Marvel of the Midwest
For many shoppers in the upper Midwest, it would be a bit tough to consider life without Roundys. Spanning the Chicago and Twin Cities metro areas, as well as much of Wisconsin, the retailers stores reach a large number of shoppers in three major Midwestern states.
Even the makeup of Roundys executive team screams "upper Midwest" – several members of the team hail from the regions largest market. At the helm is Chairman and CEO Robert "Chairman Bob" Mariano, the former CEO of Dominicks, an iconic grocery chain in the Chicago area acquired by Pleasanton, Calif.-based Safeway in 1998. Other executives who served alongside Mariano at Dominicks include Darren Karst, executive vice president and chief financial officer; Donald Rosanova, executive vice president, operations; John Boyle, group vice president, store operations; and Don Fitzgerald, group vice president, chief merchandising officer.
But Roundys roots in the upper Midwest go back to a time before Mariano joined the company in 2002. According to Jim Hyland, vice president of investor relations and corporate communications for Roundys, the company boasts an impressive 141 years of experience in the areas grocery market, beginning in 1872 as Smith, Roundy & Co., a privately owned food wholesaler in Milwaukee.
"In 1952, we were sold to a certain number of our customers," he states. "Until 2002, we operated under the Roundys corporate name as a retailer-owned cooperative, with food wholesaling operations largely focused in Wisconsin."
Roundys finally entered the market as a store owner and operator in 1975, Hyland says, with its first Pick n Save store. As the years went by, the company continued to open and operate stores under the Pick n Save banner and several other banners.
Focus on formats
Today, Roundys operates 161 stores under five banners. The five banners can be divided into two distinct formats, each one catering to a specific type of consumer. Its Pick n Save, Copps Food Center (both in Wisconsin) and Rainbow Foods (in the Twin Cities market) stores are high-volume, value-oriented supermarkets that offer attractive prices and the best value among conventional food retailers in a given market, Hyland states. In addition to fresh produce, the stores "offer full-service deli, meat, seafood and bakery departments," with many also featuring full-service pharmacies.
Meanwhile, Marianos (in the Chicago metro area) and Metro Market (in the Milwaukee area) stores are specialty food markets that offer a "highly differentiated" food-shopping experience with a strong focus on customer service. The two banners stores have a "distinctively modern and inviting ambiance" and provide an enhanced selection of premium perishable and prepared food departments with a wide array of organic and natural offerings. Most of them also feature full-service pharmacies.
Marianos, in particular, has seen massive success since opening its first store, in Arlington Heights, Ill., in 2010. And Hyland states that the company sees a very bright future for that banner.
"Our current capital plan will allow us to open five new Marianos stores per year for the foreseeable future," he says. "Based on the Marianos banners success to date, we are increasingly confident that the Chicago-area market can accommodate more than 30 Marianos stores."
One feature that plays a big part in differentiating Marianos from the competition is its Vero café – a concept that rolled out first in Metro Market stores, according to a June 11, 2010, article on the Milwaukee Business Journals website – which serves coffee drinks and gelato under Roundys Vero brand. Outside of the café, Vero can be found on bags and dispensers of coffee beans in the center store.
Closeup on the brands
While the Vero brand is exclusive to Marianos and Metro Market stores, all other Roundys brands can be found in all stores under Roundys five banners. And regardless of the department or category, Roundys positions all of its own-brand products as the most trusted and preferred items on shelves, helping customers make purchase decisions easier and enhancing their shopping experience, says Bridget Lehrke, director of Own Brand for Roundys.
"Since 1922, Roundys brand products have certainly driven customer loyalty," she explains. "Our brand is perceived as a quality, trusted store brand, offering a wide variety of products that cost less than national brands."
In fact, respondents to a recent brand-equity survey performed by Roundys used the words "trust," "quality," "dependable," "consistent," "variety" and "good value" when asked to describe the retailers brands, Lehrke points out.
