Work Is Family Affair Nine Cousins Run Genuardi's Supermarkets.

Posted: June 14, 1996

When Gaspare and Jacqueline Genuardi, two Italian immigrants living in Norristown, started their food business in 1920, high-tech meant deciding what kind of harness to put on the horse.

And expansion meant adding extra routes and converting from wagon to Model T truck.

For their nine grandsons, who operate Genuardi's Family Markets, a 26-store supermarket chain, expansion means adding five stores next year and a trip across the Delaware River into New Jersey. Genuardi's will open its first Jersey store in Evesham Township in 1997.

There's nothing like a little recession to inspire expansion in the supermarket business.

On every other corner, no, make that on every corner, a supermarket is either opening or expanding.

``There's a reason for it,'' said Skip Genuardi, director of real estate and one of the cousins. ``We're all looking for the right corner, the right location and the right community.''

``You are really talking about people getting in each other's faces, particularly in this market,'' said Meg Majors, editor of Food Trade News, a trade publication in Conshohocken.

Here's what Genuardi's, of Plymouth Meeting, is up against:

* Giant Food Inc., a 165-store supermarket chain from Landover, Md., plans to open 35 to 45 Super G stores in Pennsylvania, New Jersey, and Delaware in the next decade.

* The other Giant, Giant Food Stores Inc., of Carlisle, Pa., has opened stores in Blue Bell; Audubon, Montgomery County; New Hope; and Kennett Square in the last eight months. By the end of 1997, stores will open in Morrisville, Southampton and Horsham.

* Acme Markets Inc., in Malvern, the market leader in the region, embarked on an ambitious store-opening and -expansion program, working on 11 stores in 1995 with plans to complete 11 more this year and 15 more by the end of 1997.

* Pathmark, which expects to expand and remodel five of its area stores this year, is shopping for additional sites in the region.

Don't extrapolate population growth or a booming econony from all of this burgeoning square footage. It's simply a matter of grabbing customers before the competitor does.

``You just don't have new customers to count on in existing locations,'' Major said. ``Really, the key is to take that supermarket formula to a new area, where you can pluck business from a competitor.''

Precisely Genuardi's strategy.

Besides the New Jersey store, Genuardi's plans to open three other stores in 1997, in Feasterville and Langhorne in Bucks County, and in Roslyn in Montgomery County, and to remodel and enlarge its Glasgow, Del., store.

By the end of 1996, the company will have opened two stores and remodeled or enlarged eight. In 1995, it opened five stores, including its first in Delaware.

Since 1990, when the cousins assumed control of the business, Genuardi's stores also have expanded in size, from about 35,000 square feet to between 40,000 and 50,000 square feet on average. New stores, such as the one in New Jersey, will be 62,500 square feet.

One advantage Genuardi's brings to the table is an excellent relationship with its local suppliers, said one observer of the local supermarket business.

Some other major merchants are shifting to centralized buying based in locations outside the region. So, local suppliers will be doing all they can to retain Genuardi's business, the observer said. That means good buys for Genuardi's, which it can pass on to customers.

Even with that, will Genuardi's, a relatively small, family-owned chain, thrive in the face of their competitors' deep pockets and buying clout?

``It's a question for all retailers of that size,'' said Brian Salus, a supermarket consultant from Virginia. ``You've got a chain with 25 or 26 stores, below 30, and you've got them competing with some giants here, no pun intended, with deep pockets, lots of muscle and lots of marketing savvy.''

Part of the answer lies in a continuing shift in the supermarket business, as consumers are able to buy groceries from an increasing number of sources. Potato chips and cereal can be purchased in drug stores, milk and bread at the gasoline station.

Even more significantly, supermarket operators are bracing as Wal-Mart and Kmart begin to incorporate full-size supermarkets into their store formats, plunking butcher counters near aisles selling pantyhose and garden hoses.

