Successful independent grocers create loyalty — and sales — by understanding their communities.
Originally printed in the February 2022 issue of Produce Business.
Supermarket chains, with sophisticated operations and market research savvy, may rule the mass market grocery segment, but it’s often independents that drive innovation with their understanding of local communities and customer preferences.
Independents apply their local knowledge and relative operational flexibility to create shopping environments that reflect their communities in a particularly intimate way. Commerce may be the central function, but it’s the continually evolving relationship with the customer that makes the difference for successful independent grocers. And each independent serves its community in its own unique way.
Let’s use Washington Heights in New York as an example.
The community in upper Manhattan has recently become better known due to the Lin-Manuel Miranda play and later movie In the Heights, but it has been a unique location in New York City for generations. Lately, the community has mixed with a core of long-dwelling, old-money residents living in high-price apartments and condos near Riverside Park beside a big corps of first and second generation Americans, with Dominicans the most representative.
So, for Super Foodtown, the trick is serving ethnic shoppers from the Caribbean and new residents from various backgrounds, but generally from affluent circumstances, who have diverse preferences, but are trend-driven.
That’s no easy task, but it’s what Dan Wodzenski, head of operations and merchandising, and his staff face every day.
KNOW YOUR NEIGHBORS
Washington Heights is a densely populated neighborhood at the very top of Manhattan, and it will surprise you, Wodzenski says. For example, amid all the apartment buildings, Super Foodtown sells a lot of grilling vegetables, not to mention charcoal. That’s because the community has a range of parks, some overlooking the Hudson River, where people like to barbecue as the weather permits.
In a community where space is at a premium, Super Foodtown at Broadway and 160th Street spreads over 30,000 square feet over two levels, but still retains much of the traditional supermarket format. As an independent trying to serve a highly varied customer base, Super Foodtown uses a combination of hands-on experience and data to keep pace with the variety of needs and preferences of its customers.
“In the store, we make sure everyone has a voice,” Wodzenski says. “But we use a lot of data. We’re data mining constantly. We get real-time data on operations we weren’t able to a couple of years ago.”
He said the increased sophistication of available technology has helped him and his staff better understand what was happening in a granular way, even as the store employees discussed and listened to customers.
The produce department addresses core needs both with extensive displays of national and organic products, as well as Latino specialties. Products include bulk root vegetables organized together up front, with waxed yucca and white yautia arranged in baskets. Hachiya persimmons reside on an endcap display otherwise featuring bagged citrus and apples. Juices, often merchandised under main produce displays, include a range of Latino specialties.
The flip side is fresh-cuts, a specialty of the operation.
“In Washington Heights, the cut vegetable program is far and away the best. So our customers there have no problem buying premium products. That’s our affluent population,” Wodzenski says.
Trends toward organic eating and preference for local produce are also evident. So packaged salads from Satur Farms, which has growing operations on Long Island’s North Fork, takes a place alongside nationally distributed Earthbound Farms.
Much of how Super Foodtown approaches the consumer is the same as it might be at chain stores, but it’s fine-tuned. Package sizes are moderate, but not tiny; convenience items may be placed for quick carry out; ethnic items may get more prominent placement, as may products that satisfy the latest easting and diet trends. In other words, Wodzenski says, Super Foodtown pays attention and responds in a way and at a pace that chain stores can’t.
Although some other demographics appear in the store, the essentially half Dominican and half affluent clientele has to be appraised constantly, as does the competition, so that Super Foodtown isn’t out of line on the top 10 to 20 items in the major categories. Wodzenski says. At the same time, Super Foodtown recognizes that Washington Heights isn’t a neighborhood that, as in the case of other areas in New York, is filled with young affluents in tiny apartments with little space to store food.
“You have to take into consideration the bigger apartments down the river and the large family sizes that are typical with the Dominican shoppers,” he said.
ACROSS THE RIVER
If that isn’t enough to think about, Wodzenski and his staff have to take even more variables into consideration to satisfy its shoppers on the other side of the East River, where they run a different sort of operation.
Brooklyn Harvest, with four stores in its namesake borough and one in Astoria, Queens, has a hybrid positioning, combining aspects of gourmet grocery store with that of a small urban supermarket. The store concept is such that it can be modified from one location to the next to accommodate sometimes dramatically different demographics.
