April 16, 2014

Sweetbay Supermarket

Food, Glorious Food

Kash n’ Karry is remaking itself as Sweetbay. It hopes to compete by working both ends of the food chain, from Slim Jims to $15-a-pound cheese.

Amy Keller | 11/1/2005
In 2002, Kash n' Karry was at a crossroads. Sales were slipping, and the Tampa-based regional grocery chain was struggling to hold on to its market position in southwest Florida. For years, Kash n' Karry had cultivated a niche as a lower-cost alternative to Publix. But as Wal-Mart began to dominate the price-conscious lower end, Kash n' Karry found itself stuck in the middle with chains like Winn-Dixie and Albertsons. Making matters worse, the company hit a leadership drought, cycling through eight presidents over two decades.

Market research told the Brussels-based Delhaize Group, Kash n' Karry's parent company, that the chain's customer base closely resembled that of New England-based Hannaford, one of its other chains. And in 2003, the Belgians sent a fast-rising Hannaford executive to Tampa to make Kash n' Karry competitive.

FRESH START: A former investment banker, Shelley Broader learned the grocery business at the Hannaford grocery chain. She convinced Delhaize Group executives the only way to revitalize Kash n' Karry was to junk the name and remake the stores.

Shelley Broader, then Hannaford's senior vice president of business strategy, marketing and communication, had worked briefly as a television journalist and then for several years as an investment banker before finding her passion in groceries. In 1991, tired of investment banking, she had approached one of her banking clients, Ron Hodge, a top executive at Hannaford, about getting into the supermarket business. Broader, a native of Spokane, Wash., says the grocery people she met had always impressed her: They didn't take themselves too seriously, and they shared her passion for food.

Broader wasn't scared away by the grunt work that accompanied Hannaford's management training, a hands-on immersion that included everything from cleaning drains in the meat department to bagging groceries and running a cash register. Some former investment banking clients, she says, didn't know how to act when they encountered her bagging their groceries, and at times neither did she. "Banking is a pretty heady gig. There was part of me that had to check my ego at the beginning."

Shelly Gilchrist Broader

President, COO /
Sweetbay Supermarket, Kash n' Karry

Age: 41

Hometown: Spokane, Wash.

Family: Husband, Brian Broader, was an accountant at his father's heating and ventilation company in Albany, N.Y., when mutual friends set up a blind date. "Everyone tells me you're the guy I'm going to marry," Shelley told him when they met. Brian, an avid golfer, runs the Broader household. They have a daughter, Madison, 7, and son, Clay, 4.

Studies: Broadcast journalism at Washington State University. After a brief stint in the news business, she became disenchanted with the media. She "didn't have that killer instinct."

Role model: Broader's mother, Lois Gilchrist, became a teacher after Broader's father, Clay Gilchrist, was killed in a car accident when she was 13. Broader, then Shelley Gilchrist, says her mother told her: "Your life is going to be different than your brothers'. You're going to have to find your own way in the world."

Food favorites: White Stilton cheese with blueberries, fresh mussels, New York strip steak and sour cream doughnuts. Another favorite is a Sweetbay chocolate cake dubbed "The Presidential" because Broader once ate a whole one.By 1994, she had risen to become operations coordinator for the chain's New York distribution center. In 1997 -- two years before Hannaford's merger with the Delhaize Group, which also owns Food Lion -- she was promoted to Hannaford's corporate headquarters in Portland, Maine. There she created a new strategy for the chain that focused in part on top-quality perishables, a move that dramatically increased sales. That experience, says Hodge, made Broader a good choice to revitalize Kash n' Karry: "I knew that we really needed to have a strategic thinker in place to figure out just what would work for consumers in the Florida market."

Delhaize's market research indicated that southwest Florida's population growth was creating a huge opportunity -- a potential increase of $21 billion in grocery spending in the Tampa, St. Petersburg, Sarasota, Fort Myers and Naples markets from 2002 to 2007. Reinventing Kash n' Karry, however, was problematic. The frequent changes in upper management and shifting strategies had taken a toll: Consumer research showed that the chain didn't just have an image problem, it had no image at all. In focus groups, customers could describe a Publix, Wal-Mart or Winn-Dixie in a sentence or two but would draw a blank when asked about Kash n' Karry. "We had zigzagged so much we shook our customer base off. We didn't stand for anything anymore," explains Broader.

Ultimately, Broader persuaded Delhaize to junk the Kash n' Karry name and create an entirely new supermarket built around a "passion for food" -- but without the snobbery or prices of a luxury grocer like Whole Foods Market. A Maine-based marketing firm, VIA, was tapped to help craft the new image for the store and played with 2,300 names before settling on "Sweetbay," a type of magnolia tree with white blossoms and red berries that is indigenous to west central Florida.

