Strategic Resource Group
Wegmans resets stores to highlight store brands
Rochester Democrat & Chronicle: A lot of people are talking about Wegmans reorganizing some of its Rochester-area stores. Burt P. Flickinger III, managing director of Strategic Resource Group, a New York City-based retail consulting firm that has studied Wegmans for more than four decades, agrees that the re-set helps prompt shoppers to make unplanned purchases and fuel bigger sales, but adds that there's more to the story.
Flickinger, who has studied Wegmans for more than four decades, and whose research involves regularly walking Wegmans stores from New York to the Carolinas and talking with Wegmans suppliers and shoppers, says one of the company’s big pushes is to increase the presence of Wegmans-branded products on shelves, and store resets facilitate that by giving them more prominence.
Right now, he said, around 50% of what Wegmans stores sell are store-branded, or private-label, items. That puts Wegmans far ahead of the majority of U.S. grocers, which average 20 to 25 percent, he said. However, Flickinger believes that Wegmans’ objective is to get that number to at least 60 to 65%. “They are the most beloved supermarket chain in the country,” he said. “They want their brands to be the most beloved, popular and best-selling brands.”
And while they may deliver a lower price and in some cases a better value for shoppers, they also boost Wegmans' bottom line: “The gross profit margin on Wegmans private label is about 35% versus about 25% on national brands," he said.
Flickinger expects that at some point in the not-too-distant future, Lidl, another discount grocer founded in Germany that sells 90% private-label items and is expanding along the East Coast, will have a presence in this area, too.
Some also question why the three Rochester-area stores are being reorganized now at back-to-school time versus during a less-hectic period. Flickinger said Wegmans' best period for sales does tend to run from Labor Day to New Year’s.However, “Wegmans has gotten so big, they can’t do all the major resets during the slower months of the year” — like February — “because there are simply too many stores,” he said.
He added that like other retailers, Wegmans is dealing with massive labor shortages caused by the pandemic. Yet, for the bottom-line results the big resets may deliver, Flickinger believes it’s important for the company to heed shoppers’ concerns about the disruption, because based on his conversations with suppliers, “it’s really been helping BJ’s Wholesale Clubs and Costco” as Wegmans customers look for “complementary places to shop.”
The ongoing diminishment of national brands on Wegmans shelves may be having the same effect. “With the shoppers we talk to, they are getting concerned because they feel that too many national brands are being eliminated or reduced,” he said.
So, as all of this plays out, and in the aftermath of the resets, what can shoppers do to make things easier on themselves? Here are some tips: “The best thing is to shop from 7 to 9 in the morning, after the night crews have finished stocking shelves,” Flickinger said — and that holds true for all supermarkets. Avoid shopping the first three days of the month when stores are busiest, he said. He also advises shopping Monday, Tuesday and Wednesday, which is when stores have lowest customer counts.
Finally, Flickinger suggests not waiting to stock up on holiday items. In the end, resets will always be a factor in retail, although, “They’re not as pervasive and extensive and expansive as at Wegmans,” he said.