A step ahead

As a regional retailer, Pittsburgh-based Giant Eagle might not have the reach of the national players. But the privately held, 80-plus-year-old company still has managed to beat many of those retailers to the punch when it comes to a slew of supermarket- and private brand-related innovations.

For example, Giant Eagle led the way in introducing child care into its stores (via its Eagles Nest activity centers), notes Jim Wisner, president of Libertyville, Ill.-based Wisner Marketing Group, as well as talked about and reacted to the trend toward "speed-scratch" cooking when that trend was just emerging. Moreover, the retailer was one of the first to introduce a premium store brand – and the first to build an entire store concept around that premium brand via its Market District banner. And Giant Eagle did a much better job than other grocers without a drug heritage when it ultimately incorporated health and beauty care (HBC) items and general merchandise into the store.

"I think they were one of the first ones to realize that their competition was not other supermarket chains, but really was every channel of trade, and they had to compete on that level," Wisner says. "They were having those conversations for years before everyone else."

He believes those and many other firsts have come out of Giant Eagles unique approach to the market. The retailer pays close attention to changes in shopper behavior and is quick to identify and act on opportunities to respond to those changes. It also is known for putting a localized spin on products whenever possible.

"I would rank them along with H-E-B," Wisner says. "They are more intelligent and thoughtful about how they go about marketing and merchandising to the consumer. They think through issues in what I think is a far broader and more complex way than is typical for most [retailers], who are just simply addressing the operating and merchandising questions that are in front of them."

Multiple formats

Over the years, Giant Eagle has grown its operations significantly; the company now operates more than 400 retail locations with annual sales totaling more than $9.3 billion. Although strategic acquisitions certainly have played a role in the retailers growth and expansion outside of Pennsylvania, Giant Eagles early adoption of a multi-format business is a factor as well.

In addition to its flagship Giant Eagle Supermarkets (which average around 75,000 square feet in size), the retailer operates 188 GetGo convenience/fuel stores, five upscale Market District stores, seven Good Cents and Valu King deep discount stores, and two new Giant Eagle Express stores – small-footprint offerings billed as contemporary neighborhood grocery stores that meet everyday needs and offer quick meal solutions.

"Giant Eagles pursuit of a multi-format strategy well before many of its competitors has given it an agility advantage both in terms of addressing new customer segments and expanding into new markets," notes Carol Spieckerman, president of newmarketbuilders. "They have done a great job leveraging each formats unique proposition to participate in future-seeking opportunities that transcend grocery."

As an example, she points to the expansion of compressed-natural-gas refueling options at GetGo locations, adding that the company always is testing new ideas – and unashamedly copying the best of others – in the name of progress.

"As a private company, Giant Eagle can take customer-centric risks rather than answering to shareholders," Spieckerman stresses.

Speaking of customer-centric risks, the various formats allow the company to respond "very aggressively" to the needs of different consumers, which run the gamut from value to premium and convenience, notes Neil Stern, senior partner with McMillanDoolittle LLP, Chicago.

"Rather than a one-size-fits-all approach, they have taken a tailored approach by customer type," he says.

In Sterns view, Market District represents "a marvelous experiment in new products and services," particularly on the foodservice side, while GetGo is "an innovative convenience offer that compares favorably to strong operators like Wawa and Sheetz."

Mark Heckman, principal of the Bradenton, Fla.-based Mark Heckman Consulting Group, notes that Giant Eagles leadership – in particular, David Shapira (now executive chairman of the company) – always has viewed the business in a comprehensive manner; instead of focusing on "just being a supermarket," the executives home in on being a "needs provider," he says, which gives the company another reason to offer multiple formats.

"This vision manifested itself in [the companys] being an early [adopter] of fuel rewards programs, which has fostered the proliferation of Giant Eagle [GetGo] stores," he says. "Key to the success of managing multiple banners is maintaining the integrity of each of the banners and resisting the temptation to blend them with common products, programs and promotions to achieve economies of scale. Giant Eagle has done a great job of running each of their banners with that type of integrity."

Multiple brands

Giant Eagle essentially has taken the same approach to its own brands program as it has to its banners, Stern observes.

"The strength is in the segmentation, which hits the key trends," he says.

Lisa Henriksen, senior vice president of marketing and own brands for Giant Eagle, confirms that Sterns observation is spot-on, noting that the companys strategy for own brands is consistent with that for its multi-format banners – with the goal being to meet the varying needs of customers.

