Where will the grocery industry be in the near future? Chester Sideman and his wife Carmen married 25 years ago. After they married they decided that they did not want to be typical working Americans who worked from 9-5 and retired at age 55. They had always envisioned running their own company and running it in the form that they saw fit. After thinking long and hard they decided to build a company from the era that they were from.
Being that they were from the "hippie" era, they fell in love with the idea of running a grocery store that provided a healthy alternative to the grocery shopping experience. A few years after opening, Chester and Carmen began to notice a trend. They were seeing that their health food store was beginning to gain popularity with the locals here in San Francisco, since so many were from the same era. Seeing this, the couple decided that they needed to expand and take full advantage of their popularity. First they decided to expand into a neighboring store that had gone out of business.
With this added space, they were able to triple their size and bring in an enormous variety of products that tied into the theme of the store. With this added size, they also found that they needed help in the day-to-day operations of running the store. Due to this fact they hired Craig Premier. Craig was a grocery industry professional that had worked for years in the business.
He was also able to see the great potential that this store had. After five years of Craig taking control of running the store, he had implemented all the ideas that he had to help build the grocery store. At this point, the store was doing great. Profit was double what it had been before Craig got there, but beginning to level off.
Craig noticed this and had a talk with Chester and Carmen. Craig: Chester, we need to reevaluate what it is that you want out of this store at this point. I understand that this store has been doing very well the past few years, but with the increase in competition from stores like Whole Foods and Rainbow Grocery, I feel that changes need to be made. Chester: I know that our profits have been doing well and have started to level off, but do you think big changes need to be made? Craig: I feel that I should first tell you from experience that we are not safe. The grocery industry is not much different from the technology industry. As soon as the competitor figures out a way to make any aspect of the shopping experience better than ours, we can very well loose our customers.
This would be disastrous because we would then be working to catch up rather than setting the industry standard. Carmen: I understand where you are coming from Craig, but I can already see this as being a huge investment for a small grocery store to undertake. I guess I'm just trying to say that I would hate for this to be what brings us down. Craig: Fear is a part of this because you " re dealing with the unknown.
I am quite sure that you were second guessing me running this store, but all I have done is what I feel would create the most for this store. I also see my ideas taking this store to the next level. Chester and Carmen: So what are you suggesting? Craig: Being that this store is not the huge mega-store that can dish out a great deal of money, I have come up with a few ideas. First, our own company brand. There are no small mom and pop grocery stores with their own brand of items. Being that our shoppers look to us for specialty items, we can create our own brand of "Great Food Select" items sponsored by Great Food Grocery.
Next, I would want to implement a cross of food and medicine. The differences between the food that we eat and the medicine we take will continue to diminish. This will lead shoppers to try a more wholesome form of curing illness rather that bombarding the immune system with drugs. Finally, we can offer a way to show that we care for the community and all those that are trying to get their foot in the grocery door. By introducing a Buyer & Seller marketplace, we can give those individuals that want to place their product in our store the chance.
Chester: Well, if you think it would be best, you have our blessings, and hopefully all this will be done in 3 years! After getting the OK from Chester and Carmen, Craig had his new project. He felt that deep inside his heart these changes would be what the store would need set in apart from their competitors. From here, Craig began investing in time and money into his plans. The first issue he took on was the company brand.
He had a feeling that by distinguishing the store and goods in the store from the competitors, he would have more interest generated in the products, and more importantly in the store. The first venture was wine. This wine would be bought from a local vineyard, but bottled under the store logo. This would bring interest to the store and would also be a marketing tool. "Hey, have you tried that new Great Foods wine," causing interest in the product and the store.
Next, the food and medicine integration began. A great deal of money was spent on research to find the food, herbs, and naturally edible items that aid in healing sicknesses. Through the use of a consultant, they were able to set up a new section in the store that offered food alternatives to illnesses. This section contained healing foods like canola oil, garlic products, vitamins, and natural nuts. Thinking that the shoppers that started shopping there were from the "hippie" era, Craig felt that this idea would blow the roof off. Finally, Craig began to research on ways to set up a buyer and seller convention.
