News From Terre Haute, Indiana

December 3, 2013

As neighborhood changes, so does grocery

New model: Slashing prices to boost sales

Howard Greninger
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TERRE HAUTE — Locust Street IGA, a long-standing neighborhood grocery, will soon undergo a transformation into a low-cost grocery named “Locust Cost +10%.”

The idea is that whatever it costs the store to place the food on the shelf — such as freight, fees and labor — that is the price. Then 10 percent is added to that price at check-out.

“This is a SuperValu concept, and SuperValu [Inc.] is our [food] supplier. They have done these very successfully in other locations,” said owner William Spatz, of Chicago., who has owned the grocery since 2000, under Terre Haute Associates LLC.

“We are trying to branch out our geographic pull because the area immediately around the store has had a school close, and the university keeps tearing down one home after one,” Spatz said.

He said Cost +10% will be the first of its type as a low-cost, full-service grocery store in Terre Haute.

“It is our actual costs and then we tack on 10 percent at the register,” Spatz said.

“You should be saving at least 10 percent” on groceries, Spatz said. “It will be a full-service grocery store. It will still have a meat department and still have a produce department and all the other shelf items. It is still a 40,000-square-foot grocery store, so a big grocery store.”

The model combines a low profit margin with a higher volume of sales.

“It is a balance. The goal is that by reducing our margins substantially, we will be able to attract significantly more business and, therefore, end up in a better position,” Spatz said.

“The business has fallen off substantially over the years. In places where this type of situation has taken place, this concept has proven to be very successful in terms of increasing sales volumes substantially,” Spatz said.

“It should be good for the community. Everyone likes cheaper prices,” he said.

A tentative roll-out date is Dec. 11, Spatz said.

Store Manager Abe Hubbs said fresh cut meats “will be a very big part of this. Meats have always been a strong point in the store. We cut meat fresh every day.

“We don’t have a deli now, and we will not have a deli bakery for Cost Plus, but we will have some popular items, such as fried chicken dinners and such,” Hubbs said. “In the summer time, we buy local produce, too, such as watermelon.”

Hubbs said the store has reduced its size by 25 percent, with the reduced section available for storage or any future use.

“Cost Plus is changing our total thinking process,” Hubbs said. “We buy in bulk to save, but it is not like a Sam’s, where you have to buy one item in bulk.

Reporter Howard Greninger can be reached at 812-231-4204 or howard.greninger@tribstar.com.