by Lorrie Griffith/editor–Southeast
While neither Louisiana nor Mississippi is booming economically, there is still a lot going on in the food retail business.
According to Bureau of Economic Analysis gross domestic product numbers released in May, Louisiana posted the worst economic performance of the 50 U.S. states in 2017. Its economy shrank by 0.2 percent, which is better than 2016, when it contracted by 0.4 percent. Louisiana’s $246 billion economy remains nearly 6 percent smaller than its 2010 peak, after adjusting for inflation, according to The Daily Advertiser, a Lafayette newspaper.
Donny Rouse, CEO of Thibodaux-based grocer Rouses Markets, tells The Shelby Report, “Our economy in south Louisiana, unfortunately, is the worst economy in the United States right now. The oil runs our economy here, and with it, the last couple of years it has continued to fall. A lot of people lost their jobs, a lot of people moved out of the area, so it’s been difficult for us and for our customers. But we feel like it’s kind of hit the bottom and should begin rising up again.”
Emile Breaux, president and CEO of Baton Rouge-based Associated Grocers Inc., a member-owned grocery cooperative, added, “Unfortunately, as the oil and gas industry/petrochemical industry goes, that’s kind of how our economy goes along the Gulf Coast. With the downturn that our industry saw for so many years, now you’re starting to see the price of oil come back up. Not saying we’re going to be back to prior levels of employment, because that’s not the way those industries work, but we are seeing a little uptick in the economy because of the increase in price in oil, and I think the tide is rising and kind of helping all the boats float upward at the same time.”
The Advertiser noted that, in fact, the last three months of 2017 showed stronger growth for Louisiana, with its economy expanding at a 2.2 percent annual rate.
That Bureau of Economic Analysis report showed Mississippi 46th in economic growth in 2017. Its $112 billion economy remains smaller than in 2008 in inflation-adjusted terms, but economic output by private industry finally surpassed 2008 last year, according to published reports. Its economy grew 0.3 percent in 2017 after growing 2 percent in 2016. Growth was led by wholesale trade and durable goods manufacturing; sectors shrinking included government, nondurable goods manufacturing, agriculture, construction and arts, entertainment and recreation, the report said.
AG Baton Rouge ready to grow
Breaux said his company is “back in growth mode again” after a couple of years of “taking our blows.”
New stores are set to open, many members are renovating and updating, and several pieces of land currently are being evaluated for potential new stores.
Two stores AG will supply are in the process of opening soon.
One is a greatly anticipated store in Grambling called Legends Market. The anticipation partly stems from the fact that Grambling is an FDA-designated food desert and, according to one of the companies involved in the development, Enhanced Capital, it is the city’s first grocery store to open in nearly 50 years. The project received $10 million in federal New Markets Tax Credit funding.
Ground was broken on the Legends Square retail development, which is near Grambling State University, last July; Legends Market is expected to be open by the end of June. The developers of the store are Michael and Mitchell Kimble of Kimble Development.
A statement from the developers in February 2016, when the project was announced, said, “Members of the community are forced to travel to surrounding areas to shop for groceries and other basic retail commodities. Not only is the additional travel inconvenient, it also means that precious tax and economic development dollars are being exported to surrounding localities instead of generating benefits for the City of Grambling.”
About 100 jobs were expected to be created with the Legends Market, a pharmacy and four other retail stores.
The other will be the first campus location AG will supply—a Matherne’s on the Louisiana State University campus in Baton Rouge.
“It’s going to be a full grocery store but it’s going to focus very heavily on prepared and fresh foods,” Breaux said, adding that it will be “very similar” to the Matherne’s in downtown Baton Rouge that is in on the first floor of a residential building. “We think the student population is likewise going to be looking for more prepared and fresh foods and less of the traditional center store box and can type products.”
The campus store should be open when the fall semester begins in August, Breaux said.
In terms of the store updates among customers, “We’ve got it in all forms,” he said. “We’ve got everything from just standard equipment and décor package—painting, interior renovation work, exterior renovation work. I’ve got one project right now that’s undergoing a major expansion—will probably almost double its footprint. I have another project where they’re expanding the store by about 25 percent to accommodate more prepared foods. That same retailer has yet another of his locations that we’re in the planning phases for a very similar expansion for prepared foods. We’ve got a little bit of everything going on right now.”
