In the mid-western state of Iowa, tucked away among the wheat plains, are two interesting and clever independent grocery retailers. One a family owned company, the other owned by its employees, but both offer their shoppers exactly what they want. And that’s not just the opinion I formed from walking stores and talking to shoppers and staff. That’s the opinion reflected in the shopper totals.
When Joe Blundell came into Coles as the new marketing director, under Ian McLeod, one of the first things he and his team did was agree to find a new face for the Coles business. They chose celebrity chef Curtis Stone, as he was fresh, bright and genuinely interested in fresh food and ingredients. He looked and sounded fantastic on camera.
So imagine my surprise when I arrived in Des Moines, Iowa to see Curtis Stone smiling out from TV ads for grocery chain Hy-Vee. When I got into stores, there he was again on in-store point-of-sale displays and the front of the Hy-Vee healthy food magazine Seasons, with tips on health and great menu ideas.
Hy-Vee is a $7 billion a year retailer that owns and operates 230 stores, managed by employees. The newer stores cover an amazing 100,000 square feet complete with a bakery, deli, coffee shop and fresh flowers in glass front fridges in-store, as well as a pharmacy and liquor store on-site. The newest stores have a Hy-Vee Fitness gym, highlighting the link with health and wellbeing that is the core of the brand offering.
The Hy-Vee own-brand offering is as good as, if not better than, the national brands. The own-brand only competes with national brands where the company believes there is a reason to compete. They are great stores that I like to think are helped along by the happy, healthy Aussie icon, Curtis Stone.
In global terms, FAREWAY is a small retailer. It has revenues of around $1 billion a year and owns and operates 100 smaller stores. When you first see the FAREWAY block capital branding, it reminds you of the Safeway branding used by Woolworths in the Southern Australian states and the Safeway branding used in the Western United Sates. Why? Perhaps because in the 1930s one of the founders of the company worked for Safeway in the US as a meat department supervisor.
Today, 70 years later, its unchanged red and yellow block capital branding and signage is a truly retro and cool statement of what the brand stood for then and still stands for today. The fresh meat offering remains of very high quality – cut to order and so good that the car park is packed on Friday ahead of a sunny weekend – and customer service is provided right up until your shopping is put into the trunk of your car.
Importantly, for FAREWAY to compete on price in a market where its larger local neighbour Hy-Vee sits alongside retail powerhouse Walmart, it has invested in a state-of-the-art distribution centre. This investment can only be seen at store-level in the shelf prices.
So what do shoppers think about FAREWAY and Hy-Vee?
The recent 2012 Consumer Report looking at shopper preference in the US revealed that FAREWAY ranked in fourth position, while Hy-Vee placed at number nine. These rankings were generated by 24,000 shoppers who were asked to rate 52 grocery store chains across the US. Now that’s an impressive outcome against some of the world’s best retailers.
We can certainly learn from how the smaller players ensure they remain relevant, while swimming among the largest players.
Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Now Comms Group. He is also an independent director of Australian fintech company InvestSMART.
