Frozen and Refrigerated Buyer – At first glance, Abingdon, Va.-based Food City would appear to have little in common with heavy hitters Kroger, H-E-B, Safeway and Wegmans. But the 131-store chain recently joined the elite group after becoming the latest to mark 100 years in the grocery game. Although the chain was purchased by the Smith family in 1984, the first Food City opened its doors in 1918 in Greeneville, Tenn. A century later, the banner operates in small towns throughout Southeast Kentucky, Southwest Virginia and East Tennessee (all represented in parent company K-VA-T Food Stores’ name), as well as North Georgia, where two new stores opened just last month.
Many Food City shoppers have deep roots in the area — and the chain takes great pride in serving generation after generation — so community involvement is key.
“It’s a smart business model that distinguishes the company’s ability to source local products (and demonstrate its support of the community) and also service customers in smaller-format ‘local’ stores that offer easy-in, easy-out convenience — forget the 200,000-square-foot supercenter,” says Perry Kramer, senior vp and practice lead at BRP, retail consulting firm. “This market is hard to serve,” he adds. “We’ve seen many large retail chains try and fail to penetrate these kinds of markets even with smaller footprint stores” because they don’t know the customers and they don’t have the community connection.
So far, that appears to be Food City’s strategy, though it did enter the Chattanooga, Tenn., market in 2015. In fact, the two North Georgia stores it opened last month (Dalton and Oglethorpe/Fort Ringgold) are both Chattanooga suburbs — a little different from the chain’s typical small town. Food City CEO Steve Smith has told various news outlets he can also imagine expanding into North Carolina and Alabama, though it remains to be seen exactly which markets it would enter.
“Retailers like Food City that rely on their brand heritage and nostalgic following can find it difficult to expand into new markets,” says Kramer. But if the chain is strategic about growth, expanding only to nearby communities “then it can leverage existing brand awareness from consumers that have shopped at Food City in other towns.”
One area where Food City may want to invest more resources is its private label program. Though the chain offers more than 20 different store brands through Topco, including Food City-branded items in high-volume categories, “a more cohesive brand that spans multiple categories would create stronger brand loyalty and awareness,” says Kramer.
Read Full Article: HAPPY 100th FOOD CITY! (pages 26-30)