At Andersons, no place like home

Locally based retailer grows choices for its softer side

10/7/2012
BY JON CHAVEZ
BLADE BUSINESS WRITER
June Rollins of Temperance shops at the Andersons in Toledo. The Maumee-based retailer added about 10,000 more items within retail soft lines categories such as linens, towels, cookware, and room accessories, giving consumers more for their homes.
June Rollins of Temperance shops at the Andersons in Toledo. The Maumee-based retailer added about 10,000 more items within retail soft lines categories such as linens, towels, cookware, and room accessories, giving consumers more for their homes.

For years, The Andersons Inc. has used its catchy “More for Your Home” jingle to sell a variety of merchandise to retail customers in and around the Toledo and Columbus areas.

But this year the company has put more meaning behind its trademarked phrase.

By making a variety of key changes this year to its stores, the Maumee-based retailer really has given customers more for their homes — about 10,000 more items within retail soft lines categories like linens, towels, cookware, and room accessories.

The Andersons’ expanded home goods department, which triples the size and selection of its previous choices in soft lines, was finished about five months ago at the company’s five large stores in Toledo, Maumee, Northwood, plus two in Columbus. A smaller Andersons Market food store in Sylvania was not involved.

Dan Anderson, president of the The Andersons' Retail Group, said the two-year makeover of its stores is a recognition by the company that its primary customer has changed in the last decade or so.

“We did a pretty significant change about two years ago with our food business. The food business has been growing significantly and has been, by far, the fastest growth segment of our retail section,” Mr. Anderson said. “But as it grew, so did changes in our basic customer.”

Bedding is featured in The Andersons, which added 26,000 square feet of home goods, including mattresses and furniture. A Bed, Bath & Beyond store is anywhere from 10,000 to 50,000 square feet.
Bedding is featured in The Andersons, which added 26,000 square feet of home goods, including mattresses and furniture. A Bed, Bath & Beyond store is anywhere from 10,000 to 50,000 square feet.

From humble roots that started in 1952 as The Andersons' Warehouse store, the company's retail outlets evolved into general stores with a focus on produce, home improvement items, and other general merchandise categories. More recently they became proficient in specialty foods, wine, and garden center merchandise.

Throughout its growth years, the retailer's primary customer always was an adult male interested in tools, home improvement items, sporting goods, and garden center merchandise. But Mr. Anderson said that changed in the last few years.

“Food is now nearly half our sales, and our primary customer is no longer the adult male,” he said. “It is today now an adult female customer, and as we watched that change, we watched the food business grow considerably and some of our traditional hard lines businesses contract.”

Women now make up 60 percent of The Andersons’ customers, company research shows. And those women shoppers have been vocal and specific about items the stores lack and what they want them to sell.

“We always had a house lines business, but we were not deep in any category there,” Mr. Anderson said. “We were never deep enough to garner any kind of attention there. Then we saw what kinds of categories make sense for this new primary customer who is coming to the store regularly to shop.”

Discreetly conducting in-store research over the last two years, the retailer got a clearer picture of what its merchandise selection should be.

It eliminated sporting goods and toys — two categories dominated by so-called "category killers" like Dick’s Sporting Goods and Toys R Us — and redistributed the space in its stores. It cut back on home improvement items that were slow sellers, and thinned its merchandise depth on other categories.

Officials visited dozens of malls and stores — including J.C. Penney, Kohl’s, Bed Bath & Beyond, and Target — to decide how best to display the new home goods, and a mock-up of store aisles were erected in its distribution warehouse in Maumee so the final design could be tweaked.

Changes in the stores were finished in April, with each store adding about 26,000 square feet of home goods. By comparison, a typical Bed Bath & Beyond store is anywhere from 10,000 to 50,000 square feet.

“For all practical purposes, we exited the sporting goods business and toy business and opened up that space up to expand housewares. We said we’re going to feature kitchens and bathrooms and bedrooms and provide bedding and bathroom accessories, and all the categories that go with that,” Mr. Anderson said. “You’ll now find picture frames, candles, furniture, gift ware categories, mattresses, all those kinds of things.

“We just said we’re going to take that [left] side of the center aisle and turn it into categories that make a statement, that fit this new primary customer that we have. And we were going to do it in a meaningful, house-and-home-related way,” he said. “ I think that we accomplished that.”

From a customer standpoint, the changes were the kind of move any good retailer usually will make.

But from a bottom line standpoint, The Andersons felt pressure to do something about its struggling Retail Group.

As a diverse agri-business, the bulk of the company's operating revenues come from its grain, ethanol, plant nutrient, rail, and turf & specialty divisions.Retail represents the smallest of The Andersons’ six divisions, but that does not mean the company has been comfortable with its continual poor performance.

Retail posted operating losses of $1.5 million, $2.5 million, and $2.8 million the last three years. The division's last profit was $843,000 in 2008.

“Frankly, the performance of the retail division has not been acceptable for years,” Mr. Anderson said. “We needed to change the bottom line in order to have a vibrant future. We’re doing what we need to do to improve the bottom line of this business.”

The Andersons at first focused on the adult male and tools, home improvement, produce, and other general merchandise. The sporting goods department and toys have been eliminated.
The Andersons at first focused on the adult male and tools, home improvement, produce, and other general merchandise. The sporting goods department and toys have been eliminated.

