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Case #344

Title:
Small family owned grocery continues to thrive

Summary:

Independent grocery stores in the United States have been failing at a rate of two per week. They're being replaced by big chain stores, whose low prices reflect the purchasing power of a national, or multinational corporation. However, with their attention fixed on moving big volume, they lose sight of individual shoppers.

In Damariscott, Maine, Jeff Pierce's response is to hold to a course set eighty years ago when his grandfather, Linwood, founded Pierce's Meats on Damariscotta's cozy main street. His basic strategy is as simple, and as complicated, as getting to know his customers. It's working. As Jeff and his brothers have succeeded their parents, their Yellowfront Grocery store continues to thrive, a small feat when only one in ten family businesses survives into a third generation. When a shiny chain store had appeared just up the street, the Yellowfront had done something unexpected: It had survived. By focusing on the needs of one customer at a time, the Pierce family has held its place in the community.

The whole story about the Yellowfront is about not putting a modern twist on anything, says Jeff. He has not, for instance, joined the statewide organization of socially responsible businesses. He has not added a selection of grape leaves or organic wines to lure young gourmands. He does not study industry trends.

Jeff's innovation is to stick to the business practices of a century ago. That works just fine, most of the time. Five hundred charge accounts, some opened in 1921 and inherited like wedding silver, are tallied and billed each month. "We tried to charge interest once," Jeff chuckles. "It didn't go over well." The store up the hill chastens check bouncing patrons with a computerized blacklist. Jeff Pierce simply tapes hand-written notes to his cash registers: "Have so and so come see me." In a glaring departure from modern merchandising science, Jeff does not force his customers, many of whom are elderly, to navigate the entire store before they reach the staples aisle. Jeff left a shortcut in the new floor plan allowing customers to steer directly for basic staples. For the same reason, the store is intentionally small, and the parking close.

There are challenges, however. "It's more of a struggle every year," Jeff says soberly. "It's harder and harder to compete in terms of wage and benefits. I can only do so much. I'm concerned for the future. Unless the labor crunch eases, other prices will rise, too.? The Yellowfront also takes a regular thrashing in the price wars.

And why does all his time consuming and unscientific backwardness translate into success against grocery chain Goliaths? It's not even about scale, Jeff says. "The grocery business is about winning one customer at a time," he says. "People can get groceries anywhere now, even at gas stations. So you have to give people a reason to come to your store. I can't compete price wise with the store up the road. But I know my customers by name. We pay attention to what they need. A thousand people a day shop at the Yellowfront Grocery. Jeff believes that he knows 800 of them by name. "The other 20 percent I may not know by name, but I recognize them," he says with a proprietary pride. "They're my customers."

Comments:

The Yellowfront Grocery operates with a business strategy of paying attention to individual customers. Although at times financially costly, the business continues to operate while other small businesses have been forced to close. Therefore, their strategy has worked. Other factors which have likely helped are location in a small town (an established neighborhood in a city might be a good alternative), a history of personal service that spans three generations, and a small sized operation. Vulnerabilities are present as older employees retire and more and more big stores with their discounted prices appear in neighboring towns. During a recession or economic downtown, this could prove to be especially difficult on this (and any other) small business. Location and willingness to stay in business for the long term seem to be important factors for replication.

When: 1920 - pres
Location: Maine, US
Action: Economic/Business
Setting: Developed World
Extent of Action: Local
Issues: Corporate/Economic Abuses
Year(s): 1920
Outcome successful for now
Source: Hope, summer, 2001, p.43

Contacts:

Yellowfront Grocery, Damariscott, Maine, USA
Prepared By: sl 1/02
Rating: 1
 
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