Ohio Grocers Offer New Concepts

by Terrie Ellerbee/associate editor

Nate Filler, president of the Ohio Grocers Association (OGA), sees the many different directions grocery retailers find themselves pulled in these days. Customers want local products, store-specific specialty products. They want the best price. More shoppers want their grocery store to communicate with them through social media about product availability, specials, deals and sales.

But first on every shopper’s list is quality produce and meats.

“Customers are demanding quality and freshness, and while that might not be anything new, it’s really raised the bar for the retailers,” Filler tells The Shelby Report’s VP Geoff Welch, who caught up with Filler at the National Grocers Association (NGA) Show in Las Vegas. “I think this is an area where the independents can stand out from the chains and other folks because they’re able to have a high quality meat department, a high quality offering in produce.”

Retailers in Ohio have the chance to buy local through a program offered by the state’s department of agriculture called Ohio Proud. This is something that, for example, Findlay-based Fresh Encounter Inc.’s markets and Wooster-based Buehler’s Fresh Foods have done well, Filler says.

“Both of these strong, regional independent retailers see the advantage of using Ohio products,” he says. “I’m really proud that at the Ohio Grocers Association, we have a new member, Gerber Poultry, using great Amish farms for their chickens. It’s these kinds of things folks are demanding, and the retailers that are doing that are on the cutting edge in Ohio.”

Others are excelling at social media, including Defiance-based Chief Super Markets. President Stephanie Skylar is on the OGA board.

“They’ve done a really good job of using Facebook and other social media to ‘blast out’ and get deals in front of shoppers,” Filler says. “The days of having advertisements over a week are still with us, but really, you have to be focused on, ‘We just got in fresh corn today’ or ‘Our bakery or commissary just baked our famous chocolate chip cookies.’”

Another retailer setting an example is Riesbeck’s Food Markets, based in St. Clairsville.

“They do ponchkes, which are these special donuts that really tie into the local community, so every year folks are waiting and waiting for the ponchkes arrival and then they can blast it out on social media,” Filler says. “These are the kind of unique things the independent grocers are able to be fast and nimble on and they really set them apart.”

Other retailers are focusing on value-minded shoppers. One issue that came up this year in Ohio was a bit of a kerfluffle about grocery stores implementing a “cost plus” format.

“Associated Wholesale Grocers runs a lot of these stores, but we had to fight the bureaucrats who didn’t understand this business model and almost put one of our grocery stores out of business,” Filler says. “It was almost down to the wire. They really wanted him to cease and desist his operation.

“At OGA, we were able to make the connections politically to stop that and then really just turned it around for him. But it’s these kinds of things that we’re trying to do to help the members. Nobody else will fight for them.”

Another issue: the state’s timeframe for distributing Supplemental Nutrition Assistance Program (SNAP) and Women, Infants and Children (WIC) assistance.

“We’ve been working to make processes better on two fronts: SNAP and WIC, two things that are heavily regulated. One of the things that I am most proud about, and one of our biggest victories I think in the history of the Ohio Grocers Association, is we are embarking on expanding the disbursement of SNAP,” Filler says. “In Ohio, 80 percent of folks get their SNAP benefits in the first five days. I worked with the state regulators to extend this out, so starting in 2014 we will now have a system where folks will get it over a 20-day period.

“Why that’s important is our members are not going to have to lay folks off at the end of the month when it’s not as busy and then staff up at the beginning of the month. Our wholesalers are going to have a lot more regularity on when they can bring products and shipments. And, really, the customer is going to have a better experience, a lot better produce and fresh meats and food selection for them throughout the course of the month.”

As for the economy in Ohio, Filler says it’s “great.” He sees good things for Ohio thanks to Gov. John Kasich and a “business-friendly general assembly.

“Ohio is finally rebounding, and rebounding I think a lot better than a lot of our Midwest partners,” he says. “The big thing in Ohio that is leading the way is shale development.”