The newest Brooklyn Harvest in Williamsburg has a more gentrified surrounding with somewhat less ethnic clientele, but it’s still a demographic where the customers are extremely food conscious and embrace vegetarian and vegan diets, or some approximation.
“It’s really a healthy lifestyle in Williamsburg,” Wodzenski says. “We have people who are vegan, vegetarian, going vegan.”
Even people who aren’t dropping meat and dairy from their diets are very conscious of what they’re eating, which means organics are in demand. The produce department in the Williamsburg Brooklyn Harvest reflects the neighborhood lifestyle with organics all over, as well as items that supplement meat and dairy as protein sources.
Package size also is critical in Williamsburg, where singles and small families are the rule, living space comes at a premium price and refrigerators are small. As in Washington Heights, convenience still is a concern of customers, and fresh cut produce is important, with careful attention paid to freshness and quality. Not only are fresh cuts packaged for convenient eating as items and meals, they also appear as elaborate platters that are customer favorites.
Oddly, the Williamsburg Brooklyn Harvest has a certain homogeneity, as the customer base is heavily weighted toward young, trendy consumers who have their own definite tastes. However, the strong influence of ethnic shoppers in other locations makes store operations even more complicated — and reflects an independent operation that thrives on close customer knowledge.
Astoria is famous for its large Greek community and includes a mixed contingent of Hispanic customers. Move from neighborhood to neighborhood and store to store, and the ethnic customer base changes, as does the product offering at Brooklyn Harvest.
Wodzenski pointed to the Union Avenue Brooklyn Harvest, which not only serves a significant Asian audience, but a large nearby orthodox Jewish community.
“We have a lot of Chinese customers, and we get some of the Kosher trade there,” he notes.
The Kent Street store is also different, with a significant population with an Eastern European background. But the location is also near a ferry port that carries Brooklynites to Manhattan and back. The ferry also carries a lot of tourists who take the water route to check out Brooklyn. So, the Kent Street location offers easy to access, grab-and-go produce products.
In all cases, Brooklyn Harvest leans on employee knowledge of the community, but it also applies the technology that shines a light on what’s happening in stores on a close-to-real-time basis, maximizing response to circumstances.
“The data is great for identifying mixed opportunities,” Wodzenski says. “Being independent, we’re able to make decisions at the store level, and we’re able to work quickly to act on decisions. If we see categories performing well, we’ll look at adding variety. We’re always looking at pricing and can execute quickly.”
The idea of serving communities is part of the retail business in general, but it is an especially important feature of the independent grocer. Chain stores can serve common community needs effectively, but independents get deeper into the nitty gritty, supporting populations that have unique requirements.
Bargain Grocery in Utica, NY, is an operation that has so successfully dealt with unique needs that it is being used as a blueprint by local governments to deal with acute community challenges.
Mike Servello Sr. came up with the idea when he served as pastor of Utica’s Redeemer Church. With a family background in the produce business, he considered how to support the local charity he operated, Compassion Coalition, which supports various groups, such as a large local refugee population residing in Utica. By carefully buying and working with operators such as Walmart as well as sources donating food or selling it to Bargain Grocer at low cost, Servello created underlying support for Compassion Coalition with the profits. At the same time, he helped the Utica community by providing low-priced fresh food and dry grocery items.
Bargain Grocery began as a small space in the Compassion Coalition before a recent move into a 13,000 square foot stand-alone location. Although he knew that bringing Utica low cost food would help lower-income residents, Sevello found out later, he was providing sustenance to what had been a food desert. Indeed, Servello said he didn’t really understand what a food desert was until social services employees began to visit the initial 1,200 square foot store and encourage him to go bigger. The model worked so well, in terms of feeding people and generating money for other charitable purchases, that Servello is in the midst of working with two New York communities, Troy and Schenectady, to establish the concept there.
In developing Bargain Grocery, refugees were a particular focus. Over the past 40 years or so, Utica has experienced the influx of more than 16,000 refugees, many from Bosnia, Nepal and Somalia but, all told, some 30 countries. These new residents look for produce and other fresh items to prepare food according to their own traditions.
