Winning Against the Big Guys: Ukrops
Ukrop’s is a 28 store, family-owned grocery chain based in Richmond, VA. All of their stores are located in central Virginia, mostly in Richmond, so you’ve probably not ever heard of them. That’s too bad because Ukrop’s is a very unique retailer. Over the last four decades, Ukrop’s has steadily grown to dominate the central VA grocery marketplace, competing easily against much larger regional and national chains. Instead of taking the “lowest price” approach, Ukrop’s has always focused on delivering a great customer experience. Ever since Joe Ukrop opened the first store in 1937, the operating philosophy has always been “treat customers, associates and suppliers as they personally want to be treated.” That attention to the customer experience coupled with a history of innovation and community engagement has built incredibly strong brand loyalty. In this post, I’m going to share some of things Ukrop’s has done to build their brand.
Customer Focus Differentiators
Ukrop’s does things for their customers that I’ve never seen at any other grocery chain. They’re little things, but as I’ve said before, it’s the little things that differentiate you from your competition. Things like:
- Ukrop’s employees carry your groceries out to your car and load them for you. By the way, don’t bother tipping them. They won’t accept it.
- If you get to the checkout counter and realize you have forgotten your wallet, don’t worry. In most cases, Ukrop’s says to take the groceries and pay them next time you come in.
- Ukrop’s provides in-store “Tot Spots” in their larger stores. Parents can leave their child at the “Tot Spot” while they shop.
- Ukrop’s listens and responds to individual customers. Each store has a Customer Requests board prominently displayed at the front of each store. Have feedback or want the store to carry a new product? Simply write down your request and put it up on the board using a refrigerator magnet. Each note is read and replied to within a week. The next time you come into the store, check the board for your note and the reply. I once asked for a specific flavor of ice cream. The product was in the freezer the very next week.
Ukrop’s has a history of grocery industry innovations that have allowed them to differentiate their brand.
- Like most Americans, you probably carry around some kind of supermarket discount card, but I bet you didn’t know that the very first supermarket card program in the US was launched in 1985 at Ukrop’s as part of a Citicorp Point-of-Sale initiative. Ukrop’s saw huge potential in being able to identify their customers by name and understanding purchase behavior of it’s best customers.
- Research conducted during the mid-1980s revealed that changing consumer demographics and lifestyles indicated a growing demand for convenient, restaurant-quality food. Demonstrating their “sense and respond” competency, Ukrop’s decided to tap into the demand and further differentiate themselves from competitors. The result was one of the grocery industry’s most lauded success stories of the late 20th century. Ukrop’s already had experience with a central bakery, having purchased a well known local bakery to supply bakery items to to their stores. The bakery gave them some experience with manufacturing and logistics. Leveraging that experience, Ukrop’s decided to create a 10,000 sq-ft “central kitchen” to package chilled prepared food, which consumers could then re-heat. On Halloween 1989, the company’s prepared foods line debuted, featuring ten items that included twice-baked potatoes, lasagna, and macaroni and cheese. By 1994, the roster of prepared foods had swelled to a rotating list of 125 items. Ukrop’s foray into prepared foods became the talk of the industry, accounting for nearly 15 percent of the chain’s total sales and adding further incentive to shop at Ukrop’s.
- Don’t feel like cooking? Ukrop’s added an in-store grill to their larger stores in the late 1990’s. The grill serves everything from sandwiches to stir fried Asian dishes to steaks. Of course, the ingredients for all the menu items are available in the store.
- In 1997, Ukrop’s established a unique partnership with National Commerce Financial Corporation in which it co-owns 25 First Market Bank branches in Ukrop’s locations and 10 free-standing branches First Market Bank. Customers who bank at First Market can receive points worth up to $200 in free groceries each year.
- Ukrops’ latest innovation is a partnership with a local gas station operator called Fuelperks. Capitalizing on the concern over rapidly rising gasoline prices, the program rewards Valued Customer Cardholders with a 10 cent per gallon discount (up to 20 gallons) for every $50 spent.
The Other Bottom Line
Ukrop’s is perhaps best known for their community involvement. Each year they commit to giving at least 10% of their pretax profits back to the communities they serve. They sponsor many local events including the Monument Avenue 10K and the upcoming Richmond Folk Festival, but perhaps their biggest community program is the Golden Gift. Started in 1987, the program allows customers to designate a local non-profit organization. It might me a charity or perhaps your kid’s school. Each year, Ukrop’s allocates an amount to the Golden Gift fund. This year it was $400,000. During February and March, Ukrop’s awards each customer with a Golden Gift point for each dollar spent. At the end of March, the fund is allocated to the customer’s designee based on points accumulated. The customer then receives a certificate that they can give to their non-profit which can bee redeemed for cash. Since inception, the program has given back $11.6 million!
These are just a few of the many things that have helps build the Ukrop’s brand. By putting customers and community first and through innovative ideas that have redefined the grocery store, they have been able to stand the test of time.
Do you own or work for a local or regional retailer? Having a hard time competing against the big guys? Perhaps you can take some lessons from Ukrop’s.