Changes seem to be coming ever faster in the grocery industry; however, “we don’t change just for change’s sake,” asserts Rob McDougall, CEO of Encino, Calif.-based Gelson’s Markets, which operates 27 stores in Southern California. Gelson’s is rolling out a new store design that addresses the new needs of consumers while staying true to the roots of Gelson’s success.
“It’s always been about quality; it’s always been about service,” McDougall says. He notes, however, that consumers’ definition of service is quickly changing and doesn’t mean the same thing as it did even five years ago. “How do we meet that need?” he asks rhetorically. “How do we add more touchpoints to the store? How do we come up with concepts and ideas that create a social experience inside our stores?”
Much of the inspiration for Gelson’s new concept came from scouting trips that McDougall takes around the world, especially Europe. “The main reason I go to Europe is because my customers do,” he explains. “They like to spend time in Italy, France, Germany and London. And so we make sure we’re staying on top of whatever trends are there.” Gelson’s also worked with Los Angeles-based design firm Shook Kelley to develop a concept that represents the Southern California lifestyle, McDougall notes.
New and remodeled stores — Gelson’s has opened two new stores and remodeled seven stores in the past two years — feature a bar that carries up to 20 craft beers and as many as 40 types of wine. The mix depends on location, McDougall observes, as the company found, for example, that the Long Beach store calls for a wine bar with some craft beer, while the Silver Lake store demands a craft beer bar that also carries some wine.
The bars additionally feature freshly prepared foods, from sushi made on site to a variety of tapas developed by Gelson’s executive chef. The burrata salad stands out, according to McDougall, because it introduces some customers to this mozzarella-like cheese, but Gelson’s version features arugula dressed with balsamic vinegar pearls instead of regular balsamic vinegar.
“It almost looks like a fine caviar,” he adds. “Customers are like, ‘Oh, this is great, but where can I get these [balsamic vinegar pearls]?’ You know what, you can get them in aisle five. That’s huge, because I want to help [customers] learn how to create these things as well. The more cool things we can come up with, it just helps a sale.”
McDougall notes that sales of the $20 bottles of balsamic vinegar pearls are up exponentially in the stores including a bar with the burrata salad on the menu.
The bars also afforded Gelson’s the opportunity to offer a new service: the Sip ‘n Shop. Customers can enjoy a glass of wine or beer at the store’s bar, and hand off their shopping list to a member of Gelson’s staff, who will fill it at no additional charge. McDougall points out that customers tend to hand over short lists of 10-15 items, instead of larger orders, making it a win for both parties.
Other features of the new concept include customizable breakfasts and bowls in the service deli, and grills in the meat and seafood department. A customer can buy a ribeye, for example, and the store’s butchers will grill it to the shopper’s specifications. “I thought customers would order it like they want and eat it in the store,” McDougall admits. “What they’re doing more of, though, is ordering it and eating it at home.”
Similar to the bar and service deli offerings that highlight new ingredients to consumers, the grills in the meat and seafood departments have shown customers how to prepare a cut of meat properly. The new concept also features juice bars that offer cold-pressed juices and smoothies made to order. (Several Gelson’s locations had previously partnered with Liquitarian to learn the process of creating cold-pressed juices.) Meanwhile, the produce department features a fruit and vegetable chop station to take the hassle of cutting produce at home.
Along with its other advantages, the concept offered new promotional opportunities for Gelson’s. Several stores have hosted wine- and beer-pairing dinners for which customers pay $75 to sample a set menu of unique products paired with either beverage. The San Diego stores also frequently host Tap Takeover Night, when the wine bar is “taken over” by a local craft brewery and all of the taps feature beers from that brewery, with customers paying a cover charge to participate.
Gelson’s operates stores that range from 17,000 square feet to 50,000 square feet, with little room for expansion to house the added elements of the new concept, which has forced the company to get creative. In some cases, the back-room space can be reduced, thanks to better stock management and daily deliveries of products, as well as a streamlined product selection.
The stores that have been remodeled to the new concept have seen double-digit sales increases, McDougall says. Gelson’s future plans include remodeling the rest of its stores at a pace of at least two per year, and no more than six.