One thing every operator should watch closely is the nature and makeup of the competition within the marketplace. Most of the attention goes to the larger competitors, such as national chains and large regional players, and many retailers make the mistake of not considering the small, independent retailers within the trading area.
Successful produce retailers always observe the actions of these smaller players to make sure they are getting an accurate picture of the entire state of competition and market trends. Upper management, however, tends to only concern themselves with the actions of the larger players in the market, as they tend to behave similarly to their own perceptions of market conditions and behavior. Because of this predisposed disposition, they tend to overlook these “little guys.” This tendency to exclude part of the marketplace as relates to competition, especially in produce, once again shows “they just don’t get it!”
It is important for any produce operation to keep tabs on what is going on with the smaller retailers. Many of them have considerably different approaches to daily operations, as well as unique concepts in display and merchandising. Their major strengths lie in the fact that their size allows them to move more quickly to test and adopt new innovations. This independence allows them to develop strategies that don’t follow the “rules” the larger operators follow. In most cases, they violate many conventional theories of operations used by the larger players.
One thing these “little guys” share is the fact that they are recognized as a unique operation and tend to attract a large following of consumers despite their size. Obviously, they’re doing things that are attractive to consumers and develop an appealing presentation and a loyal following.
In addition to this independent nature, their size allows them to ignore some of the pressures major players face. They don’t have to worry about reporting results to “Wall Street” periodically or face pressure to generate anticipated sales and profits as well as a desired EBIDA ratio. They also don’t rely on typical measurements of performance or algorithms that project what that performance should be. They base their strategy on a “buy and sell” philosophy and a customer-first focus.
It is important for any produce operation to keep tabs on smaller retailers.
Their independent status allows them to observe and evaluate many concepts and innovations they see in the marketplace. Their size and agility that allows them to adopt the principles one at a time to see if they actually provide a benefit for their operation and then integrate them into their operation. Because of this tendency to buck conventional wisdom, the “little guys” share many things in common.
For illustration of this point, we will now discuss some of the key differences that make these independent operations unique compared to their larger competitors.
The first of these differences is in their attitude and use of labor. As we all know, department labor has always been used as one of the controllable costs at retail. The “little guys” use labor to generate sales and not for cost control. They utilize labor as a sales driver and supply all the labor needed to reach their sales goals. They use the targeted sales and its required labor as their guides instead of artificially created allocations based on past week sales.
The attitude in the department is one of sales generation not time- or task-oriented work schedules. This alone is a major deviation from the way large and small chains and regional operators regulate (and save) labor.
A second major difference is in how many of these independent retailers share department success. In this case, everyone in the department shares in the success, not just the department manager. Each member of the department has a piece of the action and is responsible for the continued success of the department. This is certainly a different concept from what is practiced in the larger operators, and provides increased motivation for superior performance within the department.
A third area of difference is in the importance these “little guys” place on training of personnel. Part of their consumer-first focus is the development of skills to not only operate the department, but interact with customers. This develops employee buy-in by demonstrating the value placed upon the individual employee. In addition to developing these skills, these stores also educate each employee on knowledge of product and uses of that product to assist the customer. This all equates to a customer perception of knowledgeable, helpful produce personnel.
The takeaway from all of this is that if you ignore the “little guys,” you are at risk. The risk is that you will find yourself behind the market trends and may not be using every possible concept to drive sales.
The best produce operators keep close tabs on the entire market. Every player has advantages and disadvantages that need to be evaluated. Utilize what you can to benefit your operation. The best operators keep their options open and take advantage of any opportunities that will fit into and enhance the business.
Keep these “little guys” on your radar to make sure you are up-to-date on your market situation.