So instead of supermarkets striving to sell to everyone, ``we are seeing more segmentation,'' said Barbara Kahn, a Wharton School marketing professor who is writing a book on the grocery business.

``Supermarkets are meeting the needs of more specific customers,'' she said, explaining how supermarkets are trying to target different types of shoppers. ``Some are quality-sensitive, some are price-sensitive, some are variety-sensitive.

``And that's what Genuardi's is doing - going to the more high-end and variety-conscious customer, and letting some of the price shoppers go elsewhere. Wal-Mart is not going to be able to compete with Genuardi's for this quality image,'' Kahn said.

``Differentiation is the ticket,'' said Salus, the consultant, describing Genuardi's reputation in the industry as a ``premium player.''

Indeed, Genuardi's abandoned its discount food business several years ago, closing four Mad Grocer stores.

Salus said Genuardi's success will depend on the extent to which it can stick to its market, follow its customers' tastes and not be tempted to adopt some competitor's business strategy.

``The chief threat for them is the restaurant industry,'' he said.

Indeed, of all the local supermarkets, Genuardi's most resembles a restaurant. Its St. Davids store and all new stores and remodels include a cafe where people can eat food purchased from a Chinese food stand, a pizza parlor or the company's Italian market delicatessen. Some stores even have sushi bars.

``A lot of people love to come in and sit, eat a Danish and drink a cup of coffee,'' said one of the nine cousins, David Genuardi, director of public relations.

Obviously, a Danish and a cup of coffee don't add much to the bottom line compared with the money that table space could generate if it were filled with groceries, but ``loyalty translates into a lot of different things,'' Skip Genuardi said.

``If you can provide a social situation, that hopefully means they'll do a little more shopping in the store, rather than cherry-picking [bargain-hunting] the competitors or buying at the Rite Aid down the street.''

In its new stores, Genuardi's will use a new layout, dubbed the ``store of the future,'' to push its strategy of fresh foods, quality and ``meal solutions.'' That's the industry buzzword that means selling ready-to-eat or easy-to-prepare foods, such as microwave-ready lasagna (instead of noodles, sauce and cheese separately) and stuffed and rolled roasts, ready for the oven.

In the store of the future, Genuardi's will abandon the traditional supermarket perimeter layout, which arrays the fruits, vegetables, meats, seafood, breads, prepared foods and desserts around the store's edge, circling the canned goods and the toilet paper. Instead, Genuardi's will cluster all of those attractive items near the entrance, making that area more inviting.

``We're finding there are more and more visits to the store,'' said David Genuardi, explaining the strategy. Genuardi's hopes customers will adopt a pattern of stocking up on staples during one visit and returning several more times during the week to answer the perennial ``what's for dinner'' question.

Grouping all of the answers to that question together should make the shopping trip shorter and encourage impulse buying, David Genuardi said.

Of course, Genuardi's growth poses its own challenges to the company's stability, adding the threat that the company's internal systems won't be able to keep pace with the expansion.

``One of the sayings we've been repeating is that we can't continue to do things the way we did when we had 15 stores,'' David Genuardi said. ``You have to talk about building yourselves inwardly and evaluating your processes.''

The company has already hired a consultant to help it deal with family-succession issues. The third generation, aged 48 through 37, which is running the company, is planning now for the fourth generation's rise to leadership. The oldest in the fourth generation is 23, the youngest 4.

One of Genuardi's goals is to generate enough growth to sustain the growing family: Five brothers from the second generation took over for two parents. Now, nine cousins in the third generation have succeeded five brothers. Most family businesses don't make it through two generations, let alone into four.

``Our focus has been on what's good for the company, not what's good for my brother,'' Skip continued. ``My father and uncle live very humbly. My cousins and I have chosen to live humbly.''

``We're comfortable,'' said his cousin, David.

``We have a very strong belief in reinvesting our dollars into the business,'' Skip Genuardi said. ``I may tease about driving a Ferrari next week, but that's not one of the things that runs my life.''

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