Indie Grocers

With a host of new players about to arrive in the Capital Region, will neighborhood markets survive?

Independent grocer Calvin Lindsly darts through the tight, neat aisles of his Bocage Village supermarket, pointing out dozens of specialty goods he's ordered over the years in response to requests from customers.

Special wooden cases affixed to the front of each shelving unit contain jars of boutique barbecue sauces, mustards, marinades, packages of cookies and crackers, and packets of seasonings and rubs. Calvin's private label products, which he introduced six years ago, are shelved prominently as well.

Gourmet displays are sprinkled among Calvin's Bocage Market's everyday items, including a stand at the entrance stocked with high-end chocolates from the trendy New Orleans confectionery, Sucré. In July, Lindsly plans to install a new fois gras display near the deli.

“We added this slogan to our bags a few years ago,” says Lindsly, picking up a plastic grocery bag stamped with the phrase “Your global connection to gourmet foods.” He explains, “This is our thing. This is what we do.”

Lindsly bought the market at Bocage 16 years ago, after working for its previous owner for nearly 20 years—plenty of time to know the generations of customers who flock to this Jefferson Highway neighborhood grocery store. Lindsly renovated and expanded the landlocked space, adding hundreds of specialty items and enlarging areas with high profit margins, including the wine department and deli. The latter gets big returns on take-home entrées made on-site, and on the store's wildly popular $7-a-pound chicken salad.

“I make 400-450 pounds of that stuff a day,” says Lindsly, pointing to a tub of chicken salad in the cart of a departing customer. Indeed, within minutes on a weekday morning in June, four out of five customers in Calvin's check out queues had tubs of the store's signature dish.

The significance isn't lost on Lindsly, who, like most Baton Rouge independent grocery operators, has been in the business long enough to navigate volatile market forces, from the arrival of Walmart Supercenters to the decline of national chains to the arrival of natural foods behemoth Whole Foods Market, which opened practically across the street from Calvin's in 2005.

“Our customers were so worried about it, but I knew we needed to just keep doing what we were doing,” Lindsly says. “Business ended up increasing 15%. To beat the competition, you have to have something special the other guy doesn't have.”

Those things are old-fashioned service and product variety, the same duo of traits that most independents claim has helped them remain relevant and expand in Baton Rouge over the last 20 years. But with a host of new players about to hit the local market, including Thibodaux-based Rouses, Costco, an unnamed gourmet chain and others, these stores are hoping their brand identity, attention to detail and loyal customer base can carry them through the next big wave of change.

Local culture

The presence of Interstate 10 along with a college-age labor force has made Baton Rouge historically appealing to national chains. But amid the presence of chain restaurants and popular big-box stores is a powerful collection of neighborhood groceries that doesn't exist to the same degree in many other cities, says J.H. Campbell, president and CEO of the member-owned Associated Grocers, which provides products and services to AG stores in the Gulf South.

“This is a city where independents are strong,” Campbell says.

There are dozens of emblematic names in the area, including Ralph's Market, Reeves Supermarket, Calandro's, Bet-R-Store, Matherne's, Hi Nabor, Oak Point Fresh Market, LeBlanc's and others. Most have multiple locations.

“In a lot of other cities, for various reasons, you see more of a chain-dominated [grocery] culture,” Campbell says.

In Louisiana, Baton Rouge and New Orleans have a long history of family-owned supermarkets that began as corner grocery stores. These mom-and-pops expanded to full-service supermarkets over the decades, and many opened multiple locations. But similar stores in places like Alexandria and Shreveport did not thrive, and today those cities are served primarily by large chain supermarkets, Campbell says.

It's not that grocery chains don't do well in Baton Rouge. Albertsons, Winn-Dixie, Piggly-Wiggly, The Fresh Market, Super Target and a 50,000-square-foot Whole Foods Market are firmly planted in the Capital City. Walmart and its subsidiary Sam's Club, the top U.S. food retailer by sales, thrives in Greater Baton Rouge with several regional Walmart Supercenters and Sam's Clubs. The state's largest Sam's Club opened in Denham Springs in June. The market is fiercely competitive for consumer dollars, but independent grocers have held on by touting deep community roots, competitive pricing and the ability to respond fast to customer preferences.

“Independent grocers are better poised to personally interact with their customers, and many grocery store operators feel those relationships are an important competitive advantage,” says Jessica Elliott, director of government affairs for the Louisiana Retailers Association.

When they comment on the local retail climate of the last two decades, independent operators point to a watershed event—the arrival of Walmart Supercenters.

“Things started to change when the first supercenter format came into the state, in Deridder in about 1992,” Campbell says. “All of a sudden there was this new competitor, and it changed the way everyone went to market.”

