With a second Woodman's Food Market set to open this year on the northwest edge of Milwaukee, Roundy's Supermarkets Inc. is getting ready for a fight.
Its newest weapon: the Super Pick 'n Save, a 100,000-square-foot format that has elements of a wholesale club, with some of the brand variety of the giant Woodman's stores.
Roundy's opened the company's first Super Pick 'n Save in October in a former Home Depot location at 7401 W. Good Hope Road. It is the largest store operated by Roundy's, and a second one just like it is planned at the site of a former Sears Grand store on W. Appleton Ave. in Menomonee Falls.
"This is more being proactive," said Roundy's Chairman Robert Mariano, during a tour of the Good Hope Road store.
Roundy's also has cut prices on 5,000 items at stores in the vicinity of the new Woodman's, which will open in the fall at W. Leon Road and N. 124th St., near an exit from Highway 41/45, where Milwaukee, Waukesha, Washington and Ozaukee counties meet. The company did the same thing in 2008 at a group of Pick 'n Save stores that compete with the area's first Woodman's store, in Oak Creek.
The lower zone-pricing strategy continues, and Roundy's has no plans to change that, Mariano said.
"We want to earn their business, and we want to work to keep it," Mariano said.
But competing with Woodman's on price is difficult, said supermarket consultant David Livingston of Waukesha. Woodman's prices are similar to Wal-Mart Supercenter's, typically the lowest in any market region.
In recent years, the Milwaukee area has seen expansion of Wal-Mart Supercenters and the addition of several Target stores with expanded food departments. Wal-Mart has converted a store on S. 27th St. in Milwaukee to a Supercenter and is in the process of a similar expansion of its store in Franklin. In addition, new Supercenters are under construction in Waukesha and Muskego, and another conversion is planned in Delafield.
At the same time, Roundy's market share has declined to about 55% from 56% a year ago.
"They used to have a 1.25% market share for each store," Livingston said. He expects that share to decline to about 0.75% per store in the future. Each Woodman's store takes about 3% of the market, Livingston said.
Janesville-based Woodman's operates huge stores, encompassing 225,000 square feet. About half of that is selling space, with the back of the store devoted to warehousing. The company uses each of its stores as a warehouse for certain product categories and does not operate a central distribution center.
Woodman's offers low prices on brand names, with large assortments, in a no-frills format. The stores do not offer full service bakeries, delis, meat counters or floral departments. A 15,000-square-foot liquor store boasts a wide selection of beers and wines.
The new Super Pick 'n Save evokes memories of the chain's early warehouse stores. Located in space that Roundy's is renting from Home Depot, it still has the bare-bones look of the original occupant: concrete floor, an open warehouse ceiling. The Home Depot garden center structure remains attached to the building. Roundy's has not yet come up with a way to use the space.
The store has Pick 'n Save's traditional full-service bakery, deli, meat counter and floral department. It also has a salad, soup and sushi bars, as well as a cafeteria with a menu that includes fried and roasted chicken, macaroni and cheese, hush puppies, onion rings and hot vegetables. Shoppers can buy a meal and eat it in the seating area near the prepared food counters, or carry the food out.
The Super Pick 'n Save also has a substantial offering of large-size products, including 20-pound bags of Riceland rice, 20-ounce boxes of Triscuit crackers, baby diapers and cleaning products.
The Good Hope store also aims to serve varied ethnic tastes. The produce area has a counter filled with greens that appeal to African-American cooks: mustard, collard and turnip. In the store's huge packaged meat section, Mississippi hot sausage sits next to kielbasa. The frozen food area includes large bags of pierogi, a Polish dumpling.
"Vendors who serve minority communities have reached out to us," Mariano said.
A second Metro Market
At the same time Roundy's rolls out this new super-size value-focused format, the company is preparing to open its second high-end Metro Market store on W. Blue Mound Road in Brookfield. Roundy's is converting its oldest Pick 'n Save store to a Metro Market, upgrading and adding 10,000 square feet to the old store, for a total of 64,500 square feet. The Metro Market on Milwaukee's east side is 46,000 square feet.
Roundy's also has a store under construction in Arlington, Ill., with an opening scheduled in May. It will be the first of a number of stores the company hopes to open in the Chicago area under a new yet-to-be-announced name. The company announced plans a few years ago to have as many as 12 locations in Chicago by 2010. Those plans have slowed because of the recession and the difficulties developers have had in securing financing, Mariano said.
Roundy's sales have declined in the past year, but store traffic and unit sales are up, Mariano said.
"Customers are trading down. They're watching the ads more."
Sales at the new Good Hope Road Super Pick 'n Save store, which replaces a smaller one on N. 76th St., are better than expected, Mariano said. The company plans to level the old Sears Grand building in Menomonee Falls for the second Super Pick 'n Save, which will be the first of the large-format stores to be built from the ground up.
"We would not tell you that we have this whole thing figured out," Mariano said. "We're working on it."
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