Energy companies are unlocking the resources of the Marcellus Shale Formation, mostly in eastern Ohio, for oil and gas through hydraulic fracturing or “fracking.”

“We are expecting it to be a huge, huge boom. The supply of natural gas that is locked into this shale is going to be a leader in the country once it is harvested,” Filler says.

“What does it mean for the grocers? Well, it means we got new jobs coming. It means we’ve got folks coming from other states,” Filler says. “Tom Kishman, Kishman’s IGA, are in the middle and heart of this shale country. Ron Graff, Columbiana Foods, has to have a great product selection for the new folks that are coming in from out of state and they really have to start to look to expand.”

Wally Wagner, president of Wagner’s IGA Village Market, agrees that Ohio is looking good economically.

“There are a lot of good things going on,” Wagner says. “The auto industry is coming back. That’s affecting Ohio as a whole. And then the fracking that’s going on with the oil and gas recovery in Ohio is huge. More in our west central area, we’ve got a lot of great companies that are flourishing right now. Crown Equipment Co. is one that’s close to us. We have a Dannon yogurt plant that’s in Minster that is doing tremendously well and we have a lot of smaller, independently-owned businesses that are doing well. We have one company in Minster called Minster Machine, which produces big high volume punch presses. They’re doing very well, too. We’re very fortunate with the industry in our area.

Kristina “Krissy” Martin, VP of Carnival Foods/Cash Saver, says the economy is “tricky.” She doesn’t want to be pessimistic, but says she is deeply concerned.

“I truly believe we are on the slow ticking upward track of a roller coaster that has just about reached the top. I see a plunge in our future,” she says. “Right now the economy—via Wall Street—looks great. But, I think Main Street is about to get very bumpy.

“Americans today have never really had to do without,” Martin says. “The majority of us have had the privilege of living very comfortable and need-free lives. What I see right now is we have some shoppers watching their grocery bill—that is where they make their cuts—so they can still have some disposable income. I think when the plunge comes, the grocery industry is going to see a surge in business and the restaurant industry is going to be left scrambling. But, no matter what, people are always going to want quality and a reasonable price.”

Martin excited about new cost-plus concept

Martin, like many of her peers, comes from a line of grocers. Her grandfather Bob Bay opened a Red & White store in Lancaster in the 1940s then moved locations to Bob Bay & Son Supermarket in the 1960s.

Dan Bay, the current president, is her father. He took over when his father passed away in 1977. Dan Bay grew the company from a single 6,000-s.f. store to a three-store operation.

Martin has worked in the company in every department. Her grocery store career started at age 12, but she officially joined the ranks after graduating from college in 1998.

Today, as VP, she helps oversee operations of two Carnival Foods stores in Lancaster and Circleville and the Cash Saver in Heath.

She is excited about the Heath store. Last year, the grocery company changed the store’s concept from the more traditional Carnival to the Cash Saver cost-plus concept. The store sells everything at cost and then 10 percent is added at checkout.

Martin likes the new concept so much that she drives 40 minutes to get to the cost-plus store to do quite a bit of her own shopping, she says.

“Cash Saver is to me one of the most exciting concepts to come to the grocery industry in years. The savings to the customer are incredible,” Martin says. “Cash Saver is generally 40 percent lower on meat prices than the competition—and that is with 10 percent added at checkout. Based on several price comparisons, we can save customers an average of 30 percent each week on the overall food bill.”

With Walmart “a stone’s throw away in our very own parking lot, Kroger across the street, a newly

remodeled Target with several added square feet of grocery and a Giant Eagle about a mile down the road,” Martin says, the Cash Saver concept is a new twist for the competition, which also ­includes dollar and convenience stores.

“The competition is fierce,” she says. “It seems everyone wants to sell groceries these days. That’s why I am excited about Cash Saver. It is different. It saves the customer money and gives them variety, quality and friendly customer service. To me, that’s ­different.”

