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In 1954, E.W. Williams, publisher of Quick Frozen Foods, made some fanciful predictions about how the grocery business would look in the year 2000. He predicted that every home would be equipped with an “electronic home defroster.” We call them microwaves but they are nonetheless as he envisioned them. He also predicted that pocket-sized microfilm viewers would be useful tools for grocers. We've taken that vision one tiny technological leap further and call it an MIS, but it fills the same basic purpose. But Williams, despite those successes, was pushing his buggy down the wrong aisle when he predicted the disappearance of the supermarket. Supermarkets are alive and well, especially in North Carolina where the business continues to grow. In 1998, Winn-Dixie, operating almost 1,200 stores in 14 Sunbelt states, was alive and well to the tune of over $13.6 billion in revenues. Food Lion, with its 1,207 stores in 11 states, boasted a healthy $10.2 billion in sales that same year. And Hannaford Bros. Co., the newest kid on the retail grocery block, topped the $3 billion mark with its sales and other revenues. Numbers like that inspire investors to continue plowing capital into their most fruitful markets, and they find North Carolina to be a real peach. People moving into our state keep us at the top of the list of potential sites for store expansions. Food Lion, for example, ever-hungry to expand its presence, plans to open 80 new stores by the end of 1999. “We've got two strategies that we've been building on for a number of years,” says Food Lion's Tawn Ernest from the company headquarters in Salisbury. “The first one is to locate as often as possible in a given market.” People ask, says Ernest, why Food Lion will build a new store just around the corner from another. “It's a strategy designed to meet the greater issue right now, and that's how to make food shopping more convenient.” Food Lion does not expect customers to drive past any other supermarket on their way to go food shopping. “We want to completely saturate a market,” Ernest says, albeit with smaller stores that usually do not house departments like pharmacy, photo developing, or video rental. So far, the company remains staunch in limiting its ideal of one-stop shopping to its core identity as a supermarket. IGA's identity rests in its motto: “hometown proud.” The company licenses stores, sometimes to savvy business people who own several but often to families who own and operate just one. “This is a way for families to compete with the Food Lions and the Harris Teeters,” says company chairman, president and CEO Thomas S. Haggai. “We offer them our expertise in marketing, promotions, planning, and rapport with manufacturers, and they have an opportunity to run a family-owned business.” The company has 3,600 stores in 32 countries, commonwealths and territories. It is the only multinational supermarketer based in the U.S. and maintains a strong presence in North Carolina, with three distribution centers and 77 stores located here. Twenty of those were just signed under contract last month. Throughout the world, IGA adds a new store every 36 hours. For Hannaford Bros. Co., the key to capturing new customers is convenience, but keeping them requires something more. While the company's strategy used to be to appeal to the growing mass market, it now seeks to understand and appeal to individuals. Founded as a fruit and vegetable shop in Portland, Maine, over 100 years ago, Hannaford Bros. still has a passion for perishables — and lots of them. “We want to provide customers with all the choices that are available,” says company spokeswoman Beryl Wolfe. “Customers want freshness, quality, and variety at their supermarket, and we believe people will drive a little further to find the products they want.” Inventory is the name of the game at Hannaford. “There are plenty of choices at Hannaford for vegans and vegetarians and anyone on a special diet,” adds Wolfe. “Whether it is soy hotdogs or special canned products, we are committed to giving our customers options.” To ensure that a full and diverse inventory is consistently available to Hannaford customers, the chain has revised its store format. Most of the Hannaford stores in North Carolina are fashioned in the company's newest format, featuring larger floor plans, more health foods and natural foods, clearer pricing, and bigger produce sections that include organic options. “We've tried to be very accommodating in our store design and we are seeing it pay off in market share. We look to price, but we are not a hi-low store with weekly specials based on price.” Hannaford Bros. is opening two new stores in North Carolina this summer: one at Piper Glen near Charlotte in June and the second in Apex near Raleigh in mid-August. Not wanting to limit its revenues to stores made of bricks and mortar, Hannaford is experimenting with a virtual grocery store that offers home delivery to on-line shoppers in the Boston area. HomeRuns, its grocery fulfillment center, is designed to keep overhead