With supermarket chains, big box retailers and warehouse stores competing knife and fork for food dollars, independent grocers are working hard for their place at the table, ringing up $360 million in sales in Delaware last year.
At Janssen’s Market, shoppers peruse such upscale offerings as fresh truffles, fiddlehead ferns, pheasant and nine varieties of gouda. The family-owned gourmet grocery is located in Greenville Center, a scant 8.5 miles from Glen Eagle Square in Glen Mills, Pa., where a much-heralded Whole Foods opened in 2012, bringing its blend of exquisite produce, coveted cheeses and mouthwatering meats.
“We are very aware that you cannot be complacent and run a successful business,” said Joseph Janssen Jr., whose father founded the market in 1952. “There is always somebody out there who is looking for customers.”
[audio:http://www.wdde.org/wp-content/uploads/2013/11/Indygrocers.mp3|titles= WDDE's Tom Byrne and contributor Eileen Smith Dallabrida discuss independent grocers on The Green.]
In a decade in which many retailers are hungry for profits, food is a natural draw. After all, everyone has to eat.
Both chain-owned and independent grocery stores are competing with drugstores, convenience stores and Walmart, the world’s largest retailer. In 2012, groceries and pet food accounted for 20 percent of sales at Target, which rolled out its own organic brand in June.
In Delaware, the independent grocery sector includes 39 supermarkets, which generate $359.79 million in annual sales, according to the National Grocers Association (NGA), a trade group based in Arlington, Va. Supermarkets are defined as full-line grocery stores with annual revenue of $2 million or more. NGA doesn’t include micro-businesses, such as neighborhood bodegas and mini-marts at gas stations.
NGA says the markets’ impact resonates beyond food sales. When factoring in the equipment, supplies, technology, transportation, real estate and other goods and services that go into independent grocery stores, the sector generates 4,550 jobs in the state with total wages of $158.68 million.
Janssen’s has about 100 employees, of which 70 percent are full time. In addition to the workers who stock shelves and ring up purchases, the staff includes pastry chefs, caterers, an in-house florist and an executive chef.
“Having a great staff is the secret to our success,” Janssen said. “They are the people who are responsible for taking great care of our customers.”
About 20 years ago, the store added Sunday hours in response to the seven-days-a-week shopping hours offered by chains.
Still, the store keeps early hours, closing at 7 p.m. Customers maintain personal household accounts, running tabs and receiving monthly bills in the mail.
“We stay in tune with what our customers want,” Janssen said.
Young Joe started working in the market when he was 12, bagging groceries. At 73, he still enjoys working in the store with his wife Eileen. Their daughter, Paula, is the general manager.
“She handles all the griefy stuff, all the headaches,” he said.
Paula Janssen began her career as a software engineer. She went back to school, graduating in 2004 from the Wharton School at the University of Pennsylvania, among the nation’s top-rated business schools.
That was just in time to help the family business take on its greatest challenge, the opening of rival gourmet grocer Foodsource a mere stone’s throw away in an adjacent shopping center.
Janssen’s wound up eating Foodsource’s lunch, competing by expanding hours, beefing up its gourmet takeout section and capitalizing on longstanding relationships in the community. When Foodsource closed in 2007, Janssen’s moved into the larger store.
At 18,000 square feet, the new location is more than double the size of the old market. The store includes a cafe for casual dining. Much of the added space was devoted to the prepared-foods department, which offers such indulgences as lobster salad made from scratch and special occasion cakes baked to order.
Knowing how the regulars at the deli counter like their salami sliced is essential for independent operators.
“Our members know their customers by name and can tailor their inventory to meet their demands,” said Peter Larkin, NGA president and CEO.
More Coverage: Ethnic grocers cater to Delaware's diverse tastes
Zingo’s Supermarket in Newark is home to an in-house Pike Creek Coffee Roasterie shop. Witt Brothers Market in Wyoming advertises daily meat specials on the store’s Facebook page. Byler’s locations in West Dover and Harrington carry bulk grains and more than 30 types of flour for bakers.
Mary McDonough of Smyrna enjoys shopping at Willey Farms in Townsend on Sunday mornings, when the staff is setting out cut-up sections of fruit for customers to sample as they browse. Wednesdays are another favorite because senior citizens get a discount.
“Willey's has the freshest vegetables, and they are mostly locally grown. The choices change as the seasons change because they are right on top of what is springing from the earth that week,” she said. “They make their own almond and peanut butter and bag up the raisins, cranberries, and spices and the shelves are all labeled with the nutritional information. There are many gluten-free choices and a big focus on sugar-free items for diabetics.”
Lloyd’s Market, founded 94 years ago in Lewes, is steeped in local tradition with such offerings as “Broaster” rotisserie chicken, cabbage and sweet potatoes grown in Sussex County and sticky buns baked at Dorman’s Donut Shoppe.
The store started stocking such fashionable fare as quinoa, flaxseed and edamame, a soybean popular in Japanese cuisine, when customers requested organic grains and natural ingredients.
Like many independent stores, Lloyd’s strives to find the sweet spot between tried-and-true and trendy.
“We are trying to develop that little niche with the things people ask for because they can’t find them any where else,” says Darren Purcell, son of Lloyd Purcell, who purchased the market in 1971 and still cuts custom roasts and chops in the store’s butcher department.
Independent grocers and chain operators have some of the same challenges, such as labor and energy costs. On the expense front, the tab for healthcare benefits increased 7.6 percent in 2012, according to an NGA survey. Further, 81.8 percent of operators expect that trend to continue. Market owners did report decreases in utility costs, as well as lower rents.
Grocers also say they are trimming the bottom line in response to customers who are looking for leaner food bills. To keep a lid on costs, 76.9 percent of independents are putting the brakes on overtime hours; 34 percent are limiting bonuses.
“The major challenge is consumer confidence,” Larkin said. “Consumers are still conscious of spending not just for luxury items but for food.”
Budgets for food vary widely by family. The U.S. Department of Agriculture estimates that a family of four on a thrifty plan spends $147.60 a week for groceries. Shoppers on a liberal plan ring up $291.70 in food charges each week.
Within the past year, close to 75 percent of U.S. consumers have purchased specialty foods, according to new research from the Specialty Food Association (SFA). Two out of three splurge on premium ingredients to serve in everyday meals at home. The SFA defines specialty products as "foods of premium quality that are often made by small or local manufacturers, have ethnic or exotic flavors and are foods that are distinctive."
That’s a big boost since 2009 when only 46 percent of consumers put specialty foods in their shopping carts. Chocolates, cheeses and oils are customer favorites. Geography plays a role, too, with the greatest demand for specialty foods in the West or Northeast.
Larkin expects the independent stores will experience some ripple effect as chains are merged or acquired. Earlier this year, Supervalu sold its Acme stores to AB Acquisition, an affiliate of a Cerberus Capital Management-led investor consortium.
Harris Teeter, an upscale family-owned chain with a location in Bethany Beach, was recently gobbled up by Cincinnati-based Kroger, the nation’s largest grocery chain.
In the Northeast, A&P and Stop & Shop have shuttered a number of stores, creating opportunities in the marketplace.
“Some of the larger chains are closing underperforming stores and independents are buying and rebranding them,” Larkin said. “I think you will see that trend in Delaware, too.”