Destined for Success
Jungle Jim's International Market has taken the term "destination shopping" to a whole new level.
Billed as a place where customers can find "A World of Food, Fun & Adventure," the company's two locations–the flagship store in Fairfield, Ohio, and the Eastgate store in Cincinnati–each boast more than 200,000 square feet of shopping space that includes an international foods section, cheese shop, hot sauce department, plus a beer and wine section featuring 1,200 specialty, craft-brewed and imported beers, 12,000 wine labels, and even a tasting bar where shoppers can sample beer and wine before buying.
Jungle Jim's also includes gift shops, a cooking school, restaurants and conveniences such as a bank and post office, while the Fairfield location's Oscar Event Center hosts events such as the International Beer Festival, International Wine Festival, Weekend of Wellness and Weekend of Fire, which showcases fiery foods.
While it reigns atop the "destination store" category by sheer size alone, Jungle Jim's is not unique in its quest to cultivate a memorable experience for customers. From Giant Eagle's Market District store concept (which Martha Stewart has called "a veritable retail wonderland") to H-E-B's Central Market to the new, 44,000-square-foot "Blue Ribbon" Stater Bros. Supermarket that debuted in Redlands, Calif., in September, retailers are transforming the grocery shopping experience.
What's driving the decision to create destination stores? It's a matter of standing out in an increasingly diverse marketplace, industry experts say.
"The grocery business has become extremely competitive, with pressure coming from multiple channels: supercenters, club, dollar, drug, hard discount and natural grocers," says Neil Stern, senior partner at retail consulting firm McMillan Doolittle LLP in Chicago. "Many of these formats operate with lower costs and can undercut supermarkets in the center aisle. Grocery retailers need to find a way to compete and stay relevant. Becoming more experiential is one of those avenues."
Customer service also is at the heart of the trend, according to Robin Shea, senior grocery sector marketing manager at DCI-Artform, a global retail marketing company headquartered in Milwaukee, Wis.
"The availability of virtually any product online has ushered in a new era for retailers to serve the needs of shoppers first, rather than serving the brands primarily," Shea explains. "If you look at the history of grocery retailing, back to the original trading posts and general stores, food items were always offered alongside other household goods and conveniences. Things have come full circle. While the reasons have changed, consumers again have an extreme craving for convenience."
At Jungle Jim's, Jimmy Bonaminio, creative director and son of owner James O. Bonaminio (aka "Jungle"), recalls how the company grew from a small produce stand in Hamilton, Ohio, in 1971, to the destination store Jungle Jim's is today. "We didn't really have a master plan or grand vision," Bonaminio says. "We just kept listening to what customers wanted and things evolved until, approximately eight to ten years ago, we decided to create a shopping complex. We said, 'Let's go crazy and bring more energy and with it, more business!'"
Bellevue, Wash.-based The Hartman Group cites Whole Foods and H-E-B's Central Market as "celebrated examples where food theater sets the stage for the shopping experience" in a September 2012 newsletter. Casting the right products is an important part of setting that stage, no matter the venue.
"We are noticing that some big chains like Vons are updating their product offering to reflect a trend towards more locally sourced or 'gourmet' items–beer and wine from local craft breweries and wineries, produce and meats from farms within the region," says Brian Weltman, co-founder and creative director at San Diego-based Retail Habitats, a company that specializes in retail store design. "Adding smaller-scale, local products that aren't as easy to find in a traditional large-scale grocer is helping to make customers feel as though their local chain store can compete with that specialty liquor or cheese shop as a place they would go out of the way to visit to make that perfect purchase."
Combining service with the "fresh and local" theme enhances the shopping experience, says Jim Hertel, managing partner at Willard Bishop LLC, a food retail consulting firm based in Barrington, Ill. "Being able to select local beef and have it grilled in-store while you shop, as you can at Mariano's, is a popular concept," he says.
It's also a way to stand out from the competition. "There is such intense, price-based retail competition selling commodity food products–supercenters, chain drug stores, dollar stores, even Do-It-Yourself stores–that [food retailers] need to do something to differentiate," Hertel says. "Experience is clearly one lever to pull."
Expanding perishables and adding more prepared foods also can help stores win customers. Farmer's market-style produce sections stocked with fresh-cut fruit and juices, and bakeries with visible production and baking sections plus unique features like chocolate bars, are examples of popular approaches, Stern says.
Amping up inventory is one part of the equation in creating a destination store; creating a visually enticing space is another.
"From a design standpoint, retailers are trying to create intense pockets of activity and excitement. Rather than spread activity around the perimeter, we are now seeing more focused efforts around key destination areas like prepared foods/deli and then perishables," Stern says. "From a gold standard standpoint, there is no one as consistently good at this as Whole Foods. Their stores are exciting, visually appealing with great merchandising standards, outstanding communicators and localized to the communities they operate."
Tips on Development
Not every business, of course, has the time, space and bank account to mimic what Jungle Jim's, H-E-B, Giant Eagle and other large chains have done. Retailers must consider the cost of new construction and retrofit projects and the expected return on investment.
"There is no formula for how much money to spend. It really depends on what kind of returns can be generated, and that is very much location-dependent. That said, we're seeing retailers spend $200 to $300 per square foot for ground-up construction and in the neighborhood of $60 to $100 per [square] foot for remodels."
"There is no formula for how much money to spend. It really depends on what kind of returns can be generated, and that is very much location-dependent," Stern says. "That said, we're seeing retailers spend $200 to $300 per square foot for ground-up construction and in the neighborhood of $60 to $100 per [square] foot for remodels."
Return on investment should take into account operational and labor costs, product sales and margins, competitive advantage and contribution to customer lifetime value, Shea adds. "Increasingly, the loyalty metrics are key to the ROI model. We're seeing the key performance indicators shift," he says.
What's right for a given store depends partly on its location. "Think about how different the experience and assortment need to be for a two-story store in a densely urban area with a high-end millennial shopper base, compared to a suburban big box with a diverse trading area," Shea says. Most important, says Shea, don't postpone the process. "The time to act is now. Don't look at this as a trend or something to watch and follow. This is about really understanding your customers and opportunities, and doing the right things for your stores, in your trading areas. It should be unique to you."
Designing Destination Stores for Sustainability
The 44,000-square-foot "Blue Ribbon" Stater Bros. Supermarket that debuted in Redlands, Calif., in September counts LED lighting, glass doors and an EPA GreenChill Certified refrigeration system among its sustainable design features.
But while green design is essential from an energy-saving perspective, it isn't top of mind with everyday shoppers, says Blain Becker, senior director of marketing for The Hartman Group Inc. "The actions typically taken by retailers to signal sustainability–energy reduction, banning plastic bags, recycling and even solar or wind power– are of less importance to shoppers than contributions the retailer might make to the local economy and community," Becker says.