low and capture the patronage of busy, working families who lack time or inclination to go grocery shopping. While the new business unit (launched in 1996) has been difficult to predict, Hannaford is pleased to claim the No. 1 market share in Boston. The company is watching HomeRuns closely this year to see what it takes to grow an e-commerce business. There are currently no plans to roll it out nationally. Internet shopping can also be found in North Carolina. At least three sources are available to people who prefer one-line shopping. Greensboro-based Southern Foods Inc. recently launched Gourmet Express, an on-line shopping service within its home division, and it currently receives about 400 orders a day. “Customers can order off of the Internet and we'll pack their order in foam coolers with dry ice and have it to their door in a couple of days by FedEx second day delivery,” says Sue James, who has been the right-hand of the service since its conception. Southern Foods offers close to 6,000 products, with about 300 of them offered on-line. On-line shopping is not available in the restaurant sales division of the company, although the company is considering such an expansion by the end of the year. As is to be expected, the prices Southern Foods charges for its Gourmet Express service are a little higher than the prices charged for phone orders, largely because the system for packaging and delivering the food differs from the way it has historically worked. Traditional Southern Foods customers received delivery of their orders by company-owned refrigerated trucks — with a delivery person who would stock the freezer or cupboard. James notes that with the advent of Internet shopping, such a delivery system would be infeasible, so now each Internet order must be hand-packed and shipped by FedEx. Whole Foods Market Inc. solves the refrigerated delivery dilemma by not offering perishables at its web site. Whole Foods owns and operates the country's largest chain of natural foods supermarkets that includes 87 stores with four in the Piedmont. (Another is slated to open in Winston-Salem in 2000.) For North Carolinians who are farther away from a Wellspring (as the Whole Foods Market stores in our state are called) than is convenient, Wholefoods.com brings the world of non-perishables to their fingertips. The middle ground between on-line shopping with doorstep delivery and a family trip to the supermarket belongs, today in North Carolina, to Lowes Foods. Lowes Foods, owned by the Hickory-based Alex Lee Inc., has introduced Lowes Foods To Go, an “order ahead” supermarket. Shoppers can visit the Lowes Foods website and shop on-line, or they can phone or fax their order to the store and then pick up their groceries. There is a surcharge for having a personal shopper, and the store requires three hours for an order to be assembled, but beyond that, all a customer needs to do is drive to the pick-up station in front of the store, and the personal shopper will bring the groceries out and load the car. “This way, if a person can drive, they are still in control of their own shopping,” says Lowes Foods' Colleen Nelson. “It works great for busy families and for people who can't get around so easily,” she says. The new venture is resulting in new customers for the company. “We're tapping into people who don't usually shop with us. We're finding that people are willing to drive a little extra on their way home from work if it will save them time in the long run. Plus it's a service that no one else is providing right now,” Nelson says. To entice customers to shop Lowes Foods To Go, the company offers a bonus to new customers: Try the service three times with no service fee. As supermarkets focus on their customers, they cannot lose sight of their information systems. There is a wealth of consumer information available to supermarkets today. Front-end scanning systems make it possible for managers to understand not just what their customers as a group want, but what individual customers prefer. Having access to this kind of information is a rich resource when it comes time for decision making. Hannaford has developed a new system for maximizing the use of consumer information and using it throughout the store. Called SIP, Hannaford's Strategic Information Process has been rolled out to all of its locations and helps management see how an action in one part of the operation affects all the other parts and then measure its impact the bottom line. One of its key features is a common inventory measurement tool called ACIS, or Average Cost Inventory System. The new feature allows Hannaford to have a certain product at a certain store in the right quantity and at the right price exactly when the customer desires to buy. And if that sounds a lot like a fanciful prediction, well you have to remember: That's nothing new in the supermarket business. Maybe Hannaford will spawn the next centennial's E.W. Williams. COPYRIGHTED MATERIAL. This article first appeared in
the June 1999 issue of North Carolina Magazine |
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