Grocery: The Core of the Store

Details, details, details. I do not know who gets credit for the phrase "retail is detail" -- I heard it for the first time last week in a training session -- but it succinctly describes what I have known for many years. Any retail operation is made up of a million details that are woven and integrated into a complex product. A successful grocery department (or any store department) can be measured by the amount of attention paid to details and how well you prioritize and take care of those details.

"Merchandising is a great opportunity for information and education, areas where cooperatives' efforts and results have traditionally surpassed mass markets."

The grocery department at the Sacramento Natural Foods Cooperative consists of grocery as well as bulk, dairy, and beer and wine. Last year store sales were just over 9 million dollars. Grocery covers approximately 38 percent of store sales; labor is currently running at 4.4 percent. Most of my day is spent on details!

Our primary distributor is at our dock at 5 a.m. three days a week. It never ceases to amaze me when I see ten to twelve pallets being unloaded and know that the floor will be cleared by our 9 n.m. opening time. Our stockers do a fantastic job. We just recently hired a night stocker who works 7 p.m. to 3 am.; her responsibility is to work backstock and get all the coolers faced and stocked. The position is proving to be of great benefit to the morning crew and has really helped to relieve the morning crunch.

Focus on merchandising

We are very fortunate that our co-op has attracted a number of folks who have conventional grocery store experience, and I learn from them on a continuing basis. One area where these team members have been of great help is in merchandising.

Historically, merchandising is an area in which natural foods co-ops have been light years away from mass markets, and it's an area that we have almost disdained as manipulating customers. Yet I see merchandising as a tool to keep us competitive. I look to mass markets as experts in merchandising; they have been doing it very well for a very long time.

Before I became grocery manager, I was a produce manager for seven years. One of the best pieces of advice I got was from a thirty-year veteran of produce. I was lamenting the fact that there was no produce merchandising school I could attend to teach me the tried and true tricks of merchandising produce. He smiled and said that every produce department in every store is a school. He confessed that even after thirty years in the business, every time he walks into a store he steals at least one idea. I have found the same with merchandising grocery products.

I try to visit area stores as often as possible to get new ideas on shelf management, product mix, and building displays. Your distributors are also a good source of information and advice that you should be utilizing. Your distributor should be doing everything possible to make yours a successful and profitable grocery department.

The purpose of merchandising is to sell product, and it is a daily activity. With our store's size and volume of sales, every square foot is worth over $820 in sales annually. I look at every vacant spot as potential selling space.

Product placement

Merchandising not only means attractive and pleasing end aisles and case stacks, but also product placement on the shelf. A successful grocery asks herself whether the flow of product makes sense. What products are at eye level and should they be there?

There are two schools of thought on shelf product placement. The traditional approach is to place fast movers on the bottom because the customers will bend down to pick up their favorite product; the other school suggests that you keep the fast movers at a prime location (i.e., eye level) and give them more shelf space to prevent double and triple handling of the product. For consistent shelf displays, it is important to determine whether your shelf sets are vertical or horizontal. Whatever set design you choose, stick to it! I prefer a vertical shelf set, since it allows each manufacturer a chance at prime shelf space.

Merchandising, and in particular signage, is a great opportunity for nutritional and product information and education, areas where co-ops efforts and results have traditionally surpassed mass markets. This is an area of strength for us that we need to keep constantly improving, because it is what sets us apart from the mass markets, a tool that can keep us competitive.

Signage is one of those "details" that I emphasize to my crew, because I know from experience that you can have the most beautiful display in the world, but if it does not have at least a price sign it is not going to sell product. Customers do not want to ask the price of a product; they will do without the product rather than take the time to find a clerk and ask the price. It is our challenge to make shopping at our stores as easy as possible and to "delight" customers.

Product mix

Proper product mix goes hand in hand with merchandising. Product mix is determined by your customer base and merchandising policy. Your grocery department should have a profitable product and margin mix, including both high and low margin items, that enables you to achieve your established margin goal.

A successful product mix is incumbent on moving out the slow sellers and bringing in product that will sell. I cannot overstress thc important ofvelocity reports. In-house velocity reports are the best: they can be assessed quickly and on a weekly or daily basis, and they track product that you actually sell. If your co-op does not have the capability to generate them in-house, your distributors can provide them for you. The only difference is that distributor velocity reports track what you buy.