Walmart's low-price brand quickly seeped into the consciousness of grocery shoppers, who were easily convinced they could do better on price if they schlepped to their closest Walmart or joined Sam's Club. The stores' buying power on brand names and its private label Sam's Choice products helped make the 1990s notoriously hard for independents, says Randy LeBlanc, who owns and operates eight LeBlanc's Food Stores with his brother, Marcy. A ninth store is forthcoming in Gonzales.

“The independents took their first shot when Walmart starting selling groceries, because that was our customer,” says LeBlanc.

Independent stores weren't the only ones feeling the effects of Walmart's pricing power. The 1990s and early 2000s triggered closures or consolidations for a number of national chains with a Baton Rouge presence, including Winn-Dixie, Delchamps, National and SuperFresh, leaving fewer competitors and several “dark” stores.

Meanwhile, big-box stores may have been cheaper, but they couldn't shed their reputation for lousy service. Moreover, Walmart did away with meat cutting, instead stocking its meat departments exclusively with pre-packaged beef, pork and chicken. Independents were in place to reclaim personal service, says Sonny Calandro, one of four brothers who own Baton Rouge's two Calandro's Supermarkets.

“We've always tried to make shopping with us an experience, a social event,” he says. “Going to Walmart is not a social event.”

LeBlanc says focusing on services like meat cutting and personally showing customers where to find items helped buoy independent grocers in a manner that evaded chains.

“After Walmart, we took it on the chin and got back up,” he recalls. “But chains took it on the chin and stayed down. By the late nineties, it was pretty much us and Walmart.”

The shrinking of the chain market and the empty physical locations they left behind provided opportunities for many independents to expand. Between 2000 and 2009, LeBlanc's opened eight new stores, six of them in spaces once occupied by Winn-Dixie, which had drastically reduced its national fleet.

Similarly, Calandro's Supermarket expanded to Siegen Lane at Perkins Road in 2000 in a space once occupied by Winn-Dixie, says Calandro. Matherne's Supermarket, based in Paulina, moved into the Baton Rouge market in 2000, first in a former Winn-Dixie on Highland Road at Kenilworth, followed by a move into a former Delchamps on Bluebonnet Boulevard at Perkins, reports Matherne's Highland Road store manager Bill Hounshell. Despite Walmart's formidable staying power, Campbell says that independents have consistently been moving more products. AG sales of both national and in-house ShurFine brands have grown more than 140% since 1992.

Branding themselves

Profit margins in the grocery business are notoriously slim—as low as 1% to 2% on the national average. And while independents have remained strong in Baton Rouge, they still face perception issues, Campbell says. Some consumers simply believe they're not going to get the same quality from independent grocers, so they continue to shop at large national chains, he says.

“I don't understand it,” says Campbell. “I don't know where [the belief] comes from.”

Campbell says he likes to combat it with a question about where consumers traveling to a city like New Orleans would rather eat: family-owned eateries with extensive culinary pedigrees or chain restaurants?

However, the constant fight for consumer dollars has motivated independents to develop specific offerings that complement the grocery basics, Elliott says.

“Tight profit margins and a highly competitive business environment force independent grocers to stand out in some fashion,” she says. “Independent grocers find a niche and market that niche to their customers and prospective customers.”

At Calvin's, those specialty areas are gourmet fare, take-home entrées and the deli. As basic a dish as it is, the chicken salad is the backbone of a strong catering and sandwich tray business that spiked further with the closure of Southern Belle Sandwich Co. in 2009, says Lindsly.

Wine has proved to be a staple for Calandro's on Government Street and Matherne's on Highland Road, which have well-established boutique wine programs. Charles Calandro began growing his supermarket's wine department in the late 1980s when Americans were still generally limited in their wine exposure. Calandro stayed ahead of consumer tastes, so as interest in wines grew and demand rose among local consumers, he was already stocking diverse bottles.

Calandro began traveling to international wine regions to meet directly with vintners, and eventually added a temperature-controlled fine wine room in the back of the supermarket. In the store itself, he also increased shelf space.

“The goal was always to create more of a wine shop than a wine department,” Calandro says. “There are a lot of people who shop here today because of the wines.”

At Matherne's on Highland, Hounshell led the expansion of the wine section from an eight-foot shelf to a large portion of the store's west side. Now wine sales can occupy from one-third to one-fifth of the sales pie, says Hounshell, who holds weekly reservation-only wine dinners on-site and distributes email wine specials to hundreds of patrons every few days.

Other stores recognize the importance of a wine program as well. Le-Blanc's Food Stores hired their own store-wide wine specialist, Mickey Martin, to guide customers and offer pairing suggestions. Even one of the smallest independents, Bet-R-Store, which likely has the city's most economically diverse clientele, recently tripled the size of its wine department.

Catering is also big for many independents. Both Matherne's locations provide high-end catering and get substantial action from LSU tailgates and from the hospitality community.

