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VOL. 127 | NO. 25 | Tuesday, February 7, 2012

In the Bag

Independent grocers survive Kroger, Walmart landscape

JEFF IRELAND | Special to The Daily News

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Last September Kroger Co. purchased nine Memphis-area Schnucks grocery stores.

Matthew Burkhead helps Teresa Williams, left, and Jackie Cain carry out their groceries at Cash Saver, an independent grocery store owned by the Burkhead family. The grocery charges cost plus 10 percent on all items. (Photo: Lance Murphey)

Eight of the stores reopened as Kroger and the ninth remained vacant.

The move clearly illustrated Kroger’s intentions to increase its market share. At the same time, it gave more credence to the notion that smaller, family-owned grocery stores are going the way of the dinosaurs.

“We had big visions,” said Jeff Burkhead, who in May 2010 bought the grocery store at 729 N. White Station Road that had formerly been Robilio’s Big Star and Piggly Wiggly.

Burkhead renamed the store Cloverleaf Market and ran it as a conventional grocery store for a year before things started to go south.

“We thought we could run a family-owned store with great customer service and a quality product, and we did that,” he said. “But at the time, you had Schnucks in town and you had Kroger in town. We were basically the same thing, just a lot smaller scale, an older store and a worse location. It’s like trying to break out of the woods in golf.”

Last June, Burkhead rebranded the store as Cash Saver. Every item is priced at cost with 10 percent added at the register.

Burkhead’s Cash Saver is one of just two grocery stores in Memphis operating with the “cost-plus-10” business model.

“I was one of the first few to open and I was able to jump on the bandwagon,” said Burkhead, whose store is licensed and supported by Kansas City, Kan.-based Associated Wholesale Grocers, a retailer-owned cooperative that has more than 1,900 member stores.

“We were struggling as Cloverleaf Market. We knew that if we ever got to where we thought we should be, it would take a long time … a lot longer than we thought.”

Superlo Foods, owned and operated locally by Randy Stepherson, who has been in the Memphis grocery store business since 1978, has carved out a niche.

Cornell Watson refills the meat case with meat that is 100 percent cut in the store at Cash Saver, an independent grocery store near Summer Avenue and White Station Road. The grocery charges cost plus 10 percent on all items. (Photo: Lance Murphey)

He owns four Superlo Foods in Memphis, plus a fifth store named Stepherson’s. He is also leasing a former 55,000-square-foot Schnucks building at 975 Goodman Road in the Southaven Commons Shopping Center and plans to open it as a Superlo in the coming weeks.

Superlo is a full-service grocery store, also supported by AWG, that markets itself as having lower prices than behemoths like Kroger and Walmart.

“Not everybody likes to shop the big boys,” Stepherson said. “People like a choice. … A lot of people hear the word ‘Superlo’ and think of us as just a box store. We have a full meat department. Full produce department. A bakery/deli. We do the complete grocery game, but we do it with great pricing.”

Memphis-based PLC International Inc. owns Winchester Farmer’s Market, located at the corner of Winchester Road and Kirby Parkway. Last month the group purchased a vacant 68,000-square-foot Schnucks building at 1150 N. Germantown Parkway and plans to open it in April as Cordova Farmer’s Market.

Both stores target customers looking for something different like exotic produce and other foods typically not available in national chains.

The stores also have staples that customers are used to buying.

“That’s what separates us from them,” said Medo Boukhari, general manager of Cordova Farmer’s Market. “We want customers to be able to come and get things you’re used to every day, but also try different things and learn about other types of food. We try and educate anybody who comes in on what the items are, how to use them … everything.”

If imitation is the sincerest form of flattery, both stores are doing something right.

“I think we have a little niche that Walmart and Kroger have failed to take advantage of,” Boukhari said. “And now, if you go in certain Walmarts and Krogers, you’ll see items like that. We even have them come in our store and walk around and ask about our products and try and imitate us. When you’ve got the big boys coming around and sniffing around and trying to copy you, I’d say we’re doing pretty good.”

Stepherson believes there will always be a place for locally owned grocery stores on the Memphis landscape.

“Certainly there are fewer independents left,” Stepherson said. “I guess Walmart would be the biggest thing that’s hit the grocery market. … There are a lot that have survived, though. Nobody’s going to do all the business. Walmart’s not going to do it all. Kroger’s not going to do it all. People want options.”

PROPERTY SALES 124 481 17,865
MORTGAGES 127 530 20,565
BUILDING PERMITS 195 891 36,836
BANKRUPTCIES 52 262 11,426