The retailers private brands include Giant Eagle (national-brand-equivalent), Market District (premium), Natures Basket (natural and organic), and a number of brands from Elk Grove Village, Ill.-based Topco Associates that cover the value tier, HBC and pet care segments. Daniel Donovan, a spokesperson for Giant Eagle, says own-brand products currently account for approximately 11,000 of the 20,000 to 60,000-plus items carried in a typical Giant Eagle Supermarket.

"Our Giant Eagle own brands offering is an important part of our go-to-market strategy and a key point of differentiation for our customers," Henriksen offers. "We are committed to ensuring that our portfolio of own brand products reflects the quality and value that customers expect from Giant Eagle, and that each product meets the needs of our different customers."

Giant Eagle reinforces that commitment, Henriksen says, with a "double your money back" guarantee. And the retailers strategy for own brands appears to be working, Heckman suggests.

"It would be difficult to find a better example of a traditional retailer building value and relevance into their store brand program," he says. "Giant Eagle has done a very credible job of creating tiers of store brands, from Market District on the high end and Topcos Valu Time at the â??price end of the spectrum. Further, because Giant Eagle has pushed and promoted the store brands more aggressively than most, their shoppers are becoming more sophisticated in their understanding and appreciation of the parity in quality that store brands now can claim with the national brands."

For his part, Wisner believes that store brands have played a significant role in Giant Eagles overall growth and success. He also believes that the companys long-time involvement as a Topco member has given the retailer an edge on the quality side.

"They are serious about quality," he says, "and they support their private brands pretty aggressively. They understand where they position in the market, both as price alternatives and as a quality alternative with what they are doing with the Market District brand."

Speaking of Market District, Stern says he has been "very impressed" with the uniqueness of some of the products under that brand.

Multiple roles

In addition to delivering on myriad consumer needs, Giant Eagles own brands have helped the retailer in its quest to stand out from the competition, Spieckerman suggests.

"Giant Eagles private brand portfolio has bolstered its differentiation from competitors, and more recently, it is a critical profitability edge in the wake of its execution of widespread price cuts," she says. "Its private brand stable also helps it fend off competitive challenges. Giant Eagles private brands blur the comparison and give the company some wiggle room as it responds to national brand challenges."

Giant Eagles own brands help the retailer communicate to its customers that its stores can be a resource for "strong value," too, Henriksen says, an attribute that has become critical in recent years because of economic challenges. In fact, Giant Eagles own brands have become so popular in its customers quest for value that the retailer worked to double the item count here in less than a decade, she adds.

"At Giant Eagle, our own brands offerings are an important part of our overall customer value proposition," Henriksen says, "which also includes competitively low everyday prices, great weekly specials, our popular fuelperks! customer loyalty promotion, the ability to double manufacturer coupons up to 99 cents, our strong generic drug program and more."

Giant Eagle has had success rolling out numerous own brand products across multiple categories, she adds. In recent months, the retailer has "made great strides" in categories such as frozen novelties and snacks, and views those as key future focus areas.

"Our Top Care health and beauty care items have also become a popular option for customers looking for great value on items that have the same formulary ingredients as national brands," Henriksen says, "but for a lot less, including allergy, pain relief and sun care products. Examples of specific categories that are currently experiencing sales growth include our frozen, deli and prepared foods own brands offerings. From a branded perspective, national trends in natural and organic foods are contributing to growth for our Natures Basket line."

Multiple talents

Other competitive strengths Giant Eagle brings to the table – and ultimately to its own brands program – are its supply chain expertise and category management know-how, Wisner notes.

"They dont just do a good job of doing what everybody [else] who operates grocery distribution centers does," he stresses, "but they think through throughput; they think through load factor utilization; they think through case pack optimization. ... From a category management standpoint, they are in many ways a little more sophisticated than many others."

Giant Eagles track record of staying one step ahead of competitors should bode well for both the continued success of its store brand program and overall operations.

More than anything, agility will need to remain a top-down corporate value at Giant Eagle," Spieckerman offers. "Giant Eagles multi-format model offers tremendous advantages, but it also means that it faces more competition. Its test-andlearn innovation philosophy will serve it well as the pace of retail quickens, and that includes revisiting its private brand offerings on a regular basis."