Keep Rowing Even Under Best Conditions

By Jim Prevor, Editor-in-Chief, Produce Business

A rising tide may lift all boats but retail is, most decidedly, a local business, and each store competes in a unique set of circumstances, with unique competitors, unique shoppers, and unique economic conditions. So while it may be soothing to know that the overall trend is with us, it would be foolish to think that such a trend guarantees our success.

Indeed, for large chains, a willingness and ability to react to local market conditions is the key to success. It is no accident that Wal-Mart had its greatest growth as it trumpeted its “store of the community” initiative, while Tesco has bled red ink at its Fresh & Easy subsidiary as it insisted on placing a uniform assortment across a diverse population.

We have no idea if December produce sales — or those of any other month — will wind up rising or falling compared to last year. How could we know? Maybe the weather will be inclement and that will keep shoppers home, or it may be unseasonably balmy and this will keep people outdoors playing and unwilling to shop. Perhaps war will break out or, maybe, peace. Or there will be a freeze and crops will be short, causing prices to zoom. Or the stock market will crash and people will fear to spend.

For any individual store, the equation has other variables: Will a new competitor open or close? What about a new class of trade: A supercenter, a warehouse club, a natural foods store or an Internet shopping service?

For a chain, the big variable is new store openings. We’ve listened to CEO after CEO give speeches about how the goal is to double sales in five years or some such thing. Whether the chain achieves that goal or not is typically less dependent on operations eking a bit more out of the stores than it is on the CEO funding openings or acquisitions.

Indeed, sales success this month is often determined by how proactive management was years ago. There are a lot of towns in the United States that can support one Whole Foods store, but Whole Foods hasn’t got there yet. One attitude is for a local chain to take solace from the idea that if Whole Foods ever comes, the community won’t support many outlets and keep doing what it is doing. Another attitude is to preempt Whole Foods. That might mean beefing up organic and natural offerings in a conventional chain, or it might mean coming up with a new banner and seizing that share of stomach and share of mind that Whole Foods occupies in the national scene and national psyche.

Internet shopping is another place where many seem to be just waiting for someone such as Fresh Direct to appear in their town and seize market share. Contrast that with a chain such as Coborns in Minnesota, which purchased SimonDelivers and turned into CoburnsDelivers.com, seizing a market position that dissuades competitors from moving into the space.

Even in traditional stores, one of the things that the recent presidential election results reminded us of is that the ethnic composition of the country is changing; successful retailers have a razor-sharp focus on the clientele available for the store. Note that this is often different than the actual clientele visiting the store. It is easy to keep serving the same clientele even as that clientele becomes a smaller and smaller segment of the community.

Boosting sales is often counter-intuitive because it often requires focusing on things that particular communities value. Research might show that the priority of consumers in selecting a place to shop might be things such as cleanliness and good prices, yet counting on these attributes to win shoppers might be fruitless because every other retailer is focused on these attributes as well. It just might be the kosher section or the organic assortment or the slightly overripe tomatoes available for salsa that can be the competitive edge that attracts the shoppers day after day.

Staying in sync with economic trends is important but difficult to do well. Many a supermarket has blurred its reputation by trying to show it “cares” during an economic downturn by carrying lower cost items, and no less a powerhouse than Wal-Mart messed up by thinking it could attract the readers of Vogue to its clothing lines.

Building sales require A) a strategic approach to positioning the banner and the offer to capitalize on the market — possibly requiring multiple banners and micro-marketing in the different stores of each banner; and B) a tactical approach in which execution is excellent and the store turns on a dime to take advantage of opportunities.

It is always interesting to see how the market is trending, and nobody ever objects to having the wind in one’s sails, but if you are comfortable rowing a boat, you can keep moving ahead whatever the general weather report may project.