AG is “pretty far down the road trying to put together a meal kit program,” he added, “and we’re doing electronic couponing for digital promotions. We’re in the game as good as anybody on that.”
AG services about 145 retail grocery stores in Louisiana, plus some smaller regional wholesalers and foodservice accounts.
Rouses will keep busy
Rouses already has had a busy year of store openings, and that will continue for the remainder of 2018.
The Gulf Coast grocer opened stores in Mobile and Orange Beach, Alabama, in April and May, respectively; the remaining stores it will open this fall are in its home state, in Sulphur, Moss Bluff, Covington and Baton Rouge, Rouse said.
Rouses currently is building stores in the 45,000-55,000-s.f. range, with a focus on “the fresh part of our business,” Rouse said. “It’s really what separates us from the competition.”
While Rouses designs and builds its brick-and-mortar stores so that “customers enjoy shopping…and find new things and try new things every time they shop,” the company also realizes the need to offer online options for those who want them.
Rouses has partnered with Shipt and Instacart to deliver online grocery orders, and it is currently testing click-and-collect—shoppers place their order online and pick it up at the store.
“We felt like it was something we needed to try and see how the customers respond,” Rouse said.
Breaux said AG members also are getting into online shopping with service provider Freshop. The wholesaler is encouraging some of its customers to make the necessary physical plant adjustments needed to offer click-and-collect services, where customers pull up to the front of the store to pick up their online order.
He also said a number of customers are seeing great growth in catering.
“It’s just something that continues to grow and become a more integral part of what our stores do as we continue to focus on prepared foods,” he said.
Grocery stores offer the advantage of being able to supply not just food but also paper goods and the like for businesses that utilize stores’ catering services.
“If you have a customer meeting and you order a couple of trays of premade sandwiches, you get all your soft drinks, some supplies for the office like paper towels or bath tissue or cleaning supplies, what have you. It makes it a little more of a flexible opportunity for a commercial customer vs. just going to a restaurant,” Breaux noted.
Rouse, the third-generation leader of Rouses, which was founded in 1960 by Anthony J. Rouse Sr. and has grown to 56 stores (46 in Louisiana, seven in Alabama and three in Mississippi), acknowledged the vital role Rouses’ team members play in this level of success over 58 years.
“The team is what makes up any company, and you know from your team whether you will be successful or not,” he said. “We have a great team.”
Part of that, he believes, is the training programs that are in place for team members and managers.
“We invest a lot into our team, and we’re seeing that pay off for us.”
He credits listening to customers as another key.
“We’re giving our customers what they want, what they ask for,” Rouse said. “We’re not trying to set a grocery store how we want it or with things we want to sell; we’re giving the customers what they want. That way, they’re happy, they can find what they want, and they enjoy the shopping trip.”
AWG independents focus on fresh
David Smith, president and CEO of Associated Wholesale Grocers (AWG), told The Shelby Report, “AWG members in (Louisiana and Mississippi) have responded to changing consumer behaviors and demographics by focusing on what independent retailers do best: fresh, fresh, fresh.”
AWG operates a warehouse in Pearl River, Louisiana.
To help bolster their fresh departments, the member-owned co-op has expanded its locally grown produce program and offers retailers microwave-ready, fresh meal alternatives for the produce department; case-ready and grassfed beef options in the meat department; and meal kits in the deli.
“We have also expanded the Clearly store brand line to address the rising consumer demand for ‘free-from’ clean ingredients as well as value priced natural and organic items so our member stores can better support the healthy eating movement,” he said.
Smith said the emphasis on fresh also led to four major remodels to expand the stores’ footprints.
“Each remodel saw members expand the perishable departments for added variety and convenience,” he said.
Foodservice offerings, including prepared meals, sushi cases, hot tables and grab-and-go sections as well as salad bars and fresh olive bars, also are being added to stores.
Smith said AWG members started or completed six new locations during the past year, bucking the trends despite the fact “the last year has certainly been challenging.”
These new stores range from 50,000-60,000-s.f. urban and suburban fully departmentalized stores to a smaller format rural location designed to meet the needs of the surrounding “food desert” community, he said.
“Several of our members have also grown through store acquisitions, and there are several other projects under consideration,” he said.
