Stores Magazine - November 2007 - (Page 34) EXECUTIVE SUITE / COVER STORY some time before anyone can determine whether Tesco has hit a home run. Still, the fact that it’s rolling out a concept that eschews the weekly trip to the supercenter at a time when shoppers seem to be looking for greater convenience and different shopping options is hard to overlook. “Truth be told, there’s no one answer for every customer,” says Michael Sansolo, a consultant who splits his time between the Food Marketing Institute and Morning Newsbeat. “Trying to figure out what shoppers want is very complex, and it often depends on their mood and their need at a specific moment in time. “A shopper will tell you that price is everything to her, then drive up the road to Starbucks and pay $4 for a mocha latte,” he says. “The stores that succeed are the ones that meet as many of a shopper’s needs as often as possible.” Supermarkets have spent much of the last decade building bigger and bigger stores. Since no one expects them to instantly switch gears and revert to smaller footprint units, the challenge will be finding ways to keep the supercenter format in the front of shoppers’ minds. Some have tried to do this through design; they’ve created smaller “neighborhood” style shops around the perimeter of the store in an effort to evoke a smaller store feel. Others have introduced in-store cafes and restaurants. Bigger vs. better roger could be considered a latecomer to the supercenter game. The first Kroger Marketplace entry, a 110,000-sq.-ft. store built to counter Wal-Mart headon, was thought by shoppers to be “not as strong or well positioned” as their traditional stores, according to research SIRS compiled in 2005. Kroger executives made significant improvements to the next generation of Marketplace stores and shoppers responded favorably, moving the ratings needle several notches in two years. A bigger box isn’t necessarily a better box, however, and Kroger needs to guard against running counter to shopper trends. From 2005 to 2007, Kroger Marketplace stores improved by 10 points (on a 100-point scale) by improving the shopping ex- K OPPORTUNITY IS KNOCKING ndustry watchers are quick to rattle off new concept success stories in the grocery arena. Whole Foods comes to mind; so do Trader Joe’s and Wegman’s. Some include Bloom and Safeway’s Lifestyle stores in the mix, but after that the list trails off precipitously. There’s no question that supermarket operators have been thinking outside the brown bag of late. Many have experimented with new products (organics and more extensive private-label programs) and services (prepared foods and bulk goods) in an effort to remain competitive and chase margin gains. Still, significant store innovation has been as tough to find as a short checkout line on a Saturday afternoon. SIRS research suggests opportunity is knocking for companies willing to rethink their approach to food retailing. “The food segment is ripe for change,” says company CEO Chris Ohlinger. “Shoppers are looking for alternatives and those that manage to come up with concepts that break through the clutter and sidestep the sameness could be the next Whole Foods.“ Still, developing a new concept is one I thing; convincing management to take a chance on it is quite another. Pressure from shareholders and Wall Street to show positive results quickly can doom a project prematurely. This creates somewhat of a paradox, Ohlinger says. “Creativity is shelved because it involves risk and capital,” he says. “Failure can be expensive, but looking at it from another view, the failure to develop new concepts over the next five to seven years may doom a large chunk of supermarkets.” What does it take to develop a new supermarket concept? After studying the landscape for more than a decade, SIRS has come up with some baseline suggestions. Create an “Intra-preneurial Innovation Group.” Company “experts” need not apply; this group consists of inspired, inventive insiders with access to company resources and plenty of wiggle room to test, fail and try again. Name an Execution Czar. Autonomy is a must; new concept development can only thrive when current management’s cultural blinders are stripped away. Do Your Homework. New concepts are 10 percent innovation, 10 percent inspira- tion and 80 percent information. Principals need to study the trade area, target shoppers, brand strength and positioning – then learn as much or more about the competition. Assemble the Team. Management, store employees, marketing, merchandising and operational players need to learn the playbook and buy into the concept. Establish Benchmarks. Have an answer for “How’s it going?” Financial, consumer and operational benchmarks are essential; so is continuous monitoring for improvement in each area. Give It Time. New concepts don’t bloom overnight; give it at least three years (assuming realistic performance goals are being met). Fine tuning is a must; the goal is to identify operational excellence levels, get a detailed picture of shoppers and optimize profitability. Roll It Out. Find out if the concept has legs by stepping outside the initial boundaries. Integrate the new concept into the traditional store’s marketing as its reach expands – but don’t go too far too fast. Approximately 30 percent of a market should be “new concept stores” before heading to the next locale. 34 STORES / NOVEMBER 2007 WWW.STORES.ORG http://WWW.STORES.ORG
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