Region's No. 2 grocery chain moves to raise profile

Shop 'n Save plans new ad campaign, gas discount program

Sunday, February 25, 2007

Perky, professional voices sang out from inside the white tent set up inside the South Fayette grocery store. Sometimes shakily, they were followed by customers willing to ham it up for a free quart of ice cream: "Shop 'n Save's just right for me, Shop 'n Save's the just right place to be."

	Pam Panchak, Post-Gazette Barbara Winters, of Carrick auditions for director Bill Drake. Ms. Winters was trying to land a spot in a commercial for the Shop 'n Save grocery store chain. Click photo for larger image. Listen InListen to the Shop 'n Save jingle (courtesy of Shop 'n Save)

The jingle -- some may find it cute, others annoying -- soon could be sticking in the region's subconscious. The grocery group this week started airing radio spots in its first big marketing campaign since food distributor SuperValu decided more than a year ago to cede Western Pennsylvania's retail landscape to its independent operators.

The suburban Minneapolis-based grocery giant's decision to give up on local company-owned stores seemed to signal defeat. With supercenters chipping away on one side and niche retailers arriving with promises of natural foods or low prices on the other, SuperValu had lost both locations and market share. Giant Eagle has long been the leader, but Wal-Mart had gained enough ground to battle the distributor for second place, according to ACWilton, Conn.-based ACNielsen Trade Dimensions.

The middle ground of the traditional supermarket seemed not the right place to be, as the new marketing campaign suggests, but a dangerous place to be stuck. Yet the more than 50 independent operators who now own all of the 70-plus Shop 'n Save stores in the region aren't buying into that line of thinking.

For one thing, they're glad to return to the days when everybody in the group is a local owner. There's no split anymore between corporate stores with access to different resources than the independents. Each owner is just as focused on survival as the next guy.

Moreover, the setbacks of recent years highlighted the need for the independents to work together -- and they are, on a variety of fronts. The group is rolling out new self-service video rental machines to give customers more reasons to stop by on the way home. Three stores are testing a program that would give loyalty card users a personalized list of bargains as they enter the grocery.

And in a key development, the group has finally put together a gas discount program appears to present a viable alternative to the powerhouse one Giant Eagle created.

"To be able to come together in this way is really remarkable," said Ray Charley, whose family has been in the business for generations and who owns two stores in the Greensburg area.

The gas program offers a good example of the headwinds independents can face. Shop 'n Save began its Pump Perks project two years ago, while there were still corporate sites. Initially, a few gas pumps were built, but many stores didn't have enough space.

Last year, the chain moved to quickly expand by working with Sunoco stations, but that was a headache, too. Technology to ease data collection had to link the independent grocery stores and the often independently owned Sunoco stations.

Gas discount 'kinks' fixed

Consumers complained there weren't enough places to use the fuel discounts, and many were confused on the finer points of how they would be earned, especially since it differed from the established Giant Eagle offering.

Shop 'n Save officials think they've worked out the kinks. There are now 44 Shop 'n Saves in Pennsylvania offering the fuel discounts, and consumers can redeem points at more than 60 Sunoco stations and five Shop 'n Save fuel stations. To give shoppers a quick payoff, they've set it up so every $5 in grocery purchases earns a penny off per gallon.

These kinds of programs dramatically extend the reach of one store. Dan Falcone, who co-owns a New Castle location with his wife, Jackie, said his customers had redeemed their discounts at as many as 45 locations around the region. "It's amazing how spread out it is," he said.

Not offering a gas plan wasn't an option because customers have become so focused on finding ways to reduce fuel costs. "Fuel has become a very, very important buzzword," said Mr. Falcone.

Implementation of such a broad project might have been easier in a corporation, but in other ways, independents can be more nimble. The now entirely local ownership can argue a store in West View will be relevant to that neighborhood in a way that one stocked for the tastes of Lawrenceville might not be.

Mr. Falcone carries a spaghetti sauce made locally, and cheese from a nearby producer, and uses his background in the meat department to make that selection strong.

Mr. Charley focuses on perishables such as quality produce and baking goods from scratch in his stores. Some locations offer special sales or services.

Those techniques have been effective in other markets where small chains face off with national competition, said Jim Hertel, senior vice president of consulting firm Willard Bishop in Barrington, Ill. In many cases, he said, "They really understand who the local shopper is."

SuperValu continues to offer ideas and support. There are weekly meetings with group representatives to develop advertising circulars and to discuss other programs. It's up to the owners to decide what projects to back.

Shifting shopping habits
Another issue the group has had to address is an industrywide shift of consumers away from traditional food retailers. Around 15 to 20 years ago, 90 percent of groceries were sold in traditional stores, said Mr. Hertel. That has since dropped to about 50 percent as discounters, drugstores, dollar stores and wholesale clubs began offering groceries.

Even traditional grocers such as Giant Eagle are experimenting with a variety of size locations that might serve different customer needs depending on whether someone is doing a major monthly trip or quickly picking up something to make for dinner.

With most Shop 'n Save stores ensconced in a collection of midsized buildings, they aren't likely to morph into new formats soon. Instead, the group has chosen a strategy Mr. Hertel called the "Papa Bear" tactic, positioning their buildings as a haven for customers tired of wandering huge superstores but in need of a more complete selection than niche players offer.

The "just right" tag line came from existing shoppers, according to the South Side ad agency the owners have hired to help get their message out. When the staff at GatesmanMarmionDrake was canvassing the stores last fall as part of its bid for the account, they asked people why they were there.

"We heard so many people using those words," said Frank Marmion.

It didn't take long for customers at the South Fayette store to pick up the new tune during open auditions for spots in the TV commercials, sort of a mini-"American Idol" contest without the audience polling.

Bill Drake set up his home video camera -- at least that's what he told everyone -- and acted as the director trying to loosen up the retired schoolteacher, the young girl, the worker from the floral department, who all gave it a shot. Of 150 volunteers filmed in four stores, 23 will be in the spots scheduled to start running next week.

Everybody who sang got a choice of several ice cream flavors marketed with the "American Idol" name, including Hollywood Cheesecake, Take the Cake and Triple Talent. The spots will run locally during the TV show as well as other shows that reach the target 25- to 54-year-old demographic. The campaign also will extend to the group's Web page and its marketing circulars.

It's all about growing market share. Western Pennsylvania has long been a strong market for independent grocers, as SuperValu's decision seemed to acknowledge.

In addition to Shop 'n Save, the list of grocers using the distributor's supplies include the region's Foodland, Kuhn's, Save-A-Lot and Friedman's stores.

Bill Lipsky, who serves as director of merchandising for the region's Shop 'n Save stores, believes that the ads will help get people's attention again. "I think the marketing program is a great way for us to say, 'Hey, we're here. We've always been here.' "