"I would certainly say shoppers enjoy both the price and the products, but quality is first and foremost, and quality is what will bring them back," she states. "Customers know they do not have to be afraid to try Roundys products, as we offer a 100 percent satisfaction guarantee."
Roundys takes a three-tier approach to its own-brand program – value, national brand equivalent (NBE) and premium – and also incorporates several niche brands, Lehrke states. The value tier comprises the Clear Value brand, supplied by Elk Grove Village, Ill.-based Topco Associates; the NBE tier is made up of the Roundys brand; and the premium tier includes the Roundys Select brand. Niche brands are Roundys Fresh (produce, bakery, meat and deli departments), Roundys Pet Care (pet products), Roundys Pharmacy (over-the-counter medication) and Vero.
Two other niche brands – Roundys Organic and Full Circle (also from Topco) – cater to shoppers desire for natural and organic products. The Full Circle brand supplements Roundys Organic to provide customers with as many organic options as possible, Lehrke states.
"In other words, where we may not be able to meet the minimum volume requirement to produce under our own label, we look to Topcos Full Circle brand to help provide that offering for our customers," she says.
When asked to name her two favorites of Roundys newest store brand offerings, Lehrke points first to Roundys Select Single Serve Coffee, a line of Keurig-compatible coffee pods comprising six SKUs that launched last December.
"Since inception, we have far outpaced national brand sales in this category," she explains. "Our product filter is biodegradable, and we are working on introducing a recyclable lid to offer our consumer a single-serve cup that is entirely decomposable. We will be launching three additional SKUs in 2013 and will be looking to expand into organic single-serve coffee offerings as well in early 2014."
Second, she names Roundys Simply Popcorn, a line of bagged popcorn that launched in July as an answer to the rising demand for low-calorie snacks.
"Our product is lower in calories than the competing national brand, yet consistently has better-cutting results," she notes. "We also developed a trendy package for our consumer – utilizing a matte finish pack with bold and prominent colors. The product has been so successful for us that we are looking to add even more low-calorie options for our consumers."
A desire to innovate
As private label products become more prominent in todays households – and with shoppers spending less time and money in sit-down and fast-food restaurants – Lehrke says her team sees an opportunity to "ramp up" innovation and meet customers increasing demand for more chilled, frozen and ready-to-serve meals.
Roundys Own Brand team also understands the need to constantly innovate on the packaging side as well.
"We believe the quality of the outside of the pack is as important as the inside," Lehrke notes. "We are in the process of redesigning all of our product labels and adding more product attributes, as well as dietary callouts. We are evaluating resealable features on our bags and peel-off lids on cans to provide customers with added convenience – even when the national brand does not offer it."
Fitzgerald says the retailers Own Brand team looks to multiple places to inspire packaging development.
"First, we look internally to leadership from our Own Brand team, category managers and other partnerships with Daymon, as well as Topco," he states. "Next, we rely on our capable community of suppliers to bring forward new ideas of what is best in class. Finally, we are always open to learning from peer retailers in our industry or others."
The QA quandary
But even with a great team of people handling everything from product sourcing to packaging development, Roundys isnt without its share of challenges. On the quality assurance (QA) side of operations, Lehrke says one of the most difficult struggles her team faces is resisting the urge to dumb-down product quality when the national brand manufacturers are doing so.
"One of the biggest challenges we have seen is monitoring national brands ingredients, and as they lean towards adding more artificial additives and ingredients into their products to potentially reduce costs, we must refuse to do so," she explains. "We are taking a deeper dive than ever before into our products to ensure that we meet or exceed the quality of all national-brand-equivalent items – not just in terms of taste, but in nutritional value and ingredients."
To stay on top of all QA-related challenges Roundys is building an internal QA department, Lehrke states.
"[It will] further monitor existing vendor products and test all potential new items, not only to ensure we are offering superior quality, but also to monitor ingredient integrity so we can provide only the best options for our customers," she explains.
Roundys also works hard to collaborate with its manufacturers for research and development (R&D) purposes, Fitzgerald notes.