He knew that if he got the word out about this great opportunity, that the vendors would come. He felt that this would be the ideal stage for lesser know brands to be seen and given a chance to have space in a thriving store. By the end of the three year limit that Chester had given to Craig, all the pieces were in place. He had been able to create a bottled wine through the help of a local vineyard, with not only a merlot, but also a chardonnay.
The center isle, located in front of the produce, was converted into the health food aisle. It carried all the herbs, oils, nuts, and vitamins that could cure illnesses for the common cold to migraine headaches. Finally, the convention was planned. Craig thought that the best way to give the vendors a sense of their style of store was to have the convention in-house. This kept the cost of renting a hall down, but would need the store to be closed for a day. Vendors were called and appointment set.
The three year plan had been completed, and ready to roll. Dark World Upon completion of Craig's new ideas, problems arose. The first had to do with the new store brand. Craig had envisioned a platform where he would be able to launch new items and make a good profit. It all sounded good, but he did not factor product loyalty into the equation.
He failed to realize that customers have habits that they do not intend to break. These habits are formed through years of buying a specific item and sticking with it as long as the product is in demand. The wine was just a mound of mashed grapes that were not being sold. This investment had cost the store a great deal of money, from bottling rights, to trade marking the logo, to the investment of bottles and wine.
It was safe to say that the store brand had flopped. Next were the healthy alternatives to medicine. This section of the store had taken the place of the bread aisle. This was due to the whole care sensation. Since bread sales were down, he needed a boost in profit for that section. This outcome was not as bad as the wine.
Although the natural cures were selling, an unforeseeable even took place. The care craze had all but vanished. People were back to eating bread with pasta dishes, back to making sandwiches, just back to normal. Since the demand for bread was a lot higher and supply was less, they lost out on much more profit than they made from the medicine. Finally, the buyer and seller market was concluded.
Although Craig, Chester and Carmen were able to get introduced to a vast number of products, not many fitted the make up of the store, and the ones that they did decide to buy were slow sellers. What made this situation bad was that the store makes about $30, 000 a day in sales and since the store was closed for the convention there was no money made that day. So in one day they lost a sure $25, 000-$30, 000 and did not get vendors that they were looking for. In the end, the sum of the ideas was a failure. Predicted World Upon completion of Craig's new ideas, the expected outcomes came to be true. The brand name wine was selling, but more importantly, interest in the store was generated.
As people heard about the wine, naturally they came to the store. This increase in traffic due to the wine increased the sale of complimentary items. These items included crackers, fine cheeses, and bread. Even though the wine was not flying out of the store, the interest acted like a marketing tool which leads to increases in sales. As for the healthy medicine, customers were hesitant. They could not understand how ginger could cure a sore throat, or how vitamin C drinks could prevent colds.
It was obvious that the idea was good, but the customers would just have to catch up. As time passed, word got out about the healing powers of roots, vitamins, and natural foods and sales grew at a slow, but steady rate. Although the convention still made the store loose their daily profit, they got a chance to see were it was that new minds were going. Craig, Chester and Carmen were blow away with all the new types of products out in the market that were untapped.
The nest step was to see how well the items would sell, or even if they would with their demographics. In the end, their input to output ratio was about even which satisfied them, Rosy World Upon completion of Craig's new ideas, sales soared. Customers in the local area could not believe that their little local grocery store had their own brand of wine. Since the holiday season was approaching, everyone seemed to want to buy a bottle of Great Food Grocery Wine. It was dubbed the item to give and receive in the stores area. Due to great wine sales, the store received more foot traffic than ever.
Not only were complimentary items to wine being sold, but just about everything else was flying. Due to this great exposure, interest in the natural cures gained popularity. The customers did their research and discovered that the healing power mentioned were true and valid. This section began to move at a faster rate than previously expected.
Finally, the convention was over. When Craig, Chester and Carmen saw the potential that the new items that they had seen could bring to the store, they were already talking about creating a second convention. They knew that with the increased foot traffic, the new items they were planning to sell would more than cover the daily loss of the store being closed. In the end, the ideas were more than a success, they were a hit.