Promotion

Regular promotions and specials are another key element in selling products. We tend to tailor our sales and specials seasonally, and we prepare an annual market guide that assists our buyers in product selection for their departments. For instance, the theme for May is International Food Month, and most of our specials will reflect that theme. This allows for a cohesive product theme throughout the store and makes it easier for our buyers when determining sale items. The market guide also includes what suppliers we want to highlight, what types of products we want to educate our customers about, and a master calendar of events. (Contact me if you are interested in obtaining a copy of the SNFC market guide.)

Product demos can boost sales dramatically. We do few passive demos in the grocery section; most of our demos are handled by our in-house demo coordinator.

As stated earlier, one of the strengths of cooperatives is customer education. Our demo coordinator does a tremendous job of not only providing samples but also educating our customer on the benefits of natural foods. Our active demos also provide "in the moment" customer service to new and potential members, and they are a great way to dispel preconceived ideas about co-ops and natural foods stores.

Pricing

One of the questions most frequently asked of our demo coordinator is, "Why are your prices so high?" I am concerned by the widespread theory that we cannot compete with mass market prices, especially now that we are seeing yet another resurgence in mass market interest in the natural foods market (and I think this time they are here to stay). While basic economics tell us that we cannot beat their buying power, I feel we put ourselves in jeopardy of losing our market share if we do not do everything in our power to fight our high price image.

Variable price is a tool that can be employed to counter this problem. Variable pricing in every major product category (e.g., cereals, juices, snacks, soymilk) and on key items can positively enhance a store's price image. For instance, in our juice section we have a lower margin on a major line of juice; people may see these juices in other stores, but they know that at our co-op they are cheaper than even at the large conventional store down the street. In the bulk section we have lower margins on key items in each food category, such as grains, dried fruits, snacks and prepared foods; in dairy we take a lower margin on yogurts. We make up for the lower margin in sales volume, and because we have that customer in the store it is likely they will buy something else.

People

One of the most important aspects of a successful grocery department is having a well thought out training program in place for new hires. In the past we have employed the "warm body" approach to training; that is, if it's a warm body, put it out in the aisles, say a few words over them, and pray they do the right thing. Obviously this translates to a lot of clerk frustration, manager frustration, customer frustration and a lot of rework. Again, training is one of those details that we never seem to have enough time for. When I think of our past attempts, I am reminded of the story of a man who is trying to cut a tree with a dull saw. A friend comes by and says, "Why don't you sharpen the blade on that saw?" The guy replies, "Because I'm too busy trying to saw the tree!"

If you take time to properly train your crew you will save untold heartbreak, frustration, and labor dollars. One of the problems with any training is that we seem to operate under the illusion that if we show a clerk how to cut a box or rotate stock once, they immediately become an expert. We often forget the three rules of successful training: repetition, repetition, repetition.

I have come to realize that it is not fair to an employee if they do not have clear expectations of their performance as well as the proper tools to do theirjobs. Proper tools can mean good knives, work carts, hand trucks that work well. Ask your clerks what they need to do their jobs. They know; they are the ones in the aisles every morning.

Hiring the right person for the job is a key element to a successful training program, and it can significantly reduce the amount of training time. We are fortunate that our co-op has attracted a number of folks who have conventional grocery experience, and we learn from then on a continual basis. One of the most valuable lessons I have learned from these former conventional grocers is the benefits ofincreased manager presence on the display floor. I believe that managers should spend as much time as possible on the floor and that no detail should be below a manager -- from wiping down a dusty shelf to building end aisle displays.

Managing a successful grocery department requires that you must learn how to wear many hats and take care of all the details. You must be creative, good with numbers, ambitious, a good organizer and planner, and you must be up to date on industry trends and products. And if that isn't enough, you must also have a heart and remember that some folks have ideas as good or even better than yours. I urge you to involve your crew in all decisions that directly affect them and their workload. Do not be intractable in your thinking or your decisions. After all, we must be cooperative in both name and practice.

See other articles from this issue: #058 May - June - 1995