By Ayanna Kirton, Staff Reporter
With 33 stores across Jamaica and two more scheduled for completion by year end, SuperPlus is the island's largest supermarket chain.
THE WAVE of consolidation sweeping the supermarket industry is changing the way food is distributed to the end consumer and is making the individually-owned supermarket less
commonplace.
This trend, which for some time only appeared to be an international phenomenon, with companies like the Netherlands-based behemoth Royal Ahold expanding into over 20 countries worldwide, and the United States-based general merchandise discount chain, Wal-Mart, opening over 5,000 stores worldwide, has gained traction in Jamaica.
Docky Lym of the Progressive Grocers group recently acquired Lenn Happ Supermarket, located in the Twin Gates Plaza in St. Andrew. Formerly owned by Wallace Campbell, the supermarket was in operation for almost 30 years before Mr. Campbell decided to go into retirement. Though it was reported that Mr. Campbell was leaving his business because he felt there was no long-term potential in individual supermarket ownership, in an interview with the Financial Gleaner on Wednesday, Mr. Campbell said he was abandoning the supermarket business to pursue "my art."
PRIVATE COLLECTION
The owner of an extensive private collection of Jamaican art, Mr. Campbell said it was time for him to do something he enjoyed. "In my case I did not want to do this for seven days a week," said Mr. Campbell. "My family is not interested in this kind of business either so I felt it was time to hand it over to those who were," he said. "It's time for a new generation of owners. I enjoyed the rapport I shared with the customers and the many years I worked here but it is time to focus on the things I am most interested in," he said.
However, the new owner acknowledges that the current trend is likely to replace the smaller, less powerful individual storeowner. "It will be very tough for the individual owner to survive in this industry," said Mr. Lym, who is also the owner of Brooklyn Supermarket. Lym, along with Glady Loshusan, owner of Sovereign Supermarkets; Ken Loshusan, owner of John R Wong Supermarket; and Sing Sung Chin, Super-Valu's owner; formed Progressive Grocers of Jamaica and have acquired the Shoppers Fair chain of supermarkets formerly owned by Facey Commodity, as well as four JR Bargain World stores, which operate in rural Jamaica. The group also operates D&Y, Savanna-la-Mar's largest supermarket. Though the partners retain full control of their individual supermarkets, the alliance enables the group to negotiate favourable terms with their suppliers as well as
minimise marketing costs.
Wayne Chen, CEO of SuperPlus, says the success of supermarket chains lie on one very basic principle, finding areas where the demand for a large supermarket exists and meeting that demand head on. This principle has guided the chain of supermarkets, which has taken it one step further by determining its various locations according to the availability of public transportation. As the CEO explains, people are more likely to shop where they can access transportation conveniently, so it makes good business sense to construct supermarkets close to bus stops or terminals.
Acknowledging that local retailers, particularly supermarkets, could play a significant role in increasing the sale of local products, Mr. Chen noted that the chain was doing its part to support the Buy Jamaica Campaign. "More than two-thirds of the total value of goods that we sell are Jamaican products," said Mr. Chen, indicating that the majority of the stores' own branded products were also manufactured in Jamaica. The CEO also pointed out "in many cases Jamaican produce outsells imported fruits and vegetables even when the price is slightly higher."
LARGE CHAIN
With 33 stores across Jamaica and two more scheduled for completion by year end in the Angels Plaza, St. Catherine, and Buckfield in St. James respectively, SuperPlus is the island's largest supermarket chain and earned $9 billion in sales last year. The chain employs a total of 2,200 employees and has set listing on the JSE as a medium to long-term goal, the CEO said.
Hi-Lo is the third largest player in the industry. Owned by Grace, Kennedy, Hi-Lo operates 13 stores across the island: 9 under the Hi-Lo name, 3 under the 'Basix' brand created for budget-conscious shoppers as well as rural customers, and SDA Wholesale, located in Ocho Rios. "This continued consolidation will take over the independent owners," said Cameron Bisland, Hi-Lo's managing director. "The same thing has happened in Europe and North America so it is almost a natural progression that it has caught on in Jamaica," he said.
Interestingly, the managing director confirmed that in the second quarter of 2003, Hi-Lo left its Tropical Plaza location because of high overhead costs and not necessarily the threat of competition. "Our Tropical Plaza location could not be run profitably because of high overheads," stated Mr. Bisland, who remained confident that the supermarket industry could not be monopolised by one single entity.
"The market cannot be dominated by any one player. In our case we've captured two separate markets," he said. "Our business model is based on profitability rather than the number of stores we own since not all stores record the same levels of sales."
In the final analysis, "It all boils down to revenues," he said.
