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Indiana Adds Thousands of Jobs as Grocery Retailers Improve, Upgrade

[gn_note color=”#FFCC00″]The 2012 Indiana Profile originally ran in the June 2012 edition of The Shelby Report of the Midwest. The profile will be published on theshelbyreport.com one month after it has run in print.[/gn_note]

by Terrie Ellerbee/associate editor

Indiana grocery retailers are still in a “cautious growth mode,” says Joe Lackey, president of the Indiana Grocery & Convenience Store Association (IGCSA).

He says they are “more optimistic than they were a year ago, and last year they had become, I think, fairly optimistic.

“They’re not assured of future growth, but they’re constantly moving that direction—looking at expansions, looking at remodels, things that you do when you’re pretty sure you’re going to be around for another year or so, that nobody big is going to come in and really knock you down. I would say it’s a pretty positive situation,” Lackey tells The Shelby Report.

The state itself is in a good situation. Indiana is second only to Texas when it comes to the number of jobs added for all of 2011.

Jobs have flowed into Indiana this year. The state added 14,400 new jobs in April, marking the fourth-largest month-to-month increase in private sector jobs over the past 22 years for The Hoosier State, reports the Indianapolis Star. Job gains in Indiana have been twice as large as the national increase in jobs over the past year. Indiana’s unemployment rate declined for a fifth consecutive month in April to 7.9 percent, a 0.3 percent drop from March.

Indiana will gain some jobs from Supervalu closing its Xenia, Ohio, distribution center, Lackey said.

“That business is moving to Fort Wayne, to what’s called the Food Marketing Corp. warehouse,” Lackey said. “That’s about 140 jobs.”

Lackey credits Indiana Gov. Mitch Daniels for the stability and ­fiscal health of the state. There are now caps on property taxes; ­businesses pay no more than 3 percent of their assessed valuations. In addition, a referendum must be held before local money is spent.

“What they’re finding that’s happening is they’re just voting everything down,” Lackey says. “They want to build a new library. They want to spend more money on schools … to build parks, they want $50 million swimming pools. The voters are saying, ‘No, we don’t think so.’

“And oddly enough, the sky has not fallen,” he says.

On Feb. 1, Gov. Daniels signed into law “right-to-work” legislation that makes it illegal to force ­employees to join a union or to pay union dues in order to work. It is the first state to pass right-to-work laws in more than a decade.

Lackey says the state has created “a good environment for retailers,” but he does have a problem with the push many states, including Indiana, have been making to authorize farmer’s markets to sell more ­varied items, including products purchased through the Women, Infant and Children (WIC) ­nutritional assistance program.

“Things they shouldn’t be selling,” Lackey says.

He spoke at length about problems with WIC itself: the hoops grocers have to jump through, the forms they have to fill out, the listing of specific brands and not allowing independents to charge more for items than what big box stores with their scale and buying power charge.

Meanwhile, a major election is coming up in the state, and Lackey says, “The association is a little bit concerned.”

He says by the end of November, there will be a nearly 50 percent turnover in Indiana’s legislature.

“That means we’re going to have an awful lot of new legislators who have never been exposed to some of the things we’ve fought over the years,” Lackey says. “We’re going to have to be there to be able to work with them to find out what it is we need to do to keep them on our side and re-educate them as we need to. That’s one of the big things we’re going to have to do.”

Lackey says retailers also would like to see simpler alcoholic beverage laws. Indiana grocery retailers are not allowed to sell cold beer, for example.

“It should not be the position of the state of Indiana to determine who’s going to make a profit from the sale of alcoholic beverages,” Lackey says. “It’s been an issue since Prohibition was repealed.”

WiseWay continues founder’s legacy

The founder of the WiseWay grocery company in northwest Indiana, Marvin “Mickey” Weiss, passed away last Oct. 28 at age 89.

Weiss emigrated from Hungary to the United States in 1937 with his family. When he was just 19 years old, he opened his first store: Ambridge Market in Gary.

