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How local family-owned Price Chopper beat back a threat from Walmart to become Kansas City’s favorite hometown grocer.

While the Walmarts and Krogers of the world tend to grab most of the headlines, plenty of small independents continue to not only survive but thrive, quietly maintaining leadership positions in marketplaces across the country. In the Kansas City area, for example, family-owned Price Chopper owns a much bigger share of the market than both Walmart and Hy-Vee. How has it managed to outperform the two retail behemoths? In some ways, says second-generation grocer Barry Queen, whose family owns and operates five Price Choppers in the area, the business owes its success to Walmart. But first, a little background:

In the mid ’70s, Queen’s father Jim and Jim’s best friend John McKeever left their executive positions at Associated Wholesale Grocers (AWG) and bought a small grocery store together in Paola, Kan. A few years later, AWG came up with the idea of creating a price format, eventually securing the rights to the Price Chopper name in the Midwest. So the two men dissolved their partnership and each opened their own Price Chopper. Other families did the same, and today, four different families – the Queens, McKeevers, Cosentinos and Balls – own a total of 51 Price Choppers in the Kansas City metro area. All members of AWG, they operate separately but share the cost of unified marketing and advertising campaigns (under Price Chopper Enterprises).

THREE KEYS TO SUCCESS

A bunker reserved for sale items features ready-to-cook store-made meals for $10.

So what does Walmart have to do with it? Well, when the retail giant first came to town in the early ’90s, Price Chopper defended surprisingly well by doubling down on three things that differentiate it from the national powerhouse: community involvement, superior fresh offerings and stellar customer service. From in-house butchers and produce specialists and tailored assortments featuring a wide selection of local brands to fundraisers for the nearby elementary school and partnerships with the Kansas City Chiefs and Royals, Price Chopper played to its strengths, cementing its status as the “hometown grocer” Walmart could never be. It wasn’t easy, says Queen – and stores still had to get all of the basics right – but the strategy worked and remains key to the chain’s success even today. Customers like the idea of supporting a local business that supports them right back.

Beyond that, “One of the biggest advantages to being an independent is our ability to adapt to the unique needs of customers at different stores,” even within the five his family operates, says Queen. For example, while two are in the sprawling suburb of Overland Park, the second-largest city in Kansas, the other three are in small, rural towns with populations under 10,000, including Paola where the family still resides. As a result, “Everything from the assortments to the ratio of fresh to center store to how products are merchandised is tailored to the customer base. Shoppers still know they’re in a Price Chopper, but unlike Walmart, they’re not all the same.”

Another driver behind the company’s success is the four families’ continued reinvestment in stores. As a result, says Queen, most Price Choppers compare very favorably against supermarkets that are part of much larger chains. For example, the family’s 85,000-square-foot store at 151st and Metcalf in Overland Park features a restaurant that seats 140, an Asian grille, a huge cut fruit and salad bar, a popcorn shop, tons of grab-and-go meals and a huge e-commerce pick-up area with six covered parking spaces. And that’s just for starters. “We really strive to keep up with the times,” says Queen.

Three generations of the Queen family in front of the original Paola, Kan., store opened by founder Jim (center) in 1979. Grandson Dylan (left) works in operations; son Barry (right) is owner/managing partner.

In an effort to stay ahead of the pack, Price Chopper Enterprises recently announced plans to more than double capital expenditures in 2020, committing $54 million to new stores, remodels and other improvements. For their part, the Queens are investing $4 million, the bulk of which is earmarked for an extensive remodel of the 87th and Antioch store in Overland Park. From rooftop condensing units and HVAC to shelving and flooring, the place is getting a complete overhaul. The biggest change to the frozen and refrigerated departments is the addition of LED-lit French door cases that are both more attractive and more efficient. The high-profile cases have a narrower footprint than their predecessors, so they’re not as deep, which makes rotating products easier. And thanks to the elimination of bulky internal refrigeration machinery, they offer better pack out. So even though the two departments aren’t getting any more linear footage in the remodel, Queen estimates the store can carry up to 10% more frozen and refrigerated products in the new cases. He adds, “Our hope is that more and more manufacturers will offer case-ready packaging. So instead of having to peg so many items, they can stay in boxes. And we can just rotate boxes that are intended for merchandising.”

FIGHTING FOR SPACE

Which categories are likely to grab that extra 10%? In refrigerated, says Queen, snacks that combine cheese, meat, nuts and other items (think Sargento’s Balanced Breaks) are growing fastest, followed by flavored creamers; yogurts and cottage cheeses featuring various mixins; refrigerated teas, coffees and energy drinks; and other better-for-you items with attributes like natural/organic and plant-based. “Convenience items like Ore-Ida’s Just Crack an Egg are also gaining momentum,” adds Queen. On the flip side, decliners include “regular” dairy milk, margarine, basic biscuit and roll dough, orange juice and Greek yogurt.

A special island holds dozens of hot-to-go meats from Big Jim’s Smokehouse.e

In the frozen section, he reports, “middle-of-the-road” basics are likely to cede space to more premium items. In entrees, for example, healthier, clean-label recipes, especially bowls, are growing while more traditional options are declining. “But we’re seeing a similar shift across categories – in pizza, ice cream, frozen veggies, bread, snacks and appetizers, etc.” In addition, says Queen, frozen novelties are absolutely “on fire,” driven by non-dairy options from the likes of Halo Top and a whole host of new plant-based competitors.