Other stores, like Ralph's, have exploited the king cake niche. The Gonzales-based store prepares 50 different varieties including hard-to-find braided New Orleans-style king cakes, often baking hundreds of cakes per day during Carnival season.

Family affair

Succession planning is a huge issue for independent supermarkets, which are almost always family-owned, says Campbell.

“These are family businesses,” he says. “It takes a lot of planning and effort to bring in the next generation, if they're even interested in doing it.”

In response, Associated Grocers features focus groups on intergenerational strategies that are meant to help independents wade through the thorny issues associated with separating roles and responsibilities among family members.

“We have a lot of strong family businesses in the area where we've got third- and sometimes fourth-generation operators,” says Campbell.

In the case of Calandro's, the four sons of the store's founder have split the operational responsibilities between two locations. However, the four brothers meet as a board to hammer out big issues.

“It's still one company,” says Sonny Calandro.

Second-generation owners Randy and Marcy LeBlanc have successfully woven four of their children into the operations. Randy's two daughters, Brooke LeBlanc Knight, 29, and Brittney LeBlanc, 26, and Marcy's two sons, Marcy LeBlanc Jr., 25, and Matthew LeBlanc, 23, have all found roles in the company, based on their personal interests and the company's future needs.

“It really just worked out,” says Randy LeBlanc. “But the trick to this is, each person has their area and they're able to make decisions."

Knight serves as director of corporate communications and is helping to develop a social media component and to refine the company's philanthropy process. As a young parent, she has also expressed a common request among Millennials: the need for more work-life balance—a tall order in a field that traditionally demands grueling hours of its management.

“When we sat everybody down to discuss their interest, they all said they wanted to work hard, but not as many hours as they saw us working,” says Randy LeBlanc. “It's funny, because I remember having the same conversation with my father.”

The Rouses factor?

Several new players are expected to enter the Baton Rouge food retail market beginning next year, which will likely have independents fighting harder to maintain their market share. Trader Joe's is rumored to be the national gourmet grocer moving into the Commercial Properties development at Perkins Road and Acadian Thruway, less than a mile from Bet-R-Store.

“Of course I think people are going to go there and check it out. That's only natural,” says owner Cliff Boulden. “But I think that we'll maintain our customers.”

Boulden says Bet-R-Store was expanded and renovated more than a year ago in anticipation of new competition on that spot.

“We knew we needed to expand in advance of anything new there,” he said. “We're going to keep doing what we're doing, focusing on service and on our customers.”

Elsewhere, Sam's Club competitor Costco is expected to open on the 28-acre former Coca-Cola bottling site on Airline Highway. And LeBlanc's just closed on land at the corner of Airline Highway and Duplessis, in Gonzales. Randy LeBlanc says the family-owned chain is planning a new ground-up location there with the modern amenities shoppers are looking for, including a sushi counter, which exists at other LeBlanc stores currently.

A new gourmet concept called Alexander's Highland Market will open in 2013 at Highland Road and Perkins Road East, the brainchild of Reid, Lathan and Ryan Alexander, who own Murray's Superette in St. Amant.

And Rouses Supermarket, found in New Orleans, Lafayette and several other Louisiana towns and cities, will finally break ground on three new stores in the Baton Rouge area next year, says company spokesman Donny Rouse. The wildly popular chain from Thibodaux has expanded considerably since 2007. It's now up to 39 stores and 5,200 employees.

“It hasn't been by design that we're not in Baton Rouge yet,” he says. “It's been a hard market to get into because of the price of real estate.”

Rouse says he believes the company will do exceptionally well in Baton Rouge because no single local store has the breadth of its offerings.

“No one in Baton Rouge does what we do in one store, with fresh seafood, wine, natural and organics, local foods and more,” he says. “We feel like we have something unique.”

Rouse says Baton Rouge residents have sent emails for years asking the store to open locally. The idea is to open three ground-up stores at one time: one in the Zachary area, the other in town and the third east of Baton Rouge.

Rouse believes the grocery culture in Baton Rouge is fragmented. Whole Foods offers plenty of organics but at higher prices than many consumers want to pay.

“We compete with Whole Foods really well in New Orleans,” Rouse says. “We're able to offer lower prices.”

Rouses has managed to cram everything from high-end wines, specialty meats and plenty of signature Louisiana fare into its newer locations. There's even an herb garden on the top of its store in the New Orleans Central Business District. Companywide, Rouses also boils about 3 million pounds of crawfish every year. Its brand is firmly tied to state pride, reflected in its current slogan: “You're either local or you're not.”

“I think the traditional supermarket … that's a thing of the past now. I don't see that being around in five years,” Rouse says. “I think consumers want a fun shopping experience. They want to pick up what they need, but they also might want to try some dry aged beef or some Berkshire pork.”

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