The year-end holidays, it seems, may be moderately merry for supermarket operators.
Interviews with food retailers and wholesalers last week indicate that consumers might be ready to start shaking off the economic chill of the past two years and warming up to a little more holiday indulgence.
“Overall, we feel the holiday season is going to be a good one,” said Jay Campbell, president and chief executive officer, Associated Grocers of Baton Rouge, La. “We feel the restaurant industry is going to bear more of the brunt going forward than we are.”
Although he conceded that the holiday season would be “challenging, because the consumer is going to be tight-fisted and value-oriented,” he is confident that the retail members of his cooperative are prepared to deliver that value.
Part of his optimism may be driven by the strong football-tailgating season retailers in his region are enjoying this year.
“Football has always been big in the South, but this year it seems people are even more excited about it because the [New Orleans] Saints won the Super Bowl last season,” he explained. “It also helps that we have a competitive college team [Louisiana State University] in our market, and we also overlap with Alabama fans, Ole Miss fans and Texas fans, and that all drives a lot gatherings among family and friends where food is served.
“Our retailers have always done a very, very good job providing the foodstuffs and beverages needed for those type of gatherings, but when the teams are doing really well, it maybe provides an incentive for consumers to spend a little more and scrimp somewhere else,” he explained.
Likewise, Larry Collins Sr., owner of four ShopRite supermarkets in Pennsylvania and Maryland, told SN he has seen some signs that consumers are beginning to spend a little more freely.
“I believe they will still be somewhat cautious, but we are starting to see customers spending a little bit more, adding a few discretionary items to the basket, other than just staples,” he said. “We are looking forward to a pretty good holiday season. Although the trend is still soft, we started to see in September and into the beginning of October that things are looking like they are going to break a little bit.”
Collins spoke to SN shortly after his company opened its fourth and largest store, an 85,000-square-foot location in Glen Burnie, Md. — the first ShopRite south of Baltimore and the only one in Anne Arundel County.
Collins said he was projecting brisk business not only at his three Philadelphia-area locations, but also at his newest store, which has a strong emphasis on providing solutions for holiday entertaining — including a shrimp bar and an expansive cheese island.
“We think those kinds of things will give us a competitive advantage this holiday season,” he said, adding that his company's investment in extensive training in customer service for the store's 270 workers is also expected to help drive business among consumers planning their holiday festivities.
Another independent operator in expansion mode is Huntsville, Ala.-based Star Markets, which is getting ready to unwrap its newest and largest store Nov. 14.
Darden Heritage, president of the soon-to-be five-store chain, is hoping the new store contributes to a brighter holiday season.
The new store is a 60,000-square-foot former Albertsons, Bruno's and Southern Family Markets location in Huntsville. Heritage noted with some pride that Star's acquisition of the site was petitioned for among the chain's local fans on Facebook. “It's very flattering,” he said. “Kroger doesn't get that.”
Cincinnati-based Kroger Co., however, is also opening a new store in the Huntsville market next month, so the competition will be strong, Heritage said. Wal-Mart Stores and Publix Super Markets also compete there.
“The big guys will all be pushing prices, but it's not always about price,” he said. “You have to be in the game with everybody else on pricing, but as an independent we will push our quality.”
Key to Star's holiday plan is prepared meals, including turkeys it will roast, fry or smoke. Stores have found an effective sales tool is providing samples — particularly during events such as “flu shot day” at Star's pharmacies, he said.
“We give the turkey samples to people while they're waiting on line and take orders right there,” he said. “It's been a very effective way to get people to try it. And we have to go after that angle because that's the niche for us.”
TREND HAS REVERSED
Trip Straub, vice president of Straub's Markets, St. Louis, said his company is expecting a slightly better holiday season than last year, citing a modest sales recovery that began earlier this year.
“We were hurting early this year but starting around April, those trends reversed. We got up out of the hole and into a positive trend, and I think it can continue for the rest of the year,” he told SN. “It's inching along, but it's going in the right direction. I won't predict any drastic gains, but we'd be great with some small gains, and I think we can do that.”
Straub's, a four-store specialty retailer, is focusing its holiday efforts on gift baskets, casual catering and food-related gift items. Straub said the chain would make a “more aggressive” effort to get the word out on these service offerings this year, sensing that people are more willing to entertain and give gifts this year than last.
