The Enid News and Eagle, Enid, OK

National and world

September 29, 2013

Tahlequah-based Reasor’s chain keeps growing

TULSA — Jeff Reasor leaned back as he recalled how his grandfather and father gradually built, store by store, what became northeastern Oklahoma’s popular Reasor’s grocery chain. He remembered when it involved just two stores, and he knew almost every employee.

“I went to visit every store once a week,” the chairman and chief executive said last week, chatting with Tulsa Mayor Dewey Bartlett at the International Council of Shopping Centers’ ICSC Oklahoma Idea Exchange conference Tuesday. “I got to know everyone.”

But the economics of groceries have changed quite a bit over the years, Reasor acknowledged. Now owned by its employees, the company operates 20 locations with more than 3,000 workers on its payroll. Its stores average 75,000 to 78,000 square feet, carrying 95,000 different products. With annual sales at about $500 million, the company just acquired three new stores and plans to remodel an existing store into a new format.

For in competition from new organic grocers like Sprouts and old titans like Wal-Mart, Reasor said the company continues to keep its focus on customer needs.

“We want the customer to see what they want to buy, not what we want to sell them,” he said, reflecting on one of his father’s mottos. That’s why Reasor’s carries more than twice the 40,000 average inventory items of a normal grocery, said Reasor.

But the company also faces challenges keeping in the forefront, he said, pointing to the natural foods stores as a prime example.

“Reasor’s sells more organic produce than anyone in the state of Oklahoma,” he told Bartlett. “We just don’t get credit for it. That’s an image thing.”

That’s one reason why Reasor’s is working with a branding company on a new format and layout to be unveiled in Tulsa’s Brookside area, at a store acquired at 31st and Peoria.

“When Whole Foods or Sprouts sets a store down, they do a good job at appealing to those customers,” he said. “That’s why we’ve jumped out to focus on it.”

Reasor’s also is considering establishing its own commissary, bakery and other such services to provide some of its own products, he told Bartlett.

The Tahlequah company achieved its growth at a time when many grocers barely keep ahead of inflation. Nicholas Hodson, a San Francisco partner in the global consulting firm Booz and Co., said sales at U.S. grocers grew 38 percent from 1995 to 2012, while their capacity in square footage expanded 78 percent. Tracked in 2010 dollars, he said sales remained flat, tracking with population growth.

“We added loads and loads of space and didn’t get anywhere at all,” Hodson told the ICSC Oklahoma audience, drawing from a report his firm prepared with the Food Market Institute.

Hodson said grocers find themselves squeezed just as online merchants target nonperishable goods sales. While supercenters (which he equated with Wal-Mart) still have a little room for growth nationwide, he said pharmacies with food components continue to track well with rising prescription counts, and dollar stores show abundant possibilities for expansion through 2025.

“The business has got less productive and more complicated,” said Hodson.

Reasor’s is working with consultants to study exactly what consumers want. Reasor told of a social anthropologist who spent three days in the Tulsa area, watching the stores and following customers. From studying their habits and buying patterns, Reasor was told these consultants can estimate with up to 98-percent accuracy what customers will want.

“I can’t wait to see the results,” he said of that study. “I’m very curious about it.”

When a store launch can cost about $17 million, as Reasor said the company’s last debut did, particular care is made to product demand. He anticipates store sizes will probably grow smaller as they get better at understanding what customers want.

“You don’t just step into those decision slightly,” he said.

As Reasor’s has learned through decades of competition with first Wal-Mart, then its Wal-Mart Neighborhood Markets, Reasor said customers form strong bonds in their shopping habits. Simply buying a competitor or opening a new location will not necessarily change that.

“Not everybody wants to shop at Reasor’s,” he said. “Not everybody wants to shop at Wal-Mart. There’s enough out there for both. It’s just trying to figure out what your customer wants at a price you can both agree upon.”

For expansion, the expanding grocery chain is looking at everything within a 125-mile radius, Reasor told The Journal Record (http://bit.ly/1932nZr ).

“I’m in the money business,” he said. “I just use groceries to get there.”

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