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Grocers Fine-Tune for Future Success as Recovery Inches Along

2011 Oregon Profile The Shelby Report
While economists are hopeful that Oregon is poised for recovery, that recovery is coming a bit slowly.

Last updated on June 13th, 2024 at 12:04 pm

[gn_note color=”#66cc66″] The 2011 Oregon Profile originally ran in the April 2011 edition of The Shelby Report of the West. Due to reader requests we will be posting our Profiles from each edition of The Shelby Report. The profile will be published on theshelbyreport.com one month after it has run in print. [/gn_note]

by Lorrie Griffith/editor

While economists are hopeful that Oregon is poised for recovery, that recovery is coming a bit slowly.

The state’s unemployment rate in January 2011, 10.4 percent, was down nicely from 11 percent in January 2010 and is the lowest it has been since January 2009, but was down only 0.2 percent from the December 2010 figure. And the unemployment rate may stay where it is for a while even if new jobs are created as people who had given up the job search get back in the game, observers say.

In January, about 218,700 were unemployed in the state, according to the Oregon Employment Department, and at press time, the Oregon legislature was looking at extending unemployment benefits for about six months to help tide them over until the recovery can gain steam.

Senate Majority Leader Diane Rosenbaum, a Democrat, and Sen. Brian Boquist, a Republican, are co-sponsoring two bills that together would extend the benefits 20 to 26 weeks. Gov. John Kitzhaber is ready to sign the bills, according to a March 3 article in the Ashland Daily Tidings.

Senate Bill (SB) 637, if passed, would pull in $225 million in federal emergency funds to support the approximately 50,000 residents who have been out of work since 2009 and have exhausted all other benefits, the Daily Tidings said. SB 638 would add six more weeks of benefits for those who have been out of work since 2008 for a total of 26 weeks. Oregon will kick in about $30 million from its own unemployment fund for that extension, the paper said. Sen. Rosenbaum said that the $30 million will help the unemployed for about six weeks but won’t raise unemployment insurance rates.

If signed, these benefits would go into effect by mid-April—the time when about 20,000 jobless Oregonians would come to the end of their current benefits.

The legislature’s joint budget committee was set to take up the issue the week of March 7.

Steve Frisby, president of Safeway’s Portland Division, had it right: “In 2011, and in the immediate future, the legislative process in Oregon and Washington will be greatly influenced by the national and local economy. State and local government will seek additional revenue streams to fill major budget gaps.”

According to Oregon Catalyst.com, the latest official state estimate for the deficit in Oregon’s General Fund Budget for the upcoming 2011-13 biennium is $3.5 billion. According to the Washington Monthly website, Washington’s deficit is about $4.6 billion.

Safeway’s Portland Division, actually located in Clackamas, operates 116 stores in Oregon and southwestern Washington and employs about 12,000 people between the two states.

“Our lobby teams in both states will be working the halls in Salem and Olympia monitoring over 10,000 bills,” Frisby told The Shelby Report. “Sustainability will also be at the forefront of the legislative process within our division and especially in Oregon. At the top of our list, we’re opposing an expansion to the Oregon bottle bill, and we’re supporting a uniform and statewide bag policy.”

This policy, he said, would ban plastic bags, place a five-cent fee on paper bags and would apply to all retailers.

This, he said, will “eventually change consumer behavior by promoting the use of reusable bags.”

Oregon, according to most observers, is likely to be the first state to adopt a statewide ban on plastic bags. Plastic bag bans have been adopted already in some cities and towns, such as those in California, but not entire states.

Fred Meyer, the Kroger-owned multi-department-store banner based in Portland, stopped using plastic bags at its 10 Portland stores last August, offering only paper bags. It was a proactive move, designed to test consumer reaction to the anticipated plastic bag ban. The stores did not charge for the paper bags during the test, but did encourage consumers to bring in reusable bags to carry home their groceries. Plastic bags remained available for produce.

Whole Foods stores in Portland also do not offer plastic carry-home bags, according to KGW.com, NewsChannel 8 in Portland.

Grocers focus on customer experience

With consumers looking to meet their grocery needs in the most cost-effective way possible, Oregon grocers are trying to make sure they are meeting their pricing needs in addition to providing as pleasant a shopping experience as possible.

Safeway, Portland’s leading grocer according to new Shelby Share figures (see pages 22-23), continues with its Lifestyle conversions, a process that began in late 2003.