Weiss lost family in Hungary to the Holocaust. He served during World War II in the U.S. Army. A sister operated the Ambridge Market in his stead while he served three years in anti-aircraft battery. The proud veteran returned from service, and in 1951 he opened the first WiseWay at 4th and Bridge in Gary.

His son Don Weiss is now at the helm of the thriving company, which now has four WiseWay stores, three PayLow and two Wise Guys Discount Liquors stores. He also serves on the board of the National Grocers Association (N.G.A.).

There are two WiseWay stores in Valparaiso and one each in Hobart and Chesterton. The stores are approximately 60,000 s.f., and feature strong meat and produce departments as well as dairies and bakeries. Very well developed natural and ­organics departments have been integrated into WiseWay stores as well. An aggressive high-low advertising strategy is a draw for customers, who also enjoy carryout service.

The North Valparaiso store will get a significant remodel. Bids were scheduled to come in at the end of June, with construction to start this summer, Weiss says.

“That’s one of our smallest stores,” he says. “It’s 50,000 s.f. and will be about 60,000 s.f. when we’re done. More importantly, we’re remodeling the whole existing facility so that it will have the same caliber of produce and natural and organic and bakery and deli departments that we have in our other stores. We’ve very excited about it.”

The PayLow stores are a bit larger than the traditional WiseWay stores, and range in size from 60,000 s.f. to 70,000 s.f. These stores are a hybrid EDLP/high-low format, Weiss says. Customers often acknowledge their appreciation for the cleanliness of these warehouse-type stores, and don’t mind bagging their own groceries. The stores have the full complements of all departments, but feature very strong pricing.

“We’re not bashful about competing with Walmart and Meijer,” Weiss tells The Shelby Report. “It’s a very important format for us.”

WiseWay stores are located near Chicago, and Walmart and Meijer were very early to that ­marketplace.

“They have been affecting our market for a long time. For us, it’s nothing new, and they did precipitate the exit of many stores, so they continue to impact our market. Hundreds of thousands of square feet of new grocery-related retail opened in the last decade,” Weiss say. “But we’ve been fortunate because people working here want us to be a survivor.”

The greatest challenge, he says, is to stay focused on the basics of the grocery business—“taking care of customers with good ­service and being creative in the perishables departments.

“Price is still very important,” Weiss says. “You have to maintain the proper mix between price and the quality of your offering. It’s important to be able to buy right, and we’re fortunate to be supplied by Central Grocers, who I believe is the premiere supplier of ­independents in the Midwest.”

He stressed the importance of being able to buy product at a fair price in relation to what large, national retailers pay.

Buying local produce is important to the company as well, and Weiss says the chain works closely with Indiana and Michigan farmers to offer produce like local melons and tree fruit. Michigan asparagus was in stock when Weiss spoke to The Shelby Report.

Overall, the company’s mindset is optimistic, but simply put, “there are too many supermarkets in America,” Weiss said. “We’re optimistic, but you have to be realistic about the number of super­markets, particularly mainstream supermarkets that can be opened … there is too much retail. There are only so many opportunities for growth, and we will avail ourselves of those that are there, but we aren’t going to put our company at risk by reaching too far.”

Marsh shuffles corporate positions

Marsh Supermarkets, with more than 80 stores, 41 pharmacies and headquarters in Indianapolis, has seen its corporate staff shuffled over the past year. Joe Kelley, who was named chairman, president and CEO of Marsh Supermarkets in April 2011, left the company on May 8 this year. Kelley is now president of Ahold’s Stop & Shop New England Division in Boston.

Bill Holsworth, COO, has been named interim CEO for Marsh Supermarkets as a national search is conducted for Kelley’s replacement.

In January this year, Kelley and Indianapolis Mayor Greg Ballard announced an $85 ­million development project on the Near North side of the city called “Block 400.” It will feature two mixed-use buildings with retail on the ground floor, 487 apartments, parking garages with more than 1,500 spaces and a 40,000-s.f urban prototype Marsh Supermarket.

