By Andrew Green, Staff Reporter THE MASSIVE expansion of the Super Plus Food Stores chain of supermarkets has grabbed so much attention that few notice the looming shadow of its rival, Hi-Lo Food Stores.
Hi-Lo will open four stores in the next two months says John Mahfood, chief operating officer in the Grace, Kennedy retail and trading division. This addition will give the Grace subsidiary a total of 15 stores, compared with 26 at Super Plus.
"We find a lot of people long established in the supermarket business come to us and say they want to retire," Mr. Mahfood said. This happens when their children migrate or do not wish to enter the business.
Thus the company took over the 22,000 square feet Bottomline Wholesale on Hagley Park Road over the weekend and will reopen it as a Hi-Lo supermarket next week.
A Hi-Lo convenience store will open at the University of the West Indies within two weeks. He said the Value Master supermarket Negril will be taken over at the end of June.
As well, the former Homelectrix store in Sav-la-Mar will be opening as a Hi-Lo supermarket by the end of July.
And previously, the Hometown store in Montego Bay with 20,000 square feet, was taken over in April and reopened that month under the Hi-Lo brand, he said.
"If you have the opportunity to buy an existing profitable business, the risk is low," he said. The thrust of the Hi-Lo expansion is in buying the existing businesses and renting the location from the owners.
SITES
Super Plus has expanded into existing retail locations, but is also setting up operations in several high profile sites with brand new, purpose-built structures. That organisation has said though, that they do not own all the properties from which they operate.
"If you had to build a new supermarket from scratch, you have to spend $50-60 million to equip it," he said. "You have to be exceptionally profitable or have a lot of money to be able to afford to build a lot of new supermarkets."
The expansion drive not only involves acquiring additional properties but also expanding and renovating some existing stores, he said.
The store at Cross Roads will double in size by converting warehouse space to retail use. Additional parking will be made available to increase the convenience of the location.
The Manor Park branch will get 50 per cent more space by incorporating the bank it stands beside, he said. At the Liguanea branch, a renovation and expansion has already taken place.
Hi-Lo has committed about $350 million over the last two and a half years, to reach its current position, including the cost of a sophisticated computer system. He said perhaps another $100 million per year would be spent over the next five years to continue the expansion at a rate of about five stores per year.
A critical element in the Hi-Lo strategy has been the launch of its own branded products. He said, "We now have about 60 Hi-Lo products. We aim to have about 100 critical products by the end of the year."
These products are priced below the lowest priced competition in Hi-Lo stores. Along with the strategy of opening low priced Hi-Lo Basic supermarkets, he said the company has seen in increased numbers of customers and improved profitability.
"We were profitable in 2002 and we are profitable now," Mr. Mahfood said. "There were many years when Hi-Lo lost money, but now that we are growing and competitive, we are seeing a different company."