Bargain Grocery is a full-blown grocery store operation with produce at its core. Consumers entering the store pass check stands and immediately enter the produce department that continually brings in deliveries of basics and seasonal products. The lineup changes, as Bargain Grocery buys opportunistically where it can source low-cost products. The operation uses social media, with Facebook videos a prime marketing mechanism to tout what’s coming to the store. Beyond that, it often offers materials in-store that emphasize the nutritional advantages of various items.
Servello said institutes such as food banks also target underserved populations, but the kind of products they carry don’t necessarily suit ethnic and refugee populations.
“As far as the refugee situation in Utica, we found out that people coming out of camps were used to eating their own freshly prepared food,” he said. “Everything out of a can is anathema to them. Fresh vegetables have been huge.”
Across the country in California, SPD Markets has walked its own path as an independent, supporting its area of the Golden State. With stores in Nevada City and Grass Valley, adjacent communities northeast of Sacramento, SPD stores are community institutions in part because they remain ready to listen and respond, says Benjamin Painter, the operation’s president.
“The No. 1 thing for us is our customer service and community involvement,” he says. “We can do things that the chains don’t. We’re not restricted by the rules of the corporate hierarchy.”
Given the inland California location of SPD markets, the stores are attuned to local agriculture, so supporting growers is part of supporting the community.
“During harvest season, we bring in a tremendous amount of local produce,” Painter says. “Our area has a lot of small, independent farms, folks who do farmers markets. We give them an alternative.”
He says that the variety of products such as herbs and nuts SPD offers gives it a cachet that chain stores lack with shoppers who enjoy cooking and who have become more interested in trends such as the farm to fork movement.
The pandemic was a significant event for SPD Market, and Painter said customers appreciated the company was willing to go far beyond its usual practices to serve the community in a time of crisis.
“Throughout last year, when products were scarce because production was down and you didn’t have people working on the farm or the distribution center, rather than a chain store pulling from a warehouse, we had the ability to draw on local vendors. We can have five different vendors we can draw from for something.”
Produce was an important part of that, but SPD did what it had to do in an effort to serve the community at a time of shortages — even mounting displays of single-roll toilet paper that it sourced from commercial distributors who didn’t have restaurants to service.
COVID-19 has been a tough haul, but SPD has been able to take more than a little solace from the role it played during the pandemic.
“In some ways, we’re even closer to the community now,” Painter says.
For Freshfields Farm in Florida, with one store in Orlando and one in Jacksonville, COVID-19 has been a challenge, too, as labor shortages have kept staffing understrength and issues of scale sometimes weighed against the organization.
However, like other independents have done in hard times, Freshfields played to its strengths.
“With our size, we can pay more attention to the local demographics of each store,” says CEO David DeLoach. “We tailor our product placement to the nuances of local taste. Even among proximate cities, Orlando and Jacksonville, the distinction in local taste is more pronounced than may be expected.”
“We have such a diverse clientele in terms of income, interests, ethnic groups and sizes of family units, we find they are putting different weights of value and importance on what they are eating. The common denominator is they are looking for quality and freshness,” Deloach says.
Freshfields has enjoyed success based on the relationships it has nurtured with shoppers. It starts right on the sales floor, where the company encourages employees to be attentive and to interact with shoppers. And Freshfields’ relatively high employee retention is its own advantage.
“We opened the Jacksonville store in 2013, and have retained a core group from the original team,” he says. “This permits us to connect with our customers, putting names with faces, while also collecting data.”
In fact, data and testing are important to Freshfields’ operation, but Deloach says the customer also has a distinct relationship with independent grocers that is more direct and personal.
“In a smaller company, we get inquiries, ‘I want to talk to the owners.’ This is unique. ” he says, adding, “If you walk into Walmart or Publix, any such expectation is unreasonable.”
The close and significant relationships built through independent grocers wind up being a critical conduit of information. That’s not to say that data collection on transactions and other relevant factors isn’t important. Rather, it means that independents have a broader, often emotional, flow of information on which to make decisions. Customers want and need to be heard, and Deloach says the Freshfields team solicits feedback, whether good, bad or indifferent. “It’s a good thing for us and the customer alike.”
Freshfields provides locally grown food, but maintains produce sections where customers can see that freshness and quality are top considerations no matter the point of origin.
“Currently, there is a high level of customer dialogue about locally sourced products,” Deloach says. “From our perspective, we’re putting feet to that dialogue by pressing for more local sourcing. But, paramount to local sourcing, we are focusing on quality and freshness. We would rather be out of a product than not be in the freshness window.”
