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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place. |
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11/15/04
Adventures in Retailing Part 1: Grocers by Ross Miller
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 GE land 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 readers
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
Joes warped sense of the world. Trader Joe was out sailing
the high seas nabbing cheap and unusual items for its
discerning clientele. The stores 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 Joes
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."
11/15/04
J.T. Adds:
Ole Stew has a brother or son! http://www.tomleonards.com/ Tom just
opened up here in Dixie as prior shared couple weeks ago w/ Susan on the
list. This place is a hit here in Richmond. Decor has Chuck-E-Cheese style
animals "Confederate Rebel Flag Wearin'" Dog singing good ole bluegrass
tunes, and over the bananas is a Monkey that grabs ones attention doing
sommersaults. The freshest cut meat and the freshest O.J. on the planet.
Private labeled almost everything in the store and has locally grown
veggies! Glad Tom decided to head south on I95!
The Leonard boys though have tough competition from the Ukrops gang!
http://www.ukrops.com/about/about_ukrops.asp which has been in Richmond
since 1930's and has defended the territory from the publicly traded boys
such as Kroger, Harris Teeter, and Piggly Wiggly. Rumor has it that there
is a two year wait to be a bagboy. Oh yeah they do it the old fashion way
they still to this day insist rain, sleet, snow or hail to walk with you to
your car with your groceries and put them in the car for you with a smile.
My favorite retail conglomerate of all is South of the Border or know down
South as SOB. This is located just across the N.C. border in S.C. and is
half way between NYC and Miami. The original owner in the early 50's as a
quasi beerstand/truckstop. Over the years it evolved into a Mexican mecca
simply because the original owner was nicknamed "Pedro". Billboards start
hitting you in the face like something out of a Alfred Hitchcock movie
starting on i95 in Va some hundreds of miles away and down in southern GA on
i95 headin' north. You literally can purchase any thing made in China,
Japan or any other Exporting Asian country there from shot glasses,
backscratchers, bumper stickers, ashtrays, t-shirts and singing stuff animals.
Food is traditional Southern Mexican, BBQ as well. For 99 bucks you can get
married and have the honeymoon suite complete with bottle of cheap
champagne. there is of course miniature golf, camping, swimming and a
special section in the Main shop title "Dirty old Men's Room" where you can
purchase any sexual novelty you can imagine. It is a must stop when one
comes across SOB. I grew up takin' family vacation to Myrtle Beach and my
Dad would purposely go out of the way so we could see what section, bldg. or
exhibit was added the following year. http://www.pedroland.com/