Associated Wholesale Grocers (AWG) is the grocery company’s wholesaler and it has been extremely supportive both in the implementation and transition into Cash Saver, Martin says.

“Cash Saver is AWG’s—but they have allowed us to add our name to it and modify the rules of the program to fit our needs,” she says. “They helped set up the store and have kept their finger on the pulse since the day we opened.”

In addition to the change in concept, the Heath store got an upgrade, particularly in the meat department.

“When we opened Cash Saver we changed to all Black Canyon Angus Beef and the Hormel pork program,” Martin says. “These are premium meat items and customers are still saving approximately 40 percent after they check out.”

Her grandfather would appreciate that. He founded the family business on quality meat. He also would appreciate the emphasis the company puts on keeping a family atmosphere in the stores and treating customers as guests.

“They are the reason we are here and what keeps us going,” she says. “Every decision is based on what the customer wants and what will bring them back.”

That also is the primary difference she sees between the independent operator and a big box store—the ability to have that personal relationship with shoppers—and employees.

When Martin hires staff, she looks for personality first.

“My theory is I can teach anyone any task, but I can’t teach you to have a positive attitude and an outgoing personality,” she says. “So, when we hire, we are looking for positive, upbeat and outgoing people.

“As an overall company—all three locations—I am most proud of the fact that we have a great team of managers and team members,” Martin says. “They are dedicated and willing to do anything needed to run the stores. Everyone is on the same page: clean, friendly stores that focus on quality, service and savings.

She also appreciates the Ohio Grocers Association, and its president Nate Filler “for everything he has done in helping us get through some of the red-tape issues at the very beginning. OGA has always been a great supporter of independent grocers—and for that I am very grateful.”

Wagner’s store seeing nice sales growth

In west central Ohio, Wagner’s IGA stores in Minster and Ft. Loramie are doing well.

Wagner’s has been an IGA member since 1953 and the current owner, Wally Wagner, still has the original charter his father signed.

Wagner tells The Shelby Report that sales are up around 5 percent for the Winster store, and a little better than that at the Ft. Loramie location.

The former store is the newer location. Built in 2003, the Ft. Loramie store is an 8,900 s.f. market that offers a full line of groceries, dairy and frozen foods, a large hot deli, fresh meat and produce. It also has a Subway restaurant.

Sales there have continually increased since it opened 10 years ago.

“It’s just the format has been really well received in that community and also it’s reaching out farther from the community,” Wagner says. “We’re reaching out farther than I ever expected.”

A couple of things happened that helped to improve sales at the Minster store on Main Street. It got a remodel a few years ago that resulted in a more focused emphasis on the produce department and deli. Minster also got a Subway because of its predecessor’s success at the Ft. Loramie market.

The other thing that changed was that a competitor closed.

“We’re in the heart of Kroger country,” Wagner says. “There are Krogers all around us, and Walmart has really been taking a toll on independents in the area. It just seems like they keep on building.”

Kroger introduced a new format in the area called Rulers, a value-oriented format.

“The independents in this area, within a one-mile radius around Minster, I know four have closed in just the last year,” he says.

Wagner says he is proud that the company has been able to keep the two stores operating successfully in such trying times.

“Staying even or doing a little bit above even I think is an accomplishment right now,” he says.

Still, Wagner is optimistic.

“I think there’s a few things that as an independent we can do to compete very well,” he says. “I think a lot of it is going to be in the customer service side and the individual attention that we can provide our customers. It seems like things are moving so fast you have to be able to stay limber. I think as an independent we can do that.”

One example is in health and wellness, which concerns more and more shoppers as the population ages and obesity is a top-of-mind issue. Wagner’s has brought a registered dietitian—someone not so easy to find in a small town—on board. One project with the new staff member is to help the company study and adjust its own recipes for its Wagner Signature line.