He admits this approach creates challenges with a clientele that expects full availability. “But, we believe our brand equity is best established and protected by providing the freshest available product, whether or not locally sourced.”
Freshfields relies on having a superior produce operation and the customer is likely returning because of that commitment, so being short becomes more of a positive than a negative.
“We spec product with the end user in mind, assembling a product line that will provide the most consistent quality,” Deloach says. “For example, yellow corn is usually larger but sometimes not as tender as white corn. White corn is usually softer, but smaller than yellow. We typically only offer bi-color corn for consistency and quality. We feel, most of the time, the bi-color corn is best.”
“We won’t buy an apple that isn’t crisp and sweet just to say we have 15 varieties of apples. We don’t sell a ‘value’ apple that is mushy or isn’t sweet. We don’t buy apples on price; we buy apples for crispness and sweetness.”
Even when it comes to promotions, Freshfields wants to make sure consumers enjoy a superior experience. “For Super Bowl weekend, we will sell thousands of pieces of avocado, all of which is conditioned product. We have found that customers expect to be able to buy avocado from us and go home and make guacamole. If they can’t do that, it’s a lost opportunity,” Deloach says.
As organics have become a bigger factor at its stores, Freshfields has doubled down on its approach to produce. In side-by-side comparison with competitors, Freshfields wants the customer to base purchases on their own individual concerns and when they trade up for the quality offered, that they’ll get their money’s worth. Deloach says it’s similar to selling ethnic specialties. Shoppers who put a lot of special consideration into the produce they select want their store to be just as picky.
“Organics have gradually played a bigger and bigger part, and I don’t think that’s going to change.”
FRANK’S PIGGLY WIGGLY
Up in Wisconsin, at Frank’s Piggly Wiggly in Elkhorn, interaction is the advantage over chain stores.
“We can react much faster,” Frank Leuptow contends. “We are closer to the action.”
He says produce is critical to the vitality of the business, and he relies on six suppliers to keep him up to speed. In doing so, the store can move with demand and maintain customer trust.
“We are local,” he says. “They see us in the community. We have been in business for 40 years.”
Leuptow sums up a lot of what makes independents thrive when he points out how the Elkhorn Piggly Wiggly has evolved to satisfy its shoppers both in what’s sold and in the relationship between them and the store.
“We put in a fresh station seven years ago and our customers love it. We lost money for two years, but we know it was the right thing to do,” he says, and beyond that: “Hire the right people, train them and let them do their jobs. That’s how independents compete with chains.”
Customers worked to keep beloved independent grocery
The close-to-the-customer operations offered by independents and their ability to shape themselves to their environments can make them not only popular, but even beloved.
Stile’s Farmers Market is one such operation. Indeed, the single-store business was important enough to its community in mid-Manhattan, NY, that residents campaigned to get it back.
Now located on Ninth Avenue between 36 and 37 streets, it’s owned today by Steve and Donna Stile, but it has a long history beginning with Steve’s grandfather who started with a produce push cart.
Stile’s is a neighborhood institution, but it hasn’t necessarily had an easy ride. It was closed for several years after losing a store location on 41st Street. Customers petitioned local politicians and the Stiles kept in touch with the neighborhood to see if the store might have a rebirth. The combination of local support and an opportunity from a friendly landlord, along with some hard work, resulted in a reopening in 2017.
Stile’s Farmers Market takes an old-school approach. It’s open year-round, seven days a week, says Donna Stile, who adds that the store is simply and effectively merchandised as “a farmers market with a wide variety of produce, herbs, eggs, anything you would find on a farm, and fresh ground coffee.”
The overwhelming focus is on produce. In a Manhattan community that retains vestiges of its ethnic past, Stile’s carries Italian and Latino specialties. It avoids a gourmet orientation with simple merchandising and fair pricing, Stile says. A rack outside the storefront on the sidewalk announces the store to a busy environment. The narrow and deep facility has a pair of aisles around a central two-sided rack display and fixtures along the walls and at the store’s rear, essentially a long race-track configuration with bananas in front.