Frisby said the broad company initiative has been all about “showcasing our commitment to quality, particularly in the perishables departments, with high-quality fresh produce, meat, seafood and floral departments.”

There also is a focus on presenting the shopper with an array of prepared foods choices and organic and natural products as well as dry grocery items tailored to local preferences, he said. The conversions also outfit the stores with “an earth-toned décor that is warm and inviting, with special lighting to highlight products and departments, custom flooring and unique display features.”

Shoppers have responded positively to Safeway’s commitment to continuing its store improvement plan during these ­difficult times.

“Even during the recession, we have been humbled by our loyal customers,” Frisby said. “As a result, we continue to ­remodel stores in the Portland Division to the Lifestyle store concept.”

Last year, 11 stores in the Portland Division were remodeled, for a total of 97 out of 116. Five more Portland Division stores are slated for remodel in 2011.

New stores also are on the ­horizon—something the division hasn’t experienced since November 2008, when the Pearl Safeway opened in downtown Portland.

Two projects are planned: A ­rebuild of the Safeway on Hawthorne Street in Portland and a new store in Oregon City. The groundbreaking for the Oregon City store is planned for the spring.

Frisby is upbeat about where his division has been and where it’s going.

“In 2010, I was proud of a number of things,” he said. “At the top of the list is our strong performance during a near economic crisis. I am extremely proud of our Portland Division employees, and the company as a whole, for continuing to provide clean, neat and well-stocked stores with exceptional service. Our customers and employees have maintained their loyalty, and the result has been a reinvestment in this market.”

Safeway also continues to fine-tune its product mix and keep tabs on its pricing.

Steve Burd, chairman, president and CEO of Safeway ­corporate in Pleasanton, Calif., said in a Feb. 24 press release reporting the chain’s fourth quarter results, “We are pleased with the improving trends in sales in 2010, driven by our price reductions, reinvigorated private label brands and targeted marketing,” adding that “these trends have continued into the first quarter of 2011.”

In the private label realm, Safeway added the Open Nature brand of meat products in January, which joined its other health & wellness brands, O Organics (300 items) and Eating Right (200 items). Portland division stores offer 300 O Organics products and 200 Eating Right items, Frisby noted.

The Open Nature brand includes more than 100 products made with 100 percent natural ingredients from natural resources, with nothing artificially added.

“It’s another demonstration of Safeway’s commitment to providing our customers the best possible experience when they prepare meals for themselves and their families,” he said.

The first Open Nature items are fresh beef and pork, fresh chicken, chicken sausages, bacon and beef hot dogs. Additional Open Nature products will be available throughout the year across additional categories, such as bread, yogurt, ice cream, salad dressing and frozen foods.

Fred Meyer is a close No. 2 to Safeway in Portland with its large stores—about 150,000 s.f.—carrying not only a full line of groceries but also apparel, home goods, garden goods, home electronics, paint/hardware and nutrition centers. The chain, which has been around since 1922 and is known to locals as Freddy’s, is in the midst of a campaign to upgrade its store base that represents a $240 million investment, according to KGW.com.

The Oregonian reports that Fred Meyer began renovations at its Burlingame store in southwest Portland on Valentine’s Day this year. But come early May, the store will be shut down entirely so that the $19 million update that will enlarge the store can be completed. About 15,000 s.f. are being added to the store’s footprint. Improvements are being made in the store’s environmental friendliness, and a larger, safer parking lot will be installed thanks to property the chain acquired when a fast food restaurant next door closed.

The store will be closed for about four months for the renovations, which is unusual for Fred Meyer, company spokeswoman Melinda Merrill told The Oregonian.

But the Burlingame store, located on Barbour Boulevard, is unique. It is the chain’s oldest operating store, having first opened its doors in 1950; it is smaller than a typical Fred Meyer; and it is located between a state highway and scenic hills so expansion space is limited. The chain considered tearing down the store and rebuilding, but economic forces made remodeling a more desirable choice.

While the store’s departments are being moved around to take advantage of the space that can be added, the remodel will not take away the neon signs the store is known for, including the sign on the outside (they will be changed over to LED). Nearly a hundred new skylights will brighten the store, as will new fixtures and new seating for the store’s restaurant area.

From May until the store reopens in September, the location’s 170 employees will be transferred to other stores. The store’s pharmacy will move to a nearby vacant Hollywood Video store during the remodel.

According to The Oregonian, Fred Meyer has other new stores under construction and several have been remodeled.