“We try to use as many natural ingredients as you possibly can,” Wagner says. “We are starting to have some of those ­analyzed to fit into a lighter, healthier eating category.”

Wagner’s also will arrange store tours with the dietitian. One will be about gluten-free products, for example. In addition, Wagner’s has begun to include a “nutritional corner” in the company’s ­advertising.

“Addressing the younger families’ and individuals’ desire to eat more naturally and organically and nutritionally—I think that’s going to be a real challenge for us in the industry,” he says.

Wagner is chairman of the Ohio Grocers Association board, working hand in hand with Filler and the staff as they work through issues from health care to menu labeling.

“I feel like we’ve been making a lot of headway,” he says. “We’re looking for a lot more successes this year, too.”

The chairmanship is a personal accomplishment, Wagner says.

“We’ve got an outstanding organization in Ohio that does a lot of great things for the grocery industry, not just retailers, but also wholesalers and manufacturers,” he says. “It also includes independent retailers and national chain retailers, so we represent the whole gamut of the grocery industry in Ohio.”

Industry-wide, Wagner sees “micro marketing, ” the use of shopper data to tailor offers to individual customers, as one of the more important issues for grocery retailers today.

His shoppers can sign up for a Wagner’s Rewards Card, which at first gives customers a discount on fuel at affiliated gas stations and then brings them more tailored digital coupons and special savings.

Geyer’s Fresh Foods reinvests in its stores

Rick Geyer, president and CEO of Geyer’s Fresh Foods, served on the OGA’s board of directors from 1987-95, and as chairman of the board for two of those years.

He was just elected to the National Grocers Association (NGA) board, which he says is “a real thrill.

“I’m looking forward to that experience,” Geyer says. “A few of the board members are friends of mine. It’s a great time in my career to get involved in this.”

Geyer’s has six stores in central Ohio, with locations in Galion, Lexington, Mansfield, Wellington, Ashland and Medina. Stores range in size from 15,000 s.f. to 50,000 s.f.

Over the past year, the 15,000-s.f. Wellington store was remodeled and the formerly 20,000-s.f. Lexington store has been expanded by 4,000 s.f.

“It was part of our plans for the last couple of years to reinvest in those businesses that are doing well for us, and we’re rather excited about it,” Geyer says.

The upgrades focused mostly on perishables.

“We never want to lose sight of center store, because that grocery department does deliver sales and profits, but it’s all about having good perishables for our customers. That’s the main thing that customers are looking at,” he says. “So we’ve been sprucing up and giving space to the departments that need it.”

Geyer says he is careful about growing the company.

“We are in a very competitive and price-sensitive market,” Geyer says. “There are probably some stores out there that I might be interested in, but we want to try to reinvest in our present operation before we stretch ourselves out.”

To make sure the stores fit the community, Geyer’s and Supervalu performed a survey to study the demographics of the area. The results were surprising, he says, with one community that had been perceived as well off not doing so well, and others, where the perception was that residents didn’t have a lot of money to spend actually have a fairly strong income base.

“Sometimes you think you know your customers, but you really don’t,” Geyer says. “You have to take a step back and look at your communities, look at what you’re trying to do and make good business decisions.”

Geyer’s has always been a Supervalu customer.

“They’ve gone through some difficult challenges the last three years,” Geyer says. “But I’m optimistic that they’re going to come through this. There are some good wholesalers out there, but I always thought (Supervalu) was kind of the premier wholesaler.

Training offered by “Supervalu University” includes courses in management/HR, store operations/financial, merchandising & marketing and customer service training for associates. Geyer sees training, recruiting and retaining good employees as a challenge facing the entire grocery industry.