The upscale store is slated to open next summer, and it will feature fresh meat, seafood and produce; an extensive deli with gourmet cheeses; a bakery offering freshly baked breads, cakes and ­pastries; and a wide selection of beer and wine, including labels from local brew masters and vintners.

It also will offers shoppers an extensive salad bar and other ­prepared meal options that may be purchased for carryout or eaten in the store’s mezzanine-level dining area.

Kelley’s arrival and departure were not the only executive changes to occur at Marsh over the past year. Last August, the supermarket chain promoted three people and added one VP. David Siegel was named SVP of sales and merchandising, a promotion from his role as SVP of merchandising and marketing strategic ­initiatives. Siegel and Kelley worked together for about 11 years at New York-based Price Chopper.

Bill Buck was promoted to VP and GM of the company’s MainStreet Market stores. Bill Erickson was promoted to VP of Marsh Supermarket operations. Don Rix was promoted to VP of pharmacy, health and beauty care and general merchandise.

The company added Larry Ritzert as a new member of its ­management team, serving as VP of meat merchandising. It also added a director of nutrition and wellness marketing, Mary Snell.

Marsh has taken itself out of the logistics business, signing a long-term agreement last August under which C&S Wholesale Grocers would provide procurement and distribution services to the supermarket chain. The agreement also meant that 250 former Marsh employees would go to work for C&S Wholesale Grocers.

In a statement at the time, Kelley said that the change would ­enable Marsh to “focus our full attention and resources on upgrading our current fleet of Marsh stores as well as expanding into new locations by opening new stores or acquiring other supermarkets.”

The company also announced plans for a $20 million investment in new stores over two years.

Sun Capital Partners, a private equity firm based in Florida, owns Marsh Supermarkets. Sun Capital put the chain up for sale in late 2009, asking $130 million to $150 million, but took it off the market in 2010.

Meijer, Kroger, more grow in Indiana, Dollar General builds DC

Large retail companies adding sites in Indiana include Meijer, which has taken possession of a former Kmart building on U.S. 6 and Willowcreek Road in Portage. Meijer will spend a year renovating the site, including installing a new roof and remodeling the interior, with plans to reopen the store next year, according to ­reporting by the Northwest Indiana Times. The new location will ­feature a drive-thru pharmacy and a fueling station.

Meijer also is working on a new store in Warsaw. It is building a 192,000-s.f. supercenter at 1140 Lake City Hwy. Meijer purchased 38 acres at U.S. 30 and Anchorage Road with plans for a full-size store with a separate gas station. The new location is scheduled to open in 2013.

Meanwhile, The Kroger Co.’s Central Division, headquartered in Indianapolis, is continuing its five-year $100 million expansion plans. In 2009, Kroger began the expansion and renovation effort in Fort Wayne and northeast Indiana. The plan includes $75 million in store renovations and expansion, as well as the purchase of four of the shopping centers where it has stores, including the DuPont Village; Maplecrest Shopping Center; the Village at Coventry; and West State Plaza.

Kroger has closed or transformed three Scott’s stores as they are replaced with more modern stores. The first to be converted was Georgetown’s Scott’s at 6310 E. State Blvd. That store is now a Kroger.

The Cincinnati-based grocery company invested $4.4 million to renovate the former Scott’s at 1125 W. State Blvd. in the West State Plaza shopping center in Fort Wayne, transforming it into a Kroger store. The newer 61,000-s.f. store features a coffee shop, beverage center, soup bar, deli café and larger frozen food, dairy and meat departments.

Last September, Kroger closed a Scott’s store on East Dupont Road in Fort Wayne when it opened a $16 million, 125,000-s.f. Kroger Marketplace across the street. That store, twice the size of the Scott’s it replaced, is in the Dupont Village shopping center.

It is the first of two Marketplace stores that will open in Fort Wayne. The second will open at the Village of Coventry shopping center. The Kroger at 8801 U.S. 24 West will be closed when the new Marketplace store is completed. It is expected to open this year.

So far, Fort Wayne is the only city in Indiana to have Marketplace stores.