KVAL News said in February that a Fred Meyer store has been proposed in South Eugene at the Civic Stadium property owned by the Eugene 4J School District. Other proposals include refurbishing the stadium into a soccer complex or redeveloping the property as a YMCA or for student housing.

Walmart operates 17 Supercenters, 14 discount stores and one distribution center in Oregon, employing nearly 10,000 people. Its activity in Oregon in recent months has revolved around remodeling stores to its “next generation” concept. These stores, which typically are renovated in a three-month time frame, get a new layout, wider aisles, low-profile shelving, a bright interior paint scheme, enhanced lighting and easy-to-read signage, Walmart says.

The Walmart in Salem unveiled its new design in September; the Pendleton store celebrated its grand reopening last June.

A new 152,000-s.f. Walmart Supercenter opened in on Adair Street in Cornelius Aug. 8 last year, adding 300 area jobs.

Another new store on the Oregon horizon is in Salem, a Trader Joe’s on Commercial Street that is “coming soon,” the company’s website says.

Also, Portland-based New Seasons Market plans to open a store in Beaverton at Progress Ridge this year.

In a January 2010 update on the New Seasons website from Lisa Sedlar, who was promoted to CEO in December 2010 from president and COO, she said, “I’m pleased to announce that we plan to open our next store in the Progress Ridge area of Beaverton. The 50,000-s.f. market, scheduled to open in 2011, will anchor a new shopping center to be developed by Gramor Development at the intersection of Barrows Road and Horizon Boulevard. Our new Beaverton store will create more than 200 new jobs and will raise New Seasons Market’s total employee count to almost 2,000.”

She added that New Seasons had “received countless calls and emails from neighbors asking us to open at this very spot and we’re excited to have the opportunity to serve the communities in the area. The Progress Ridge store will offer essential groceries for everyday living and will emphasize local and organic produce, natural meats and chicken, fresh seafood, cheeses, breads from an in-store certified organic bakery and an extensive wine and beer selection.

Sedlar succeeded Brian Rohter, one of three company founders, as CEO. Rohter also retired from his position as the company’s board chairman in January.

Sedlar joined New Seasons in 2005 as president and has since led daily operations. She is a formally trained chef who worked her way up through a series of grocery store jobs ­starting as a clerk.

New Seasons currently operates 10 stores.

C&K Market diversifying, growing

C&K Market, the Brookings-based chain, is growing and diversifying its store base to position itself for continued success.

Greg Sandeno, COO of C&K Market, which has stores in northern California as well as Oregon, spoke with The Shelby Report just a few weeks after the chain announced its acquisition of the Willamina Thriftway Supermarket in Yamhill Valley, just east of Salem, in mid-January.

C&K converted the store to its Ray’s Food Place banner in less than a week, reopening Feb. 2 under its new name.

Ray’s Food Place is the company’s conventional supermarket banner, offering a full line of groceries and a full selection of perishables as well, and Ray’s fit the Willamina store the best.

“Thriftway has a real strong weekly ad program, so we opted to go in there with Ray’s Food Place because it also has a strong ad presence,” Sandeno said.

The Thriftway was the only grocery store in Yamhill Valley; the nearest competitor is about eight miles away in an ­adjacent town, he added.

Most of C&K’s stores, about 25, fly the Ray’s banner, but the company also has a warehouse format, Shop Smart (12 stores); a fairly new convenience store concept, C&K Market (three stores); and Pharmacy Express units (12).

The dozenth Pharmacy Express was added in February, when C&K purchased a strong independent pharmacy in Brookings called Chetco. Some Pharmacy Express locations are inside stores; others are adjacent to stores; the Chetco is a stand-alone store.

C&K’s low-frills, no-gimmicks Shop Smart stores are an “everyday low price type format,” Sandeno noted.

To fill in gaps in towns that are too small to need a full-size supermarket, C&K developed its namesake convenience store, C&K Market, just a couple of years ago. These are “kind of a large convenience store model in small towns that have no grocery store.”

They stock meat and some produce items as well as “a lot of grab-and-go deli-type items,” Sandeno said. “They are great for fill-in shopping trips—run up to the store and get a gallon of milk and a pound of ground beef type deal. We find it’s kind of a good second shop for the people who live in those towns. A lot of times the people who live in those areas will wander out on the weekends to Walmart and what have you in some of the bigger towns. But this is a good, everyday-type store.”