One of the aisles features a long array of fruit ranging from bulk and bagged apples, to mangos, pomegranates, pears, kiwi, peaches and finally citrus. There’s a central concentration of vegetables, with big heads of cabbage and red cabbage leading, followed by bok choy. Along the other aisle, the central display includes lettuce, cucumbers, tomatoes and an abundant variety of peppers, while the wall presentation includes a bin fixture for bulk nuts and like items, followed by root vegetables such as yucca root, yautia blanca and chayote. Next come potatoes, onions, squash and garlic taking up wall space near and at the rear of the store, along with ginger root and aloe leaf. Neatly piled carton displays enhance the merchandising layout.
Stile points out that the store remained open throughout the COVID-19 pandemic, even through its darkest days, to serve a community that already established strong bonds with the store.
Backed by retailer-owned co-op, ShopRite named ‘Most Trusted‘
A study conducted in partnership with Newsweek magazine and the consultancy firm BrandSpark International named ShopRite the Most Trusted Grocery Retailer in the Northeast, reflecting nicely on the banner and the cooperative that backs it, Wakefern Food Corp.
A diverse retailer-owned co-op, the Keasbey, NJ-based Wakefern includes a handful of operators with more than 10 stores, but the majority run under that number and frequently only a single store.
Karen Meleta, chief communications officer representing the ShopRite banner, says customers naming the banner most trusted in the region “is incredibly gratifying and meaningful to us.”
“I think our ability to inspire longstanding trust and loyalty is rooted in our business model, a cooperative of family-owned and -operated businesses committed to providing fresh, quality foods in a shopping environment where our customers feel welcomed and respected. Our customers know that they can always trust in us to supply the foods and products they need to take care of their families at value pricing. This has been a hallmark of our brand for more than seven decades, and we believe it’s our ‘secret sauce’ for success.”
As with any supermarket banners, perishables are a key to where customers shop. Meleta says the cooperative’s members, with strong family backgrounds, understand their communities thoroughly.
“With 45 member families working together at Wakefern, many of them third- or fourth-generation grocers, we are able to constantly lean into hundreds of years of institutional knowledge and best practices,” she says.
“It is in our perishable departments where the depth of this experience is most evident. Those best practices are employed throughout the supply chain, beginning in the field to our warehouses, through to how the product is managed and displayed at the store. Whatever the season, our customers know and trust they will always find the fresh, delicious produce on their shopping lists for their favorite family recipe.”
With the growth of online shopping and the heightened importance of fresh departments, ShopRite has also renewed its focus on training associates with advanced produce knowledge.
In the Northeast, ShopRite stores have a reputation for competitive pricing, with help from Wakefern buying power, but also assortments that closely suit the neighborhoods where they are located, stocking ethnic and other specialties that aren’t as abundant or are absent from chain stores.
ShopRite has over 275 stores, serving diverse communities in New Jersey, New York, Pennsylvania, Connecticut, Delaware and Maryland. “That means there’s never going to be a ‘cookie-cutter’ approach to how we stock our shelves or service our customers,” says Meleta, adding, “Because of our individual store ownership, our cooperative members often live and work in the communities they serve. This means they are able to quickly pivot on an individual store level to offer products and services that meet the ever-changing needs of our customers. This high-touch, boots-on-the-ground approach allows us to continually strengthen the bond we have with our shoppers.”
Meleta notes that ShopRite stores have deep, longstanding ties in their communities. “Whether that means we’re sponsoring a local Girl Scout troop, raising money to help fight hunger in our communities, or working together to raise millions for other charities, our shoppers know that our owners care about the communities they operate in,” she says. “Our brand’s unique role in the community inspires trust and loyalty in a way that big box or online operators simply can’t duplicate at scale.”
Wakefern gets behind its ShopRite members by providing product sourcing, marketing and advertising support, as well as innovative technology and other services. Not only that, but the co-op has developed an award-winning own-brand portfolio that includes the Bowl & Basket, Paperbird and Wholesome Pantry lines, which offer consumers flavor-forward, value-priced, quality items, Meleta says.
“Wakefern helps an independent grocer operate a state-of-the art supermarket in a highly competitive industry dominated by multinational players,” she says.
To identify the winners, Newsweek and BrandSpark International surveyed 3,200 U.S. adults nationwide. Each retailer was judged according to store format and several attributes believed to drive trust, including: quality, fair prices, recommendation, innovation, customer support, values, transparency and heritage.