuVal nutrition scoring system, which rates foods on a scale of 1 to 100.

United also offers medical clinics at four stores — two in Lubbock and one each in Amarillo and Coppell that are leased and operated by three different companies — “and we plan to increase the number of clinics,” Taylor said.

“As health care changes, the way people seek that care changes,” he pointed out, “and going to a clinic in a supermarket is becoming more common because of the convenience it affords.”

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