Detail work
Broader's strategy involves both converting the chain's existing stores and opening new Sweetbays. First, however, she decided to close 34 Kash n' Karry stores in Orlando and on Florida's east coast and focus exclusively on west central Florida, which had the strongest economic indicators. "We got out of sites that couldn't be converted," she says.

The company won't say how much it spends on each conversion, which involves making over everything from layout to color scheme. Sweetbay stores feature hues of rust, orange, red and purple, replacing Kash n' Karry's teal and white decor. Among the design features are entryways that place shoppers amid fresh produce neatly stacked in baskets rather than facing the back ends of checkout counters.

The chain relies heavily on details to leave an impression. Like Hannaford, Sweetbay focuses on offering high-quality fresh perishables with lots of variety, including 20 types of tomatoes. Some selections, like an unusual array of kiwano horned melon and stalks of sugarcane, clearly seem calculated more for atmosphere than sales.

Other touches: In the stores' seafood sections, customers who purchase fish get a "glacier pack," a small plastic baggie filled with ice to keep it cold. Broader also has Sweetbay using higher-quality "T-shirt" grocery bags rather than the thin, crinkly plastic bags. They may cost more, she says, but shoppers will reuse them, for example, to pack a change of clothing when they head to the beach -- with Sweetbay getting some free advertising.

A major piece of Broader's strategy involves improving customer service. The chain has dropped some employees and is retraining the rest. "This is not just a new shirt and name tag for Kash n' Karry employees," she says, explaining that the training ranges from friendliness to expertise in foods. Employees show signs of buying in: In the stores, they're the biggest purchasers of $12.99 wooden cutting boards embossed with the Sweetbay emblem, according to Broader.

Twinkies and tofu
Broader says she's convinced that she and Sweetbay can succeed by having it both ways, offering customers $14.99-a-pound Stilton cheese and blueberry-cinnamon sausage ... "but if you want your Twinkies and Slim Jims, we have that too." The approach, Broader believes, will enable the Sweetbay concept to work in any community no matter its demographic profile.

George Anderson, editor in chief of RetailWire, an online trade publication that provides news and analysis of the retail industry, cautions that it's "too early" to predict success for Sweetbay. The biggest challenge for a grocery retailer in this competitive environment is differentiating itself from the rest of the pack, says Anderson, but because regional chains like Sweetbay don't have the buying power of some of their larger competitors, they have to work extra hard to stand out and still make a profit. He likes Broader's chances, however. "She had an outstanding track record before she got here. She's obviously incredibly bright, and she has a reputation for being extremely focused and frankly getting the best out of whoever's working for her."

As of late September, 20 Sweetbay stores were in operation, including four built from the ground up -- two in Fort Myers, one in Naples and one in Seminole. The other 16 are renovated Kash n' Karry stores. Delhaize CEO Pierre-Olivier Beckers recently told shareholders that sales in the remodeled stores in the Fort Myers and Naples markets have increased by more than 40% on average, and the chain is speeding up its schedule to convert the remaining Kash n' Karry stores.

One big test will be whether Sweetbay can recapture its second-place standing in the market. Recent figures from the Shelby Report of the Southeast, a business newsletter that tracks the retail food industry, show Publix with a 37.5% share of the Tampa Bay region's grocery market. Sweetbay, meanwhile, has slipped into third place behind Wal-Mart, with 15.1% of the market to Wal-Mart's 16.5% share.

Broader says she's enjoying the ride. "It's not often you get to build a brand from scratch," she says, describing herself as a builder rather than a maintainer. "The world needs both. You need people who keep the business rolling, but once I get something built and functioning, I can't sit in maintenance mode."

Makeover


Kash n' Karry's teal and white is giving way...OVERHAUL: Sweetbays are heavy in hues of rust, orange, red and purple, as opposed to Kash n' Karry's teal and white. Entryways direct shoppers toward the supermarket's fresh produce section rather than behind checkout counters.
...to Sweetbay's more colorful design
There are 87 Kash n' Karry stores and 20 Sweetbay stores in operation. By the end of 2007, more than 100 Sweetbay Supermarkets will be in operation in and around southwest Florida.
Sales in remodeled stores in the Fort Myers/Naples market have increased more than 40% on average.
Parent company Delhaize declines to say what it's spent on the conversion of Kash n' Karry to Sweetbay, but Securities and Exchange Commission filings provide some ballpark figures. Delhaize America's capital expenditures were $238.2 million for the 26 weeks ended July 2, 2005, compared with $143.1 million for the same period in 2004. The company directly attributes the increase to "construction costs" to its Sweetbay conversions as well as for construction costs on other stores in North Carolina and Maryland.
Sweetbay carries about 58,000 products vs. Kash n' Karry's 41,000.
The average Kash n' Karry store is about 42,400 square feet. The typical Sweetbay store is between 44,000 and 49,000 square feet.
Source: Delhaize Group

Tags: Around Florida

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