Smith said the prevalence of dollar stores in this area continues to impact traditional grocers, but AWG members have responded aggressively by adding or expanding dollar-item departments, increasing the availability of seasonal merchandise and sharpening the presentation, pricing and variety of store brand products.
AWG has addressed the “price sensitive dollar” by adding more variety to its “Always Save” entry price point store brand as well as offering alternative size SKUs in the best-selling categories that compete directly with the dollar store assortment, he said.
Smith said AWG also has seen significant growth with its Cash Saver licensed format “that has proven to be a very successful strategy in highly competitive markets.”
AWG continues to focus on helping its members compete by providing technology programs that put them on a level playing field with regional and national chains as well as online grocers. These include the AWG Shopper Engagement Platform (SEP), which is designed to deliver “best-in-class performance for digital marketing and shopper loyalty marketing,” he said.
Nearly 500 stores—including stores in Mississippi and Louisiana—now use this platform to reach their consumers with customized and personalized relevant offers. This program supports carded or card-less variations as well as simplified digital coupon solutions through a phone app and other connections, he said.
AWG also supports a host of options for e-commerce that can be integrated with SEP. These options include click-and-collect models and options for last-mile delivery in specific markets.
“We are proud to report that our independent member retailers in Mississippi and Louisiana continue to rise to the occasion and have demonstrated a nimble response to both increasing competition and changing demographic trends,” Smith said.
Winn-Dixies change hands
Texas-based Brookshire Grocery Co. bolstered its business in South Louisiana earlier this year by acquiring eight former Winn-Dixie stores from Southeastern Grocers, which has since gone through a Chapter 11 restructuring. The February deal added stores for Brookshire in New Roads, Breaux Bridge, Franklin, New Iberia, Abbeville, Crowley, Rayne and Eunice. They operate under BGC’s Super 1 Foods banner.
“We’re excited about this agreement and the opportunity it provides us to further grow and expand in this region. These stores are a strong fit for our Super 1 Foods banner, and we look forward to welcoming new customers and employees in Acadiana,” said Brad Brookshire, chairman and CEO of BGC. “We’re a family business celebrating our 90th anniversary this year, and we look forward to many more years here.”
Associates in the stores were afforded the opportunity to interview for positions with Brookshire. The stores underwent a brief transition period and then reopened in a matter of days under the Super 1 Foods banner. BGC’s first Super 1 Foods store opened in Alexandria, Louisiana, in 1984; its newest location opened in November 2017 in Youngsville, Louisiana.
Also in February, Shoppers Value, a Baton Rouge-based grocery operator, made a deal to enter the New Orleans market with its purchase of seven Winn-Dixie stores (three of them in Mississippi). The stores are expected to reopen under the Shoppers Value banner by September after remodeling. The Louisiana stores are in Avondale, Westwego, Harvey and Jefferson.
The Mississippi locations are in Picayune and in Laurel.
Danielle Satawa, CFO for Shoppers Value, was quoted in The Advocate as saying the locations are “a natural complement to the chain’s current footprint.”
Shoppers Value has 11 stores in metro Baton Rouge and Lafayette, and a store in Pascagoula, Mississippi.
“The addition of these stores brings our presence to New Orleans and expands our Mississippi markets,” Satawa told the paper. “This was a great opportunity for us to move into these markets.”
Shoppers Value is a cost-plus format operator. The price on the shelf reflects what the store paid for the items; shoppers are charged a 10 percent add-on at checkout for each item.
Growth to come in Mississippi?
“There is room for growth” for Rouses in Mississippi, Rouse said. “We’re looking, around I-10 along the coast. We believe there is room for another one or two stores for us to put in there. We’ll do that in the next couple of years.”
AG Baton Rouge currently supplies about 10 stores in Mississippi. One AG customer that Breaux preferred not to name has a “pretty substantial renovation of his facility. And then we’ve actually got another one of those greenfield projects that we’re evaluating over on the Gulf Coast.
“There’s a lot of upside potential, we believe, along the Mississippi Gulf Coast because there is just not a good, strong chain player there. Like Louisiana, we believe it’s a great market for independents,” Breaux said.
He continued, “We believe, at least in our marketplace, that the opportunities for independents are absolutely phenomenal. We believe that our market is very well suited for independent retailers, and we believe that our program, which focuses very heavily on very consistent quality and a very strong marketing program behind our fresh prepared perishable programs, we believe that’s going to be the key to success going forward.”