business news in context, analysis with attitude

We’re back in the air, having spent an interesting day at D&W Food Centers in Grand Rapids, Michigan, and a bit of time chatting with company CEO Jeff Gietzen.

D&W always has been respected for its intelligent, up-market approach to the food business and its respect for its customers, and Gietzen is known as one of the smartest guys in the industry. It ends up that not only is Gietzen smart, he’s also up-front about the challenges facing D&W in the short-term.

There’s tough competition, with both Meijer and Wal-Mart working the low-price side of the street. There’s a difficult economy, with Grand Rapids specifically and western Michigan in general offering more than their share of layoffs. As price cuts become a way of life, with everybody struggling to maintain or grow market share, D&W is faced with a challenge.

It can play the price-cut game, and dilute the message that it has been successfully communicating to area shoppers for some four decades. Or suffer the slings and arrows of outrageous competition, and stay the course with a high quality food-and-customer oriented retail strategy.

Tough choice.

But as we talked to Gietzen, we began to see an analogy taking shape. Think of the movie “Cast Away,” with Tom Hanks. His character’s escape from the island on which he has been stranded is made almost impossible by a natural phenomenon in which the waves breaking onto the shore prevent him from sailing past a certain point in the water. It is only when he’s able to rig a makeshift sail that will get him out into the open sea that the Hanks character has any hope of success.

In other words, the first 100 yards or so are the hardest. The rest of it is no picnic…but in order to get to the open sea, he has to figure out how to transcend the short-term problem.

That’s sort of the problem that Gietzen and D&W face. They have to figure out a way to survive the short-term difficulties with their strategic integrity intact, so that they can then face the long-term challenges. One strategic decision has already been made: get into the Save-A-Lot business so that it can capture some of the low-price-preferred business that isn’t patronizing the company’s traditional stores. And in those stores, D&W is featuring the kinds of food-oriented ideas that can capture the imaginations of a wide range of consumers. During our visit, there was plenty of activity in the store’s foodservice categories, with local people clearly gravitating to D&W’s fresh food offering.

We believe that the company, from top to bottom, is more than up to the challenge. We’ve always been impressed with the company’s management team; on this trip, looking at the business from a consumer’s perspective, we found a real and infectious enthusiasm on the part of the associates.

These associates are paying attention to the little things. As we were getting a cup of coffee yesterday morning, the young woman behind the counter addressed the woman on line behind me, saying: ‘Would you like the usual?” That made us think that two of the most effective words a retailer can use in speaking with a customer are those: “The Usual.” It implies connection. It establishes familiarity. It is the best kind of foundation on which to build a business.

In a tough environment, D&W seems to be doing the things that need to be done to remain a vibrant and energetic retailing fixture in western Michigan.
KC's View:
We hope you’re enjoying this ongoing trip as much as we are. Now, it’s home for a quick weekend, and then back on the road Monday morning…among our stops next week will be Orlando, Florida, for coverage of the annual National Association of Convenience Stores (NACS) convention…