Get a cult following
Much like Dr Who, Converse sneakers and organised heresy, many of WA’s independent supermarkets have managed to build a cult following.
The local success of the independently-owned stores has helped them to break the supermarket duopoly held by retail giants Coles and Woolworths around the rest of the country.
Research compiled by Marketing Focus shows independent supermarkets currently enjoy 26 per cent of trade in WA, which is only slightly behind Coles with 28 per cent and Woolworths at 40 per cent.
Nationally, the dominant independent chain is the German-owned Aldi supermarket, though it has failed to break the Coles – Woolworths duopoly on the east coast.
Marketing Focus managing director Barry Urquhart said the ability of WA independent stores, led by the IGA stores, to build a cult following was based on its ability to cater its brands, layout and shopping experience to the locals.
Like other products and people with an intensely loyal following, independent stores successfully tap into the fads and subculture of their community to find their niche.
Coles and Woolworths on the other hand were bound by the same formula in all stores across the entire country. Their appeal was based on more mainstream and practical considerations such as parking access and product range.
“It’s better to be different than to be better, ” he said.
“Being like all the other stores, but better, is sometimes lost on customers, but creating a point of difference is something they will remember and really appreciate.”
Mr Urquhart said The Good Grocer in Applecross was a prime example of a store that had built up a cult following because it had catered to the cashed-up, time-poor clientele in the vicinity by providing a boutique shopping experience.
The Good Grocer has a resident chef on hand to cook restaurant-quality take-away, and to discuss ingredients with customers.
Mr Urqhuart said the deli’s prepared and partially prepared meals range was in line with a shopping experience trialled across the metropolitan area about 15 years ago, in most cases unsuccessfully.
“It’s the DIFM style, or the Do It For Me shoppers, ” he said.
“These are time-poor shoppers who are prepared to pay a premium for partially prepared foods.
“They want the meats that have already been marinated, pre-made dough for the oven, and semi-prepared gourmet meals.
“A lot of female shoppers were opposed to this about 15 years ago because they felt it lessened their importance and independence, but it works in affluent areas like Applecross.”
Manager Ari Acton said the store did not seek to be all things to all people.
Instead it focused on delivering a broad range of key products, including 50 flavours of tea and more than 60 varieties of cheese.
The ready-made meals were also major focus, with the store investing in chefs like Alain Sekkouah, a former sous chef and chef patissier at award-winning restaurants.
Its popularity with locals is on par with Fresh Provisions in Mt Lawley and Herdsman Fresh.
Mr Urquart said part of the appeal of independent stores was that they were very good at tapping into the sense of community in a local area, which helped foster a sense of loyalty.
The IGA group of stores did so partially through carefully chosen sponsorship deals for events that were popular at a grassroots level, such the Royal Show, and local sporting events as well as a supportive advertising slogan, “How the locals like it”.
“IGA probably wouldn’t want to it to be known that they are as big as Coles in WA because they like to come across as the little guys in the neighbourhood, ” he said.
John Cummings, president of the Independent Grocers Association, agreed that the success of IGA supermarkets was due the fact that owners could bring their own touch and initiative to companies.
He said this was evident at the Glengarry IGA he used to own in the northern suburb of Duncraig, which stocked a vast range of Japanese ingredients.
The decision was based on the fact that he and his wife enjoyed Japanese cooking, but the impact had far broader financial consequences that he could have imagined.
“We had people coming from as far as Fremantle to shop at our supermarket, because of the range of Japanese products, ” he said.
“Independent stores can do things like that, but big business tends to say to people, ‘we would like you to come and work for us but please don’t bring any initiative’.”
Mr Urquhart said the number one actor determining where people shopped was convenience, which largely included easy access to free parking and the store’s proximity to schools and workplaces.
The second most important factor was the range of goods, followed by the types of brands.
Mr Urquhart said Coles and Woolworths were at both an advantage and a disadvantage on these fronts.
On one hand, the retail giants stocked up to 35,000 product lines each, but on the other, there was a move away from tried-and-tested brands to the more profitable homebrands.
He said homebrands were favoured because profits margins after expenses were about 8 per cent, while branded products earnt the retailers about 5 per cent after expenses.
Surprisingly, price was only the fourth most-important factor determining where people shopped.
Mr Urquhart said WA shoppers among the most price-sensitive in the nation, and they wanted everyday lower prices instead of ad hoc special deals.
However, the impact of a getting a free product and loyalty programs could have a disproportionately big effect on their consumer decisions.
“People really like the psychological victory, the emotional satisfaction, of a good deal, ” he said.
“It provides them with a kind of psychological income.”
© The West Australian
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First published in The West Australian October 22, 2013.