Retail Innovator Meijer Adapting to Compete with W
Grand Rapids, MI, Feb. 24--Meijer celebrates its 70th anniversary this summer by reinventing the supercenter concept it created in 1962 and then watched as Wal-Mart cloned the concept to become the largest company on the planet, according to the Detroit Free Press.
Meijer Inc., the nation's 9th largest private company, with an estimated $11.1 billion in annual revenues, has aggressive remodeling projects planned for the chain's 158 stores along with several new stores in the next few years.
It is testing new grocery and general merchandise strategies by New York designer and architect David Rockwell at two stores near Meijer's Grand Rapids headquarters. Rockwell is best known for designing the Kodak Theater in Los Angeles and the Planet Hollywood restaurants.
Meijer plans to compete with Wal-Mart on price, in some cases, and with offerings not typically found at a discount supercenter. Besides Wal-Mart, the company sees competitors in Kroger, Target, Kohl's, Whole Foods Market, Costco, Walgreen and others.
The test stores are offering items like sushi, $120 bottles of wine, organic food, gourmet food to go and hand-painted chocolates. They also are testing a drive-through pharmacy and have placed the pharmacy, along with health and beauty products, at the entrance.
Hank Meijer, CEO and cochairman, says the competition has made the company his grandfather founded in 1934 more frugal. Inside costs are being pared, from selling one of two corporate jets to laying off 1,900 salaried workers last month. And he's trimming the cost to build a new store by a third.
"It's a new climate in which there is an imperative for us to be low-cost in our operation so we can be low cost for our guests," Meijer said during a recent tour of the retailer's test stores.
"In a sense, part of what makes what we do exciting is that we are in competition with as formidable a competitor as anyone has ever conceived of. That has a sense of adventure about it that I guess also implies a lot of risk," Meijer said.
Meijer now leads its competitors in market share in eight metropolitan areas including Detroit, Ann Arbor and Columbus, OH, according to Mass Market Retailers, a New York-based industry publication.
In comparison, Wal-Mart, with about $245 billion in annual sales, is the dominant general merchandise retailer in 73 of the top 100 markets, the publication said. And Wal-Mart plans a major expansion in the next two years, including seven new Michigan stores this year.
Meijer plans to open five stores this year and then start opening supercenters at a rate of eight per year.
One Meijer pilot store is testing the grocery operation and the other is testing out the new general merchandise design. Company spokesman John Zimmerman said the supercenter plans to remodel up to 45 stores this year with the new concept, including stores in Commerce and Chesterfield townships.
The new grocery and general merchandise concepts will be combined in the new Southfield store in the Tel-Twelve shopping center in 2005. Meijer plans to demolish the former Kmart at that location and build a 194,000-square-foot supercenter.
Zimmerman said that Meijer competes head-on with 50 supercenters, most of them Wal-Marts. By 2007, he projects the company will be competing with 350.
Fred Marx, a Farmington Hills retail analyst and public relations consultant, said Meijer has survived because it keeps evolving.
"I think Mejier has kind of met the barbarians at the gate," Marx said. "Meijer is to be commended for getting out in front of this. I think they are far better prepared to withstand the assault than other players in the country who have had Wal-Mart coming in."
