Be Ready to Enter the Rapids: Strategic Market Growth

rapidsYou’ve been canoeing peacefully down a river, stopping at certain intervals to take scenery breaks. What do you do when the river descends to some rapids and you’re suddenly paddling for all its worth? No amount of umbrage you feel toward the river’s pace will help you. You have to be able to accept your current reality and plan to get through it. If you expected ahead of time that being in the wilderness might bring on such challenges, what sorts of strategies would you have employed ahead of time that might have made it easier?

Of the top 500 businesses in America 30 years ago, only 70 of them are still doing business. The cycle of growth and collapse is part of our economic reality. Those that have made it did so because the leadership, vision, tenacity, and proactive strategic planning aligned at opportune moments.

Is this one of those make-or-break moments for food cooperatives? The combined efforts of food cooperators to create and benefit from the alliances that give them leverage is now occurring on multiple platforms: Common Cooperative Financials (CoCoFiSt), the development of Food Co-op 500, and the National Cooperative Grocer Association. If ever there was a time to move individual food co-op market development and marketing execution to the front burner, this is it.

“ Times are different,” said Pete Davis, location and market research consultant, about current market realities. Co-op shoppers today are more likely to shop around. This has been shown in places where co-ops take a hit when a strong competitor like Whole Foods or WalMart expands in their area.

Those co-ops that are prepared with a strategic marketing plan that’s well executed are those that will attain growth and also position their businesses to meet their social and economic goals into the future. Successful co-ops that are proactive in terms of strategic market planning share a number of common denominators, according to Davis.

  • They are creative in the ways of enhancing the customer experience.
  • They are proactive, rather than reactive, in competitive markets.
  • They continually improve operations.
  • They spend their marketing funds effectively.
  • They continually engage in research oriented toward understanding their trade areas.

From Davis’ perspective, if you don’t know your current trade area, you really don’t have the proper tools to understand your market’s potential, and likewise the co-op’s future. “You’re probably missing opportunities for additional growth,” Davis said. A survey as simple as the Customer Address and Transaction (CAT) can help cooperators with understanding their market share and how to best use their resources to defend it or capture more. (More about the CAT survey.) Not only that, the CAT survey helps identify weak areas that could be worthwhile to improve.

For example, Community Mercantile in Lawrence, Kan. had done aCAT survey before their relocation and expansion. They recently did another as a follow up to see if they were on target with their projected market share goals post-expansion. What they learned was eye opening: two trade area sectors they’d expected to draw from were not up to projections. HyVee, a conventional grocer, with a store in each of these two sectors, had put in natural food sections since their expansion.

Not only is the CAT survey a good indicator of one’s market share, but Davis pointed out it’s also very useful information for marketing directors. “It’s an important part of marketing planning to have the marketing person involved in understanding the CATdata.”

Jeanie Wells, the co-op’s general manager, said, “It’s been really useful information because our marketing person is able to tarket those areas most likely to bring in customers.”

Davis also said that issues of membership loyalty are increasingly a part of the trade area equation and a necessary component of strategic market planning. The consumers attracted to the co-op through its appealing storefront come to learn that the staff not only knows the products, but that they walk the talk. “By making stores service friendly, it helps people feel part of the community,” he said

Robynn Shrader, marketing director for the NCGA, concurs. TheNCGA has been working with its member cooperatives on both fronts. They’ve been working on co-op market share expansion by collaborating with the National Co-op Bank and CDS in the Food Co-op 500 program. The NCGA has also developed an in-store Cooperative Advantage branding program to help improve store presentation. These activities have a synergy in existing retails by improving market share through better marketing and promotions. “By being better operators, they are attracting more people, and that furthers the values and ideals of cooperation,” she said.

“ Co-ops have a really strong community appeal. They have built on their reputation as ethical operators that focus on community interests, fulfilling both bottom lines,” she added. Shrader pointed out that when it comes to new food co-op development this loyalty is often expressed in the support and excitement they are able to engender when it comes to raising capital for co-op projects.

Walden Swanson, CoCoFiSt consultant, said that there’s a need for strategic thinking in order to meet community goals. Just because co-ops may be seeking to achieve philosophical outcomes doesn’t mean they are exempt from the forces of competition. “From a strategic perspective, growth is important for the whole food co-op movement to maintain market share. It’s a classic strategic issue for any industry,” he said. “There’s also a philosophical argument for why to grow; it’s because our social bottom line is also very important.”

Swanson also believes the opportunities for food co-ops to grow market share will shrink as time goes on. “The time is now,” said Swanson. “In seven to 10 years it could all be different.” There are good indications that collaborative efforts now may pay off later. “CoCoFiSt data does tell us that as a group we have very strong balance sheets and liquidity to support rapid growth. We need to figure out how to use this to benefit each other.”

Swanson also pointed out that about half of the NCGA’s member stores are engaged in some sort of expansion, relocation or second store project. Another encouraging sign that “co-ops are making strategic choices for growth,” said Swanson. “Now we’ve got to look at going to areas where co-ops are not there yet.”

FavoriteLoadingAdd to favorites
By |November 1st, 2005|Categories: Solutions|Tags: , |

Leave A Comment