"We work to partner with our suppliers as far back into the supply chain as possible," he says. "As such, we look for R&D opportunities with our suppliers to innovate and discover differentiated products and packaging. As we look forward – and work with new suppliers – we seek out those with innovative and competitive ideas who arent afraid to break the mold while looking for ways to compete more effectively."
And its Roundys preference that as many of those suppliers as possible be found locally. Fitzgerald stresses the importance of supporting the communities in which the retailer operates, calling it a "core principal" at all stores under every banner.
"There isnt a better way to support the community than to buy local products," he says. "It helps local businesses and makes high-quality, great-value products available in our stores. Its a wonderful closed loop of local involvement."
Speaking of sourcing, Roundys works continuously to improve the efficiency and effectiveness of its supply chain, Fitzgerald points out.
"This includes the consolidation of suppliers, improved on-time/complete orders, reduced lead times, reduced damage, improved clean invoicing, etc.," he explains. "An efficient supply chain leads to lower cost, greater value and – most importantly – benefits for shoppers."
One would be remiss to assume that all own-brand products at Roundys are manufactured by outside suppliers, though. According to Fitzgerald, the retailer manufactures hundreds of its own products – from packaged goods on shelves to salads, meat products and ingredients for prepared foods – in a state-of-the-art facility in Kenosha, Wis. Doing so does more than just reduce costs – it allows for greater quality control and vertical integration.
"However," he adds, "the greatest benefit is the opportunity to differentiate Roundys from our competitors. Were able to provide products that are demonstrably better than what competitors offer for both national or own brands."
But manufacturing so many products in house also comes with its share of challenges.
"The greatest challenge," Fitzgerald says, "is the ability to keep pace with the changing technology. A larger manufacturer is able to allocate the capital costs over greater volume while producing for many retailers."
More converts wanted
Even though more shoppers than ever before purchase Roundys own-brand products, Lehrke is quick to note that a number of patrons remain pretty loyal to national brands – and refuse to purchase private brands outside of a small number of categories.
However, Lehrke and her team have developed several ways to get shoppers to convert.
"For all new product line introductions, we execute product launch campaigns to educate our customers and entice shoppers to try our new products," she explains. "During these campaigns, we set up in-store signage and displays [and] product sampling events, and utilize print and online advertising to launch our products."
As for new campaigns, Lehrke says her team implemented the "Buy Theirs Get Ours Free" campaign, which gives consumers who purchase select national brand items the Roundys brand counterpart for free.
"We have also executed more and more Roundys Brand Challenge events, where customers sample our products versus the corresponding national brand," she states. "In measuring our results, we have started to convert many national brand loyalists, but still have a long way to go."
Roundys also reaches out to its shoppers regarding its store brand goods through a quarterly magazine for Marianos customers and through social media, Fitzgerald points out.
"Roundys utilizes social media – Facebook and Twitter – to communicate with shoppers about our brand," he says. "We discuss whats new [and] events that may be happening in store, and solicit feedback on the products they are buying. The degree of this type of communication varies by market."
And understanding that its employees can be a huge asset when it comes to brand evangelism, Roundys invests in educational materials and programs to help them communicate its own-brand message.
"As part of every new employee orientation, we have developed an online learning program for our brands," Lehrke explains, adding that the retailer also offers an employee discount program for private label products.
In addition, Roundys produces a monthly educational newsletter for its 20,000-plus employees titled Our Own View, which details how they can communicate information about Roundys brands and their products while interacting with shoppers, family members and friends.
And, of course, Roundys communicates a 100 percent satisfaction guarantee from "Chairman Bob" on packaging, which tells shoppers that they dont have to be afraid to try any of its store brand products.
"Our desire is for our brands to convey quality first; thereafter, a value to our shoppers," Lehrke stresses. "Regardless of the absolute price – or price gap to a national brand – if our Roundys brand products fail to deliver quality, price does not matter."