Friday, June 19, 2009
Ukrop's: Courting customers with extra promotions
Ukrop's hopes extra promotions will boost sales at its underperforming Roanoke store.
KYLE GREEN The Roanoke Times
Diana and John York shop in the frozen foods section of Ukrop's on Franklin Road in Roanoke. After Ukrop's detailed its struggles in December, the Yorks said they began making an effort to shop there more often. The grocer is adding more promotions to try to bolster its customer base.
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Shoppers lined up at the deli counter at Ukrop's Super Market in Roanoke on Wednesday evening, mounds of fried chicken, mashed potatoes and macaroni and cheese in front of them. The grocer's specialty foods area, with packaged tuna salad and hot rotisserie turkeys, teemed with customers.
But shoppers were sparse among the paper towel and snack aisles in the middle of the Franklin Road store.
This buying pattern is putting a damper on the Roanoke grocer's sales and baffling Ukrop's executives.
More than six months after the Richmond-based retailer made public its struggles gaining sales and customers at its Roanoke store, executives say business hasn't improved.
The family-owned grocer, which marks its two-year anniversary in Roanoke next week, is pulling out all of the stops to entice shoppers. Its Roanoke-specific promotions include Saturdays at Ukrop's, when coupons are tripled, meat and produce items are on sale and free food samples are plentiful.
Starting next month, it will add Wednesdays as additional triple coupon days.
Still, significant change is necessary at this grocer that closes its stores on Sundays and does not sell alcohol. The store shut down its Roanoke pharmacy in February to reduce costs.
"We need you [customers] to shop differently for our business model to work and for us to continue to run the store," said Scott Aronson, vice president of marketing for Ukrop's, by phone recently from Richmond.
Asked if the grocer will close its Roanoke store, Aronson would not comment specifically.
"We're not in a sustainable position right now," he answered.
On June 27, 2007, Ukrop's came to Roanoke with rock-star-like fame, sporting an underground parking garage and an in-store Starbucks. But the allure of this out-of-town grocer and its 58,000-square-foot store wore off.
In December, Ukrop's president and CEO, Bobby Ukrop, sent a letter to customers in the region, pleading for sales. He said a number of factors have affected the store's performance in Roanoke, such as an undeveloped Ivy Market center surrounding the retailer, competition from other grocers and the economy.
"The fact of the matter is that generally speaking customers in Roanoke still don't shop us like their grocery store," Aronson said. "They love our prepared food, our salad, our specialty items ... but they go elsewhere to do their main grocery shopping."
The dominant grocery chains in the Roanoke and New River valleys are Kroger, with 18 stores, and Food Lion, with 22. There are eight Wal-Mart Supercenters.
Ukrop's also faces mounting competition in its hometown. The chain slipped from its longtime ranking as No. 1 to No. 2 behind Food Lion in Richmond-area market share, based on a Wednesday report by trade publication Food World.
Locally, changing grocery shopping habits likely isn't easy for many people, including Virginia Draper. The Roanoke resident buys most of her groceries at the Kroger located beside Tanglewood Mall. Draper, 70, said she feels comfortable at the store, plus, she shops there on Tuesdays, which are senior citizen discount days.
Draper likes to buy shrimp salad at Ukrop's, but "I've never been there with a whole grocery list," she said.
There's much riding on Ukrop's success in Roanoke. Through a tax incentives agreement with the city, IMD Investment Group, the developer of Ivy Market, can receive the amount that the retail center generates in tax revenue up to $600,000 annually for 15 years. This year, IMD received $522,542 from the city for Ivy Market's first grant year. That didn't include revenue from a Walgreens drugstore that's still under construction at the site.
This week, Walgreens spokesman Robert Elfinger said the store is scheduled to open in August.
When IMD announced plans to build Ivy Market in 2004, Bland Painter, who heads the company, spoke of building an adjacent 60,000 square feet of retail space as the project's second phase.
But no more retailers will be coming to Ivy Market for now because of the poor economic climate, Painter said in December. He did not return a call for comment this week about progress at Ivy Market and at Walgreens.
Even so, it's unusual for an anchor store to bank success on smaller shops at a center, said Millie Moore, broker for Retail Real Estate in Roanoke. "Small shops depend on the anchor for the traffic, not the other way around," she said.
Ukrop's troubles have sparked action from at least one local couple.
John and Diana York said they began shopping at Ukrop's more often after the retailer disclosed its struggles. This year, they estimated that they've shopped there eight to 10 times, compared with only twice last year.
