With a new Smart & Final Extra! in Palmdale, the company continues expanding its innovative concept throughout California, applying a business model that seems to be successfully leveraging the current economic environment. Smart & Final’s “Extra” stores, which offer expanded groceries at warehouse prices, have been popping up throughout Southern California and the Western U.S. at an accelerated rate. Eighteen Extra! stores have opened up since the company first introduced the concept last August, trumping the company’s traditional stores in size, diversity of products and number of employees. In some areas, traditional stores have closed down to make way for the larger ones. In Palmdale and Lancaster traditional stores recently shut down to make way for a Smart & Final Extra! that opened in Palmdale in April. At approximately 30,000 square feet, the new Extra store is bigger than the two traditional stores combined and employs about four times as many people. “The concept has been very successful, we’ve seen large crowds, strong sales, it’s really resonated well with our customers,” said Randall Oliver, Director of Corporate Communication for Smart & Final. “It’s definitely a concept that we will continue to expand.” Smart & Final Chairman and CEO George G. Golleher, came up with the concept as a way to better meet the needs of the household customer. The company, which built its reputation as the go-to warehouse for bulk items, primarily catered to small business customers in the past, while still offering households great deals on bulk party supplies and other bulk items. In recent years, Smart & Final’s customer base shifted. Today household customers represent over half of the company’s customer base. “Although businesses account for a large percentage of our sales, we’ve seen sales continue to grow on the household side and we believe that is going to drive our sales in the future,” Randall said. The new stores reach out to the household customer by offering a wider assortment of products and items that families would buy during their weekly grocery trip and not necessarily in bulk. Things like fresh produce, quality meats and a wide selection of dairy products are now available at the expanded locations. Items ranging from shampoos to baby products are also offered. The stores feature enhanced interior packages and colors, more traditional style shelving, and more shopper-appealing merchandising and displays. Within the Extra stores, designated business sections consolidate items making it easier for the business consumer to shop as well. By adding a wider selection of food items, especially an assortment of fresh produce, quality meats and dairy products, all of which tend to have a short purchase cycle, the company is taking a classic approach to increase transaction size and expand its customer base, similar to what other companies like Wal-Mart and The Dollar Store have done, according to food retail expert Jim Hertel. “It certainly makes a lot of sense for a lot of reasons, and the fact that they’ve been expanding so fast in such a short period of time speaks to that,” said Hertel, a Managing Partner with the firm Willard Bishop. “The beauty of selling food is that it attracts repeat purchasers,” he said. In the midst of the economic downturn, the food retail industry is doing considerably well, Hertel added, and stores that establish a price image for themselves “in the value end of the world” will particularly benefit in this environment. Retailers like Smart & Final are leveraging the economic climate by providing innovative shopper value propositions that are attracting customers to their stores and keeping them there. The company has applied this same philosophy to the 30 Henry’s Farmers Markets they operate in Southern California. The Henry’s Farmers Market brand is also seeing rapid expansion despite the economic recession. A Henry’s Farmers Market opened in Woodland Hills in May, one will open in Monrovia within the coming weeks (June 17), and stores are slated to open in Carlsbad and Burbank in September. The expansion is not slowing down. “We’re actively looking for more sites,” said Janet Little, a spokesperson for Henrys’ Famers Market, adding that Henry’s fills a niche for high quality at the best value. Their unique format, she explained, follows a farmer’s market setting, and the store is able to offer customers great savings. Their bulk bins, for example, allow customers to scoop out as much quantity as they want, of things like rolled oats, pinto beans, and raisins, while the company saves money by buying in volume and not paying for packaging. Smart & Final acquired the Henry’s stores from Whole Foods Market, Inc in 2007. Prior to that, the stores were part of Wild Oats Markets, Inc. Smart & Final, originally founded in Los Angeles, has 282 retail grocery stores nationwide. Their new Extra stores can be anywhere from 25,000-35,000 square feet and employ about 100 workers. A typical Smart & Final store is 17,000 square feet and employs 25 workers.