But plant-based still hasn’t hit critical mass in the heartland – particularly in more rural locations – says Queen’s son Dylan, the third generation to join the family business. “We recently added a line of fresh plant-based meats and ended up having to move it to frozen after a couple of weeks because it didn’t turn fast enough in refrigerated. It’s definitely a trend and we have it for those customers who want it,” he explains, “but we can’t carry the variety you’d find at a retailer on either coast.” He notes, however, that plant-based assortments vary by store. In plant-based creamers, for example, rural stores might only offer two options, sweetened and unsweetened, while the Overland Park locations might carry four or five different brands and several flavors. It all goes back to the independent’s ability to very precisely tailor assortments.

While natural, organic, plant-based, gluten-free and other better-for- you products are integrated with their mainstream counterparts in four of the Queen’s five stores, their flagship 151st & Metcalf location merchandises those items in a separate Conscious Living Marketplace store-within-a-store. Staffed by “food knowledgeable” employees, “It’s a very large space featuring probably 24 frozen and 24 refrigerated doors,” says Queen. Although he firmly believes integration is the better approach nowadays because everyone’s eating clean, the dedicated section is simply too big to dismantle without a costly remodel. Plus, “It works in this one location because it’s such a large, defined area – a true shopper destination.”

No matter where products are merchandised, Queen says the breadth and depth of Price Chopper’s assortment is clearly a strength that reflects the chain’s customer-service focus. In an effort to offer something for everyone, “We’re very big on variety, including the local brands many of our customers support,” especially in dairy. Standouts include Good Nature Family Farms, Shatto Milk Co. and Belfonte, whose ice cream is one of Price Chopper’s top movers. In frozen, the chain carries Hometown Pie Co. desserts hand-made by a Kansas woman in her home. And most stores have added Fatty Head keto pizza dough, also from a local woman-owned business.

In addition to a handful of Price Chopper brands in high-volume categories (milk, bread, bottled water, etc.), the company also offers a robust assortment of AWG private label products under the Best Choice, Always Save and Best Choice Clearly Organic labels.

WIDE VARIETY AFFECTS PL PENETRATION

Price Chopper takes great pride in its wide assortment, including local favorites like Shatto Milk Co.

But according to Dylan Queen, the chain’s commitment to offering a wide variety means its private label penetration isn’t as high as some competitors’. “At a chain like Walmart that’s run at the corporate level, there’s so much SKU rationalization in order to maximize profits that they might only offer two or three brands in a category like shredded cheese where we offer 10. So, naturally, that affects our private label penetration.” But everyone’s OK with that.

Price Chopper’s emphasis on variety is also reflected in its prepared food offerings, which run the gamut from heat-and-eat to ready-to-eat. In fact, says Queen, weekly events like Chopper Chicken Tuesday and Steak Night Wednesday are incredibly popular. “We average 300+ steak and potato meals per store every Wednesday,” he reports. “People tell us all the time that it’s as good as they can get at a restaurant – for just $7.99.”

The chain also offers its own store-prepared meal kits and often uses endcaps and bunkers to merchandise meal solutions that combine products from various categories (easier for an independent to pull off since there’s less inter-departmental rivalry). While at least one item in the display has to be on deal, per Queen’s rule on endcaps and bunkers, the company tries to build a meal around that product. So if Pillsbury Grands are featured in the weekly circular, the store manager might surround it with eggs, bacon and cheese so customers can get everything they need to create a breakfast biscuit in one spot.

Outside formal displays, says Queen, Price Chopper promotes meal solutions through user-friendly adjacencies and secondary placement of certain products. For example, shoppers might find an item like frozen garlic bread in two (or more) different spots: with the frozen breads and doughs and also alongside the frozen pasta. “Yes, there’s some replication of certain items,” says Queen, “but we want to make it as easy and convenient as possible for shoppers to find what they want.” To that end, he adds, “We’re also very invested in signage, including perpendicular shelf tags for TPRs designed to draw customers down the aisles.”

LOYALTY, E-COMMERCE PROGRAMS FLOURISH

Beyond TPRs, Price Chopper operates a long-standing and “very, very successful” loyalty card/reward program that allows members to use points toward free or discounted fuel and products for holiday entertaining. But one of the most popular perks of the program is Freebie Friday. “Members just show the cashier the item on their app and they get it free with a $25 purchase,” says Queen. “A lot of our older customers in particular just love it. They come to the store Friday morning for a full-service breakfast and then go shopping so they can get their freebie.”

The store-within-a-store Conscious Living Marketplace at 151st & Metcalf includes more than 40 refrigerated and frozen doors.

For shoppers that don’t want to spend time in store, all 51 Price Choppers offer both home delivery and, more recently, click and collect through Instacart. But according to Queen, two of its stores were in the e-commerce game seven years before the rest of the chain – and most of the industry, too. “That’s one of the benefits of being an independent,” he says. “The downside was that without the support of PCE, we had to market it ourselves, which we did mostly through social media to our own customer base.” But as a result, Queen’s is ahead of the curve. “No one has figured out yet how to make e-commerce profitable, but it’s mandatory to not just offer it but excel. You have to be in the game.” He adds that online shopping represents only a small percentage of Price Chopper’s business, “But it continues to grow every single week.”

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