Adventures in Retailing
Part I: Grocers

by

Ross M. Miller
Miller Risk Advisors
www.millerrisk.com
November 15, 2004

I've talked with lots of electrical engineers and only one has ever told me about a grocery store that I absolutely, positively had to visit. That was back in my days at GE when I would put in a regular appearance at GE Capital headquarters in Stamford, Connecticut for our mutual amusement. The EE in question grew up on the outer fringes of GEland in fabulous Fairfield County, so when I mentioned Stamford to him one day, he said, "You've got to go to Stew Leonard's."

It took me ten years to get around to it, but last summer I actually made it to Stew Leonard's flagship store in Norwalk, CT, just down the Post Road from where Martha Stewart spends her nights when she isn't in Camp Cupcake or one of her other nesting places. Despite the similarity between their names, I do not think you will catch Martha there. Believe me, it's not her kind of place, even if a store when workers roam the aisles in cow suits may not look bad compared to where she is now.

I chose Stew Leonard's to launch my series on retailing because they understand what most retailers do not get, which is that in the Internet age where low prices are just a click away, brick-and-mortar retailing should provide customers with some form of entertainment. In their prime, Bloomingdale's and Nordstrom's were viewed as retailing theme parks by their target audience (so as not to offend the easily offended I will leave the details to the reader's imagination) to whom the merchandise itself is often sufficient entertainment. Stew Leonard's is literally modeled after a theme park, one that as far as I can tell is geared toward six-year-old boys (and those of us who can delude ourselves into thinking that we still remember what it was like to be a six-year-old boy).

The Stew Leonard's store in Norfolk is built around a glassed-in working dairy that the labyrinthine store envelops, like a one-third scale Ikea. (I wonder how many dead bodies they find in your typical Ikea every night and what they do with them.) Once one gets bored of machines going around and milk shooting out of stainless steel spigots, the store has the usual theme-park accoutrements including animatronics and the aforementioned prowling bipedal cows. Unlike a theme park (and my local Wal-Mart), they give out free samples and the lines are reasonable. The groceries are the mundane fare that one might expect from such bovine surroundings, so Whole Foods has little to worry about.

(I should interject at this point that I know absolutely nothing about retailing other than my experiences as a consumer and that as such I would never recommend nor myself buy a retailing stock. Nothing that I write about this industry should be taken seriously for it is merely, well, entertainment. But I do personally represent what my fellow economists would call the "marginal consumer" and the margin is where industry battles are won and lost.)

The ability of the Norwalk Stew Leonard's to evoke so accurately a sense of the 1960s may be due to its modest expansion over the years. In addition to the flagship store, there are only two other Stew Leonard's stores—one in Danbury and the other in, of all places, Yonkers. In contrast, two California retailers with a slightly older male target audience, Trader Joe's and Fry's (pioneer of the electronics/junk food nexus), have greatly diluted their appeal as they have expanded.

The Trader Joe's of old in Pasadena was big on novelty. It had a monthly newsletter painstakingly written from Traders Joe's warped sense of the world. Trader Joe was out sailing the high seas nabbing cheap and unusual items for its discerning clientele. The store's focus was on items alcoholic or lethally healthy (its raw milk, both unpasteurized and unhomogenized, from Alta Dena Dairy was a big item at the store that not only tasted good, but was a mild form of Russian roulette—the kind of item that do-gooder legislators like to pass laws against). Trader Joe's also stocked a liberal supply or what was admittedly junk food, though its exotic nature made it seem less junky. There was always something new at Trader Joe's and if you liked it, you had better stock up before it vanished indefinitely.

I have not been back to the Pasadena store in years, but I sometimes drop by the Cambridge store when I'm in the Boston area—it is across from a MicroCenter store that puts CompUSA to shame. As I used to say to B.B. King, the thrill is gone. Trader Joe's maintains a superficial resemblance to the its former self, but its soul seems to be missing. And it is only a matter of time before their dwindling stock of junk food vanishes completely.

The problem with entertaining fickle, marginal customers is that novelty does not come easy and may not even sell products. I found nothing worth buying on my single trip to Stew Leonard's and I am not tempted to return. I can see how the place could imprint itself on impressionable youngsters, but for me it's a case of been there, done that.

My current favorite grocer is the local PriceRite, a low-rent sibling of ShopRite that seems to be in a testing phase. PriceRite specializes in produce, some of which is so exotic that it is scary. The rest of the store is peppered with a combination of staples and items that seem to have "fallen off the truck" as my Teamster friends back in New Jersey, home of ShopRite, used to say. (No, I don't know where Jimmy is.)

My favorite thing about PriceRite is the music. Most stores have background music, PriceRite sometimes plays theirs loud enough that it is foreground music. And they never interrupt it with inane announcements or to plug their merchandise. It is mostly the kind of Seventies music that was on the "Reservoir Dogs" soundtrack minus "Stuck in the Middle with You" with some R.E.M. in the mix. And it has some tacky niceties. They will sell you plastic bags to put your groceries in for nine cents each and their shopping carts are said to lock their wheels if you take them out of the parking lot. (I'm tempted to find out if they are bluffing, but there are some situations that I would rather not have to talk my way out of.) My recent discoveries at PriceRite include Pride of Malabar gourmet ground black pepper and Heller & Strauss "Sky Candy"—both 99 cents. Stuff so obscure that (until now) Google had never heard of them. And, best of all, the yuppies (or whatever they now call those people that I pretend not to be) haven't found it. By the time they have, I will have moved on..

Next, after a two-week Thanksgiving hiatus, I explore "Two Guys from Retailand."

Copyright 2004 by Miller Risk Advisors. Permission granted to forward by electronic means and to excerpt or broadcast 250 words or less provided a citation is made to www.millerrisk.com.