Meanwhile, a Fort Wayne Scott’s store on North Anthony was closed indefinitely in May due to structural problems. Employees that were working at the 62-year-old store were assigned to other ­locations as a plan of action is formulated.

West Side Pay Less Super Market, another Kroger property, reopened last Aug. 25 following a $2.9 million remodeling project. The store now has expanded produce, deli and frozen foods departments; a new full-service floral department; upgraded meat and seafood departments with a new live lobster tank; and new U-scan checkouts. The store is located at 1032 Sagamore Pkwy West in West Lafayette.

In late May, Kroger opened a new fuel center ­adjacent to its Pay Less store at the Applewood Shopping Center on Scatterfield Road in Anderson.

North Carolina-based The Fresh Market opened its fourth Indiana store on June 15 last year in Evansville. The 20,900-s.f. store at 6401 E. Lloyd Expressway features a bakery with 30 fresh breads baked daily, 14 varieties of fresh pie daily, a full-service meat counter with freshly-ground beef, a large selection of ready-to-serve entrees, fresh seafood delivered several times per week and more than 200 imported and domestic cheeses as well as a produce department with more than 400 items and a large organic selection.

Whole Foods Market will open a store in Mishawaka in late fall at 4230 Grape Rd. in a former 24,000-s.f. Border’s bookstore. It will be the Texas-based natural and organics grocer’s third location in the state and its first in northern Indiana. Its other locations are in Indianapolis, where it first opened in 1998, and Carmel, where it opened in 2004.

Minneapolis-based Target Corp. continues to bring larger grocery sections, including produce, meats, eggs and other items offered in a SuperTarget, to its Indiana stores, including one at 1102 S. Thomas Rd. in Fort Wayne and two in Evansville.

Family Dollar has built a new distribution facility in Ashley. The chain invested nearly $70 million in the 815,000-s.f. facility, which employs 350 people. Gov. Daniels took part in the groundbreaking ceremony in May 2011.

Josh Braverman, communication director for Family Dollar, told The Shelby Report that shipping from the distribution center will begin later in June. He says the facility currently is accepting incoming freight.

Aldi opened a new $1.2 million store in Columbus last Dec. 6. The 18,000-s.f. store is located at 1505 N. National Rd.

Walmart has 90 Supercenters in Indiana, as well as 11 discount stores and three Neighborhood Market stores. It hasn’t done much in The Hoosier State since last July, when it opened a 142,000-s.f. store in Connersville. That store has a full line of groceries, a bakery, deli, prepared food and beer and wine as well as a pharmacy.

Last summer, a subsidiary of Michigan-based Linc Logistics Insight Corp. leased a facility in Hammond to serve as a clearinghouse for Walmart’s inventory. The inventory is distributed to the company’s retail stores throughout the U.S. That facility brought 120 jobs to Hammond.

The Amazon question in Indiana

Brick-and-mortar retailers were not happy with Indiana’s agreement with Amazon, the online retailer.

Amazon is to begin voluntarily collecting and remitting the 7 ­percent Indiana sales tax starting Jan. 1, 2014, or 90 days from the enactment of federal online sales tax legislation, whichever is earlier. Federal legislation is not guaranteed, but support has swelled for such a measure. Also, it is possible that changes in state tax laws could come sooner.

The Indiana Merchants for Tax Fairness have expressed ­displeasure with the agreement, reports the Evansville Courier & Press. Its members don’t understand the wait.

“Why does Amazon need two years?” asks Grant Monahan, president of the Indiana Retail Council. “That’s our concern.”

Estimates are that the state loses $75 million in uncollected online sales tax annually, with $20 million to $25 million of that from Amazon alone.

Amazon has four facilities in Indiana—two in Indianapolis, and one each in Plainfield and Whitestown—and it is adding a fifth. Amazon is building a $150 million warehouse and distribution ­center in Jeffersonville that should open this fall and employ as many as 1,050 people by 2015.

Some question whether Amazon’s significant presence in the state shaded the decision to delay.

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