- Associated Press - Sunday, March 12, 2017

SPRINGDALE, Ark. (AP) - A yellow and black sign hanging from the ceiling of Springdale’s newest grocery store explains one of its cost-saving tactics: “We have the smartest sackers - you.”

Shoppers checking out with baskets of groceries recently didn’t seem to mind the responsibility at the 10 Box Cost-Plus store. While cashiers scanned items, customers collected their purchases, packed them in plastic bags and placed them back in the shopping carts.

Harps Food Stores Inc. hopes the trade-off - a little work for lower prices - is a success as it tests a new store format, replacing an underperforming Price Cutter with a cost-plus concept. The Springdale store is the company’s third 10 Box that has opened in the state over the past year, promising customers savings by selling items at cost and adding 10 percent to the bill at checkout.

“For us, in the locations we’re at, we identified some stores that we’d like to try to figure out if there’s a way to gain market share and get some additional sales,” said David Ganoung, the director of marketing at Harps. “At this point, we’re still evaluating our operations and trying to figure out. We’re still learning as far as our execution.”

The cost-plus idea is not new in the crowded and competitive grocery industry, which includes major players like Wal-Mart and Kroger, discounters like Aldi and locally owned stores, the Arkansas Democrat-Gazette (https://bit.ly/2n7ArOs ) reported.

Cost-plus operators try to set themselves apart by selling items at their cost, which 10-Box explains in its stores as the total expense it takes to buy a product, get it from the warehouse or supplier and to the shelf. The store then adds a 10 percent charge at checkout to cover its operating costs.

Harps opened its first 10 Box store in Conway nearly a year ago. The second opened in Russellville earlier this year.

Ganoung said it was “time to look at a change” in Springdale because the Price Cutter was underperforming. So the company shut the store down and spent three weeks remodeling and rebranding the store into a 10 Box.

“I think in any community that you operate in, as the community grows and evolves, it shifts,” Ganoung said. “Northwest Arkansas is growing so fast. So that location was just one that had dropped off and this was an opportunity for us to go in and do something different. … So we threw it in there to see what it would do.”

The opening comes as nontraditional grocery store formats are gaining traction with consumers.

Less than half of all shoppers consider traditional supermarkets as their primary channel for groceries, according to a 2016 survey from the Food Marketing Institute. While they remain the preferred choice among survey respondents, shoppers have reported increasingly frequent visits to other channels like limited assortment, discount and dollar stores.

There has been an uptick in interest in the cost-plus format as well.

Wholesale company Supervalu, which operates a cost-plus format program called Shoppers Value Foods, said last summer that there were 511 cost-plus stores in the U.S. The number was expected to grow to 700 by the end of 2017.

“Since the average mark up in the supermarket industry is around 25%, this feels like a compelling proposition to the consumer and also one that’s simple to understand,” Neil Stern, a senior partner at Chicago-based retail consultant McMillan Doolittle, said in an email. “It’s another way to pitch low-priced groceries, just like a discount chain like Aldi.

“The proof, ultimately, to customers is whether they can deliver prices consistently lower than someone like Wal-Mart, who has considerably greater buying power, sophisticated logistics, etc.”

Clear messaging is another key and 10 Box wants shoppers to know “it’s all about price,” printing the phrase on the back of T-shirts worn by employees.

Similar cost-saving messages greet customers down nearly every aisle of the Springdale store, plastered on yellow and black signs hanging from the ceiling: “Smile you just saved,” ”Work a little, save a lot” and “Honest Everyday Low Prices.” The 10 percent at the register formula is also visible for customers to see throughout the store.

Donna Cunningham made the trip Thursday morning from her home in Elkins to Springdale to shop at 10 Box. Cunningham said she regularly shops at multiple stores in search of the best deals.

“It’s nice to have a store that the prices are really affordable,” said Cunningham, who cooks for her family — including nine grandchildren — each Sunday. “Groceries are expensive. If you’re feeding a family and not getting any kind of assistance, your dollar better go as far as it’s going to go.”

The 10 Box has no shortage of competition for customers like Cunningham in Springdale with an Aldi, Wal-Mart Supercenter and Wal-Mart Neighborhood Market all in close proximity. There’s even competition for customers within the company, too, with two Harps Food Stores nearby.

Ganoung said there was some nervousness about the new cost-plus store opening close to its traditional format, but he believes each will attract different types of shoppers. While 10 Box has core grocery items, it doesn’t contain full-service deli and bakery sections like Harps stores.

Ganoung said the company has made efforts to eliminate confusion among customers as well, which is why Harps hasn’t marketed 10 Box under its banner in commercials that have aired locally and on its website. He described the cost-plus concept as “a new way of operating for us” and the results have been good so far.

“You want to try to sell as many groceries as you can,” Ganoung said.

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Information from: Arkansas Democrat-Gazette, https://www.arkansasonline.com

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