“We’ve tried to put together a program that is getting to the grassroots of our company,” he says. “Supervalu provides the GOT (Greet, Offer, Thank) program…so you’re constantly working on those things. As an independent, you have to prove that you provide good customer service, and it isn’t just in the front end. It’s around the store, whether it’s bakery/deli, which is a very sensitive customer service department, the produce department, where somebody wants to understand a particular product and the produce clerk or manager can explain that to them, and meat departments just have to be right…meat department (employees) can be great salespeople if we allow them to be—not only by knowing the kind of product that you sell, but to a lot of people who like to ask questions about how to prepare things.”

Geyer also feels that while grocery stores have a responsibility to provide customers with healthful food, there is still the issue of free choice. He knows organics and health & wellness are important to some customers, but there are boundaries.

“I remember sitting in a conference with OGA about obesity and it was kind of gearing toward ‘we ought to sell this,’ ‘we ought to do that,’” Geyer says. “I said, ‘wait a minute. That’s a freedom. You come in my store and buy what you want.’ I’ll show you what’s good and what’s not so good, but we have to be careful with that.’ People have the right to ask and be educated, but that’s really a fine line, I think. I really do. I think there’s a limit to what we can do with that.”

Social media is another area that is still relatively new for independent grocers. Geyer’s is on Facebook and learning more about social media, which the senior Geyer says is “a fantastic” medium for communicating and informing customers as well as for selling.

“I’ve come up in the generation that would never envision this, but the younger population, this is their way of life and we have to pay attention to that,” Geyer says. “First of all, you have to run good grocery stores, provide good service, provide a reasonable, competitive price, but then if you can bring them in through social media, you have to follow up with that. It’s another way to get to the consumer today.”

Geyer has been in the grocery business since the time he was about 9 years old.

“The first thing you know I’m running a store,” he says. “The next thing you know my dad had to leave the business at an early age (52) in 1977 and I was in charge of the company from that point on with a lot of good support from a lot of good people in our organization.”

Looking to the future, one of his five children, son E.J., is now taking on more management responsibility for the family-oriented company.

The Independent Impact On The Midwest

In the Midwest, independent grocers provide 229,905 direct jobs, along with $6.8 billion in direct wages. Midwest grocers do $29 billion in sales annually and pay approximately $6.1 billion in taxes. In terms of sales, Ohio brings in the most with $5.6 billion each year, followed by Illinois ($5.2 billion) and Wisconsin ($3.2 billion).

Illinois

Sales: $5.2 billion

Direct jobs: 34,502

Direct wages: $1.1 billion

Taxes: $1.1 billion

 

Indiana

Sales: $2.8 billion

Direct jobs: 21,468

Direct wages: $689.2 million

Taxes: $574.8 million

 

Iowa

Sales: $1.5 billion

Direct jobs: 8,597

Direct wages: $229.4 million

Taxes: $190.2 million

 

Kansas

Sales: $1.3 billion

Direct jobs: 10,311

Direct wages: $309.9 million

Taxes: $256.1 million

 

Michigan

Sales: $3.1 billion

Direct jobs: 29,975

Direct wages: $961.2 million

Taxes: $880.9 million

 

Minnesota

Sales: $2.2 billion

Direct jobs: 18,487

Direct wages: $599.4 million

Taxes: $556.2 million

 

Missouri

Sales: $3.1 billion

Direct jobs: 25,703

Direct wages: $702.8 million

Taxes: $598.6 million

 

Nebraska

Sales: $605 million

Direct jobs: 7,814

Direct wages: $220.3 million

Taxes: $181.9 million

 

North Dakota

Sales $267.8 million

Direct jobs: 4,024

Direct wages: $94.1 million

Taxes: $80.8 million

 

Ohio

Sales: $5.6 billion

Direct jobs: 44,379

Direct wages: $1.2 billion

Taxes: $1.1 billion

 

South Dakota

Sales: $217.8 million

Direct jobs: 3,584 jobs

Direct wages: $86.6 million

Taxes: $65.4 million

 

Wisconsin

Sales: $3.2 billion

Direct jobs: 21,061

Direct wages: $587.2 million

Taxes: $523.8 million