The first C&K Market opened in Yachats, on the Oregon coast, last year. Another followed in Waldport, also on the coast. The third is in Walterville.

Having three different formats in its arsenal gives the ­company a range of opportunities for growth.

“What our strategy is now that we have these three different models is we can kind of acquire and/or build from the ground up different types of stores in different types of rural communities based on what the need is,” Sandeno said. “Not only will we look for acquisition opportunities for grocery stores, but we will also be looking for that in the pharmacy as well.”

Like some of its competitors in Oregon, C&K has worked on beautifying its store base over the past couple of years to improve the shopper experience and give a sense of cohesiveness to the store base.

“Our stores were kind of all across the board. We had a lot of ’80s décor that was kind of turquoise, etc.,” Sandeno said. “So what we have been focusing real hard on the last two years is what we’re calling ‘clean and bright.’ That’s where we’re going in and updating our conventional stores and our warehouse stores to have the same look and feel. (We’re adding) softer colors, some components of rebranding that we’ve done.”

Earth tones like olive greens, golds and rusts have been applied, and the changes have resonated with C&K’s shoppers.

“These have been very well received among the consumers. We’ve seen good numbers,” Sandeno said. “Once they’re done we’ll have what we call a ‘mini re-grand opening’ where we’ll have some specials and a meet-and-greet with the manager again. We’re finding we get some good sales lift when we do that.”

Grant Lunde, director of marketing, said these refurbishing projects are done while the stores remain open.

“It involves a few weeks of painting and about four days of the installation of the core, so about three weeks’ total time,” Lunde said. As much as possible is done in the off hours “so it doesn’t affect the customer experience.”

But the company has not neglected the price ­factor, either.

“Price is at the top of our program right now, just like anybody else. With the economy as weak as it’s been in the last couple of years, things have really become all about price, so if we invest in our pricing, we see most of the movement when we change our weekly ads,” Sandeno said. “We pick certain weeks that we feel need to heat up our front page of our ads or add additional marketing pieces out there on the weekends and things like that.”

The goal is to keep residents shopping locally on weekends.

“Our biggest thing is we’re pretty good at keeping our folks in town through the week, but we are always trying to figure out how are we going to have the best case scenario for us to keep people from going somewhere else on the weekend.”

Ironically, rising gas prices should help them do just that.

“I certainly can’t foretell the future, but there has been talk of fuel prices going up this summer, and in a lot of our markets that actually keeps folks from making that 50-60-mile round trip” to shop at Walmart, WinCo, Costco or a chain grocery store such as Safeway, which is the company C&K goes head-to-head with at the most points.

To further attract local residents to its stores, C&K holds a lot of community events at its stores, Sandeno said, noting that Lunde spends a lot of time coordinating these types of events.

These include “weekend events for the families and reasons to come to the store that aren’t all about price, whether it’s bringing Farmer John and his corn in or having a spaghetti feed or whatever,” Sandeno said. “We do a lot of those types of things just to be your local community store, things that big companies can’t pull off as quickly.”

C&K, a family- and employee-owned company, has another competitive edge: long-term employees. Sandeno, who has been with C&K for six years and spent most of his career in “the much larger arena,” noted, “C&K has an unusual amount of depth and tenured folks, top to bottom. There are still a lot of family members that still work in the company. There is not a store out there that doesn’t have 30-, 40-year employees, which is not heard of a lot of times in this industry. So that has really helped, even through the economy. We’ve fared pretty well, and I put a lot of that back on our people. They’re entrenched in the local communities and people come in to see them and know they’re going to get great service, consistent service, so that is absolutely a big deal for us, service.

“We consider ourselves right now in a growth mode,” Sandeno concluded. “Right now we’re evaluating potential acquisitions that are available in our market. We see this as a great opportunity for a company of our size to grow, and we’re positioning to do that. So we see a pretty positive outlook as far as growth potential for the company over the next three to five years.”

Safeway’s Frisby acknowledged the challenges but sees brighter days ahead.

“The economic outlook for 2011 is still tough, and we continue to operate in an increasingly competitive industry. The competitive environment in Oregon and southwest Washington is no exception,” Frisby said. “However, we’ll continue to offer our customers a truly enjoyable shopping experience with new and exciting products, good prices and exceptional service.”

About the author

Shelby Team

The Shelby Report delivers complete grocery news and supermarket insights nationwide through the distribution of five monthly regional print and digital editions. Serving the retail food trade since 1967, The Shelby Report is “Region Wise. Nationwide.”

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