“People are spending money cautiously, but they are going in the direction they once were, as opposed to being afraid to go out on a limb and spend a little extra,” he said. “It's not a sin to entertain or have a party anymore.”
Straub said he expects the St. Louis market will be price competitive, as conventional stores brace for as many as three new Wal-Mart supercenters in the region.
“The competitive market here is as thick as ever, and it's getting thicker all the time. Wal-Mart isn't a direct competitor to us, but any outlet that sells food gives people another option to pick something up there they may not get at Straub's,” he explained. “And the big chains that compete more directly with us due to proximity aren't worried about us, they're worried about Wal-Mart. So they're dropping their prices and margins through the floor, creating a larger gap between them and us, which doesn't make things any easier.”
Grant Lunde, marketing director for C&K Market, Brookings, Ore., which operates 61 stores in Oregon and Northern California, said his chain plans to repeat a holiday game at its Ray's banner stores and add a new game at its warehouse stores this year.
The “Ray's Great Grocery Giveaway” gives the chain a point of differentiation, Lunde told SN. It awards 350 top prizes of $50 gift cards, plus instant-win coupons at the register for $3 or more off the next purchase. Online, participants can enter a weekly drawing to win one of 45 top prizes of $500 (five winners each week for nine weeks) or they can win coupons worth money off their next in-store order.
For the first time, the company will feature a game at its 11 Shop Smart warehouse stores. The game, called “Holiday Bucks,” will give discounts on subsequent orders: Spend $25 online, get a voucher for $1 off the next in-store order, and spend $50, get $2 off the next purchase — up to $4 off with an order of $100.
“We decided to do the game at the warehouse stores as an added incentive for customers there and, with increased competition, to create a point of difference,” Lunde said.
FOCUS ON PARTY TRAYS
Among merchandising changes, C&K Market will put more emphasis on party trays by offering them in the specific departments (meat, produce, deli and bakery) and also at a “Party Tray Central” location in each store, which will be set off with banners to call attention to the section.
“Sometimes a customer ordering a tray in one department will not be aware there are party trays available in another department, so having them all available in one spot will make that more apparent to customers,” Lunde explained.
Asked about consumers' mood going into the holidays, Lunde said he wasn't sure. “As a company, we expect a good holiday season. Business has been what we anticipated this year, and we expect that trend to continue through the holidays.”
Neil Berube, president of the 34 Fresh Markets acquired last year by Associated Food Stores, Salt Lake City, said he expects consumers to remain in a conservative mood this year.
“The Utah economy came down at the tail end of the national downturn, so things have tightened up,” he told SN. “Plus WinCo is now competing in the Salt Lake market and unemployment is up. So we expect our customers to be in a more conservative mood.”
Boyd Irving, director of center store at the company, told SN this year will bring a focus on basics.
“We will go back through the stores and make sure customers can find the right offerings at the right prices, with a big focus on meal solutions and becoming a one-stop-shopping destination,” he said.
As the other corporate stores operated by AFS have done for years, Fresh Markets will host an open house on one of the first two Saturdays in November “and invite our guests to see what we have to offer, including some unique signature items we'll be introducing. We'll do lots of in-store demonstrations and heavier sampling, and we'll give out coupons they can use down the road.”
There will also be a focus on “meal deals,” which will involve turkey dinners that will be available through the stores' service delis with all the usual holiday fixings and side dishes, Irving noted.
Bryan Simonson, director of fresh, said the open houses will feature the introduction of several different signature items that Fresh Markets has been working to develop with the goal of timing the introduction to the holidays.
The signature items will include 12-inch pies — larger than the 9-inch and 10-inch varieties common in the market — that will become a core offering at Fresh Markets, Simonson said, including a “four seasons pie,” which features multiple fruits in a single pie, “something that no one else in this market has,” he pointed out.
The bakeries will offer a new, higher-quality line of rolls in traditional varieties (kaiser, potato and dinner), Simonson said, and the delis will feature cheese balls and dips made on-site, which are new items, he added.
— Reporting by Elliot Zwiebach, Jon Springer and Mark Hamstra