« December 2008 Table of Contents
Case Study: Low-income retail renovations
Self-serve strategy leads to profits at Boyer's Food Markets
By Lisa Duchene
December 01, 2008
In the last couple of years, John Boyer and his staff have
revamped Boyer's Food Markets, an independent chain of 17
grocery stores in rural northeastern Pennsylvania.
"We wanted to make the stores more convenient and meet the
changing demands of our customers with more fresh foods," says
Boyer. The vision was for new equipment and a new merchandising
approach in the seafood departments.
To help finance the renovation costs, about a half-million
dollars per store, Boyer found an ally in Pennsylvania's Fresh
Foods Financing Initiative, a public-private program helping
retailers offer more fresh foods like seafood in low-income
areas where retail options often amount to convenience stores,
dollar stores and fast-food outlets.
"[Seafood offerings] are pretty limited without a really
good store," says David Adler, communications director for the
Food Trust, the Philadelphia nonprofit that helped create the
fund and is dedicated to broad access to affordable, nutritious
food. Created in 2005 and reportedly the only one of its kind
in the United States, the fund
offers $120 million in
financing for projects that will bring fresh food to
underserved areas. State money totaling $30 million has been
leveraged to secure $90 million in additional equity. The Food
Trust also made its case to grocers that low-income areas are
worth their attention by studying population density figures
and local spending data to estimate that Philadelphia's
inner-city communities represent about $50 million of buying
power per square mile.
"[Seafood] is probably not something that's in a lot of
these neighborhoods," says Adler.
At the Boyer's Food Markets store in Orwigsburg, Pa., for
example, a 3,000-person town about 90 miles northwest of
Philadelphia with an estimated median household income around
$53,000, the seafood offerings were scattered among a limited
service-seafood department and some frozen seafood found among
the frozen meat. In the store's renovation, the department was
reorganized so that all of the seafood was presented together
in a self-service setup that allowed Boyer's to add
Boyer's added more fillets,
including salmon, haddock,
flounder, tilapia and catfish as well as value-added items like
crab cakes, stuffed shrimp, Cajun catfish, smoked salmon
portions and deviled crabs, says Melissa Wilson, deli seafood
merchandiser at Boyer's.
"We pretty much changed the whole way we went about
displaying our seafood," says Boyer. "We've taken a department
that was kind of an afterthought and made it into something
that's a legitimate part of the business."
Since the Orwigsburg store was renovated in 2007, seafood
sales have increased 22 percent. The store in Fleetwood, Pa.,
saw a 31 percent increase in sales following the completion of
its renovation in April to late September 2008. Work on the
Lansford, Pa., store wrapped up in the fall.
The Fresh Foods Financing Initiative helped Boyer finance
the projects in Orwigsburg, Fleetwood and Lansford - three of
Boyer's first four renovation projects - by making loans
available at lower interest rates.
Boyer's seafood results are typical of stores that have
tapped the fund to improve their perishables offerings, says
The fund has helped finance a variety of projects, from a
small store in a North Philadelphia neighborhood that upgraded
its refrigeration equipment in order to stock seafood to a
50,000-square-foot Shop Rite grocery store.
Once new or renovated stores open, the seafood departments
do well, says Adler. "We've just seen pretty much across the
board that seafood is really a draw in any of the neighborhoods
where we've seen a store open," says Adler. "I think it's clear
that seafood can do well in maybe more markets than people
While seafood departments in affluent areas can be
profitable, so can ones in low-income markets whether
inner-city neighborhoods or rural town s , despite the
Seafood is at a disadvantage in price-sensitive markets,
especially in times when all consumers are trading down, says
Tom DeMott, COO of Encore Associates in San Ramone, Calif. In
inner-city markets, real estate and operating costs can be
high. Providing security guards, for example, may be a
necessary part of customer service, says DeMott.
"You can still operate successfully in an inner-city
environment and many retailers have achieved that," says
DeMott. Self-service is the key, he says. "You have to have
pretty high sales - north of $600,000 weekly - and the right
location to even consider a service operation. You need
high-volume to support a service [department] and make that
department economically viable."
DeMott advises retailers who are entering low-income markets
for the first time to study the market and what competitors are
doing, and take 4 to 6 feet of a self-service meat case and
dedicate it to seafood. Offer 10 to 12 of the most popular
items, including value-added items and frozen shrimp, with a
close eye to moderate pricing. And then watch the weekly
performance by SKU very carefully, he says.
"What we've done has proven itself," says Boyer. "This setup
is doing better." Seafood is still a small part of the
business, less than 5 percent of store sales, but the
departments are profitable. "Going from service to self-service
helped us reduce our shrink. It helped the numbers and gave the
customers more options."
Contributing Editor Lisa Duchene lives in Bellefonte,