DnW Unveils New Strategy

June 5, 2002
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GRAND RAPIDS — D&W Food Centers Inc. announced Wednesday that it plans to go in two directions at the same time.

In a diversification strategy designed to capture a piece of the “price-valued” consumer market, the company will build six Save-A-Lot stores in West Michigan and operate them as a separate entity and new division of D&W.

D&W stores will continue to target the more affluent customer, while the Save-A-Lots will cater to the more price-conscious customer.

Company officials outlined future plans for their employees in a part-live, part-video presentation at Studio 28 on Wednesday. It was one of 17 meetings staged last week for the company’s 3,500 “associates.”

D&W will open its first Save-A-Lot in St. Joseph in July. It will open four additional stores in Muskegon, Jenison, Grand Haven and Allendale before the end of this year.

The Beckwith D&W at 1625 Leonard NE in Grand Rapids will be converted to and reopened as a Save-A-Lot in October. The free-standing D&W pharmacy will remain at that location.

Plans call for D&W to open six to 10 additional Save-A-Lot stores in 2002, in markets yet to be determined.

About 850 Save-A-Lot stores are in operation nationwide, 50 of them in Michigan. The typical Save-A-Lot is 15,000 square feet and carries about 1,400 items, all of which are priced 20 to 40 percent below retail.

D&W is looking at other opportunities to do things “outside the normal D&W box,” said Scott Rzesa, senior vice president of sales and merchandising, “As this market expands itself in different directions, D&W is going to have to move further to the two extremes.”

Many different formats — from limited assortment stores to super centers to convenience stores — are vying for consumers’ food dollar today.

All those competitors will be battling it out in the big middle ground where price is going to be important but product selection might not be so vital, Rzesa said, so for D&W, the opportunity is to go in both directions.

Plans also call for a more specialized format for D&W food centers. About 1,800 new products will be appearing on shelves, including organic and natural food products. Tomorrow’s D&Ws will be about half the size, 25,000 to 30,000 square feet as opposed to 50,000.

Stores will have added emphasis on their specialty wine selections and array of seafood products. More of D&W’s President’s Choice and Richfood private label products will be introduced, and customers can also expect to see Starbucks in more D&W stores.

There’s another change on D&W’s horizon.

This summer, the company will launch an advertising blitz of TV commercials, radio spots and billboard ads focused on D&W food centers — something it hasn’t done “since ‘Charlie’s Angels’ was on TV,” said Ron Cox, vice president of marketing.

West Michigan’s population has grown 3 percent in the last three years, yet supermarket and retailing square footage has increased by more than 10 percent, indicating there are “many more players trying to capture a similar size piece of the pie,” said Doug Blease, president and COO.

Consumers are spending more and more money on food outside the home. Statistics show that 50 cents of every dollar is now spent on food being eaten outside the home, Blease said.

“This is certainly having an impact on our business,” he added.

D&W’s traditional competition includes Meijer, Family Fare, Martins and Wal-Mart. Wal-Mart is 20 times the size of Meijer; Meijer is 20 times the size of D&W; and D&W is 20 times the size of a single-store independent, noted CEO Jeff Gietzen.

The family-owned D&W opened for business in 1943, and now operates 26 food centers in West Michigan, as well as a central kitchen, central floral and a catering facility.

Bob Chapin, D&W’s current director of logistics and store development, will serve as general manager of the new Save-A-Lot operating division.

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