By John Karolefski
Through a special arrangement, what follows is an excerpt of a current article from Grocery Headquarters magazine, presented here for discussion.
Nearly a year after Price Chopper celebrated its 75th anniversary, Grocery Headquarters is pleased to name Neil Golub, president and chief executive officer of its parent, Golub Corp., as its “Retail Executive of the Year.”
Mr. Golub has certainly seen his share of challenges over a long career. He recalls “inflation thrust” in the early 1970s that prompted the industry to turn to the EDLP (Everyday Low Price) approach to food retailing. Soon Wal-Mart’s growth changed the country’s view of pricing. Through it all, Price Chopper stayed the course.
“We approach the competitive marketplace as a promotional retailer, which is what we do best,” explained Mr. Golub. “We considered EDLP, but we are very creative. What we do best is what we know best, and that has served us quite well. We expect that to continue over the coming years.”
The northeast regional operator currently has 116 stores generating $3 billion in annual sales. Competitors include supercenters and warehouse clubs as well as a number of revitalized conventional supermarkets. Grocers in the trade area include Wegmans, Stop & Shop, Shaw’s, Hannaford and Big Y.
The 70-year-old executive is now the architect of a bold growth plan that includes more stores with cutting-edge departments, expanded warehouse space and a new headquarters building in its hometown of Schenectady, N.Y.
Stores feature first-rate merchandising and departments such as scratch bakeries, floral and pharmacy. Two supermarkets – one in Albany, N.Y. and the other in Saratoga, N.Y. – have a Ben & Bill’s deli, named after the sons of the company’s founder, Lewis Golub. Private label now exceeds 22 percent of grocery assortments.
One of the first to offer shoppers the Wild Oats brand of organic products, Price Chopper now sources organics from Topco Associates. “The message to our customers was that organics was everywhere in our stores. It started out being separate [in the assortments], but we [eventually] integrated it,” says Golub.
A new 69,000-square-foot combo store scheduled to open in 2009 in Colonie, N.Y. will be the first LEED-certified supermarket for Price Chopper and will serve as a prototype of its future “green” stores. The store is one of many new and remodeled units planned in the near future for locations in New York, Connecticut and Massachusetts. Also, some 30 sites are being considered for more supermarkets throughout the Northeast.
But none of these stores will feature a new cutting-edge format. That is not the Golub way.
“We haven’t made the mistake of getting into things we don’t know,” he explained. “A lot of people try small formats. We have 40,000-, 50,000-, 60,000- and 70,000-square-foot-formats. We try to stay focused on what we do best.”
Discussion Questions: What has been the key to Price Chopper’s longevity and success? What’s its biggest competitive threat? What will Price Chopper need to focus on to continue to thrive in the future?
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Price Chopper continues to grow because it always focuses on the heartbeats of those neighborhoods it serves. No overly fancy footwork, no cutting edge breakthroughs in store formats, Price Chopper just listens to the nuances of local customers and continually works on building a reputation for being service oriented and comprehensibly competitive…and it’s working inside and near the great Wegmans Empire.
Neil Golub is a great choice. I wish one of your options on your checklist to choose from included “variety,” because I think that is yet another thing that Price Chopper does exceedingly well. They don’t have a lot of ‘me-too’ products in their shelf sets, which gives them room to offer more items that really resonate with their shoppers and offer differentiation. They’re excellent on all the basics, including customer service, and they have a good understanding of their shoppers. I only quibble with how they still separate out “organic and natural” as separate store sections instead of integrating them, and I think they could be a little more more aggressive on private label, although they’re certainly getting there quickly.
I shop their stores regularly (I also shop a stellar local independent) and watch their website. The website is not one of the best, but focus groups I’ve run, along with a lot of anecdotal data, tell me that not many shoppers really spend any time on supermarket websites anyway. (I’ll probably hear now from people who disagree on that one!) So I think, all in all, they are allocating their resources very intelligently.
Slow calculated growth, good research…and they are not greedy. Plus, being privately held gives them a huge competitive advantage over the sluggish publicly held competitors.
Walmart will continue to be their biggest threat. Hannaford is still riding on the successes of prior management but I would expect that to fade over time. Wegmans continues to push eastward but they only build one or two stores at year at most and not in smaller markets. As Ahold’s Stop and Shop and Supervalu’s Shaws continue to decline, Price Chopper is in a good position to expand more into New England.