Making Lower Prices and Enhanced Customer Service Work Together to Drive Market Share

Giant Eagle, Inc. and H. B. Maynard and Company, Inc. team to implement a successful enterprise workforce management solution

The Situation

Today, the business of retailing food is going through a dramatic, if not revolutionary, change.

• Competition has never been more vigorous with more than a dozen types of retailers vying for market share. Food retailers today include conventional supermarkets, super stores, super centers, membership clubs, combination (food and drug) stores, natural and organic outlets, limited assortment stores, convenience stores and independent or chain fuel stations.
• The competition includes restaurants where dual-income couples, Generation X and the echo boomers are fueling steady sales growth in the “food away from home” category.
• Rigorous competition – despite increased consolidation among food retailers – helped to contain food inflation to a yearly average of 2.5 percent from 1995 to 2004. Moreover, the cost of food continues to decline as a portion of family income – from 50 percent in the 19th century to 10.1 percent today.

The Challenge

At Giant Eagle, the Pittsburgh, Pennsylvania-based supermarket retailer approximately 220 stores, its retail operations group has been able to boost the company’s competitive edge by improving the work environment, work methods, work flows, standards and labor management practices. The result has been improved workforce performance and reduced waste in the supply chain. For consumers, the program has meant enhanced customer service and reduced prices that were generated through the company’s cost savings efforts.

“We’re facing competition everywhere, from mass merchants to dollar stores, from convenience stores to traditional grocers,” said Giant Eagle Vice President of Retail Planning and Engineering, Dave Redick. “We’re always looking for opportunities that will enable us to remain the market leader by improving customer service, reducing costs and providing better value for our customers.” For nearly 75 years, Giant Eagle has built a reputation for excellent service, product quality and selection, and competitive prices that has helped them become the leading food retailer in western Pennsylvania and northeast Ohio.

The Solution

Giant Eagle asked Maynard to apply disciplines from Maynard’s Workforce Performance ModelTM to Giant Eagle’s store operations to organize the project, analyze work flow, examine work methods, and set standards to conduct store efficiency initiatives, improve performance, and eliminate waste. “Our objective was to achieve sustainable improvements in Giant Eagle’s cost structure while maintaining excellent customer service levels and while having the right people in the right roles,” said Redick. “With Maynard’s help, we are succeeding in doing this. Our plan is to take the savings from our efficiency initiatives and plow them back into improving the customer value proposition by lowering our everyday prices.

“With detailed workflow processes, our employees become more efficient, thereby increasing the time available by store employees for valuable interactions with customers.” In addition, Giant Eagle looked to provide:

• A safer, cleaner, and more consistent work environment.
• A culture where store employees take pride in their work and their workplace.
• Improved data and tools to proactively manage performance.
• Visual tools and job aides to assist store employees in meeting expectations.

“Creating efficiencies like these improves our ability to remain price competitive in all of the markets where we operate,” said Giant Eagle Executive Vice President and Chief Sales Officer, Laura Karet.

Methodology

At the onset of the program, Maynard implemented the following process:

1. Conducted an assessment to ensure that the program was properly aligned with Giant Eagle’s business objectives.
2. Implemented a pilot program at the store level within five major departments.
3. Prepared Giant Eagle for a corporate store roll-out.
4. Conducted a complete roll-out of Giant Eagle corporate and independently-owned stores.

To address Giant Eagle’s two main requirements – that the approach be comprehensive and that the results deliver real customer values – Maynard’s solution entailed elements from its direct engineered process:

• Create a culture of discipline by introducing 5-S, a systematic approach for creating a clean and organized workplace.
• Improve work methods as a culture of discipline develops and associates begin to identify better ways to do their work.
• Document work standards – the improved work methods are documented and standard times are developed. Training tools are developed to communicate work methods and expectations to the work force.
• Staff based on new expectations.
• Hold people accountable across the board utilizing Best Methods, Productivity and Service levels.

The Results

The pilot program was successful in demonstrating the viability of the approach, and these stores have become models for others in the company.

The methodology developed is currently being rolled-out to all Giant Eagle stores with much success. The store personnel have embraced the culture change and are helping the company to drive waste out of their operations.

The cost efficiencies engineered into the program have allowed Giant Eagle the opportunity to twice lower everyday pricing on thousands of items across the store. Additionally, the project has resulted in a clean, more consistent and safer work environment, the ability to focus more time on the customer through the elimination of non-value added tasks and better allocation of personnel, providing the ability to put people in the right place at the right time to meet customer demand. “The end result is a more sophisticated system that is always up-to-date and more responsive to customer needs and the needs of employees,” said Redick.

Redick said that the company is also witnessing a reduced turnover rate, providing better trained employees with longevity that customers eventually will come to know.