That new direction includes adding a larger variety of merchandise brands that, collectively, one might have to shop at several retailers to find. Additionally, the retailer has been able to secure some of the most exclusively controlled brands in the industry, such as Calphalon cookware and Tempur-Pedic mattresses.

Rick Swank, The Andersons’ retail purchasing manager, said new brands the retailer has added include cookware by TV personality and restaurateur Guy Fieri; bedding and home furnishings by Laura Ashley, Croscill, J. Queen, Tommy Hilfiger, and U.S. Polo; dinnerware by Pfaltzgraff, Mikasa, Lenox, and Gorham; cutlery by Wusthof, furniture by Ashley and Lane, and mattresses by Sealy.

“We ended up with 8,000 to 10,000 new [stock-keeping units] that worked their way in,” Mr. Swank said. “To me, it was time. Our assortment and merchandising was not where we knew it could be. We knew we could be a lot stronger in the house goods categories.”

With a third of each store still devoted to home improvement products, like drywall, flooring, paint, and lighting, Mr. Swank said The Andersons now occupies an unusual position among retailers. “I don’t know very many retailers in the country where someone can go and change a room from floor to full kitchen. We can take care of the whole project room all under one roof,” he said.

Mr. Swank said the stores will add even more new soft lines during expansions set for 2013 and 2014. “We’re mostly done with the physical changes, but there are still more merchandise changes that are not in and should be coming soon,” he said.

Retailers adapt

Mike Gatti, senior vice president of the National Retail Federation, said there are many cases of adaptation by retailers. Dayton-Hudson Co., for example, was a department store chain until their Target discount store concept outgrew the department store division, which was sold in 2004 to a rival chain. “When Target began, it was just another concept, an experiment. But it got to where they completely changed their name to Target. Dayton-Hudson is gone now,” Mr. Gatti said.

“You’re very lucky when you’re able to say one of your customers bases is growing and let’s keep expanding that part that we’re selling,” he said. “That’s what’s obviously driving [The Andersons’] sales and they probably know what their store traffic is.”

Retail outlets began as The Andersons Warehouse Market in 1952. More recently, the outlets have become proficient in specialty foods, wines, and garden center merchandise.
Retail outlets began as The Andersons Warehouse Market in 1952. More recently, the outlets have become proficient in specialty foods, wines, and garden center merchandise.

Mr. Gatti said the shift to more home goods, while logical, will place The Andersons against stiff competition from Kohl’s, Target, Wal-Mart, J.C. Penney, and Bed Bath & Beyond.

Whether the retailer is successful depends on how quickly it can re-educate its shoppers to consider The Andersons when shopping for home goods.

“A lot of companies aren’t lucky enough to where they can shift their traditional brand into a new brand. One of the hardest things to do is become something different than what your customers think you are,” Mr. Gatti said. “But that is still the easiest way to grow and strengthen your brand.

“If you can bring in the right merchandise that differentiates you a lot from other competitors, if you can bring in styles that you can’t get anywhere else, that’s where you’re going to grow,” Mr. Gatti said.

To change their look, The Andersons stores were redesigned to add cube-shaped merchandise sections dedicated to specific categories — bathroom accessories, kitchen items, tableware, etc. The home goods areas also have brighter colors and better lighting.

“Parts of the home goods area has carpet on the floor — a first for The Andersons. It was a conscious effort to merchandise to the female customer,” Mr. Anderson said. “Before, our aisles were long and lean and not well lit, and this is just the opposite of that.”

John Hoover, director of marketing for The Andersons, said if the retailer can just get customers into the store, the changes should be obvious. “I think it’s important to note there is a considerable difference in the brands we have now than what we had before. Through our connections, we got the attention of manufacturing brands that we were not able to do before,” he said.

The retailer plans to heavily promote its changes to re-educate those who do not shop its stores frequently. “We think once customers are educated to shop here, they’ll be pleasantly surprised by this new assortment,” Mr. Hoover said.

Not all rave reviews

Not everyone is sold on the new changes.

Stephen Breech, a Columbus-based retail consultant who has studied The Andersons’ Columbus-area stores, said the company excels at being a gourmet grocer, but moving deeper into home goods looks risky.

“My take on all of it is they’re not going to go very far with that. I don’t know how The Andersons thinks they can stand toe-to-toe, even from a buying standpoint, with some of the other home goods chains. That’s a horribly difficult business to manage.

“I don’t see how a chain of four or five stores could be competitive in that market,” he said.

Mr. Breech said timing is everything in home goods -- and difficult to master. “If you get the wrong color of some item, you’re stuck with it for a while until you mark them down,” he said.

The Andersons is very strong in produce, gourmet foods, meats, wines, and garden supplies, Mr. Breech said. “I just don’t know if The Andersons is where you go to find towels for your bathroom,” he said.

“I tip my hat to them for trying to transform their stores from things people don’t want to things they do want. But it’s just a really tough sell,” Mr. Breech added.

Mr. Anderson said the company knows its changes aren't an easy sell and it may not know until 2014 whether its pivot into more home goods was successful.

“This kind of significant change is not quickly disseminated to the marketplace because we are absolutely trying to attract customers that have not traditionally been shopping our store,” Mr. Anderson said. “But we think adding these changes makes it a much better shop for our customers.

“We think what we’re offering in food, combined with home goods categories, is unique in the marketplace and will improve our customer counts,” he said. But, “You’ve got to play this one out for a while and the big driver is going to be what happens over the next two years in terms of customer counts.”

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.