Schnuck talks grocery challenges, changes

Scott Schnuck, chairman of Schnuck Markets Inc., spoke at the United Way of Southeast Missouri's CEO Luncheon on Friday at Farraddays restaurant at Isle Casino Cape Girardeau. The St. Louis-based chain was established 75 years ago, founded by Schnuck's grandmother, Anna Donovan Schnuck. The chain employs 15,000 "teammates" in 98 stores in Missouri, Illinois, Indiana, Iowa and Wisconsin.

The Cape Girardeau store has been here 38 years and store manager Dennis Marchi has been there for 28 years.

Schnuck sat down to discuss some of the business' challenges and strengths.

Q: Do you have any plans for the Cape Girardeau store, as far as changes or remodeling?

A: We've updated our store about two years ago, and physically it's in really good shape. Dennis [Marchi, the store manager] always has some requests, but the changes that we made on this last remodel, I think it really got the store right in being able to offer the right kind of products that maybe we weren't able to before, such as the imported cheese counter. We expanded our dairy. It allowed us to carry a lot more yogurt [and] things like that that people are looking for. ... We've made a continual investment in the store over the years to keep it up to date, so we don't have a lot physically. ... The requests that I get from Dennis [are] more on product requests or promotion pricing in certain areas. Those are the things that if we're going to tweak something, it will be in those areas.

Q: What are some of the challenges facing a family owned grocery store in today's environment?

A: There are three things: Wal-Mart, Wal-Mart and Wal-Mart. They've changed our landscape, the way we have to do business. We're just running as fast as we can to stay ahead of them.

Q: Has the company found new ways of marketing itself?

A: We have an online ad; we have a Facebook page. I tell you where we really have worked hard to do better marketing is in store: providing better information in our signing, some in our print ad, but really at the point of sale to really help people understand that it's local produce; that it's specialty imported tomatoes from Italy. ...

Q: There was an ad recently in the Southeast Missourian about a class-action suit resulting from a data breach.

A: So we had a data breach in March of 2013, over a year and a half ago. It was an awful thing to go through, and unfortunately, there were a lot of customers' credit cards that were compromised. ... We were subject to some class-action lawsuits that, unfortunately, you're negotiating more sometimes on lawyer fees than you are on actual settlements for ... people. ... The settlement that was reached required us to pay any claims if people [thought] they were out of money due to the breach. But we have to advertise the fact that there's a process that they can go through; apply online and then there's a firm that's evaluating whether or not those ... claims are legitimate or not. ... There's a fund established to pay out of that, so that's what that's all about. I think that campaign is about over, then hopefully, we'll be done with that part of the legal arguments.

Q: So it was mostly in the St. Louis area?

A: It was the whole system, but the media up there made it into a huge, huge issue that was hard to deal with.

Q: In recent times, have you pulled out of different marketplaces?

A: We had a recent unsuccessful entry into the Memphis [Tennessee] market. We bought a local family chain down there [that] ... had been bought and sold and bought and sold three times before we actually bought it. We really thought we were buying a stronger company. ... Kroger was firmly established in that marketplace, and Wal-Mart was firmly established within the metropolitan area. And being No. 3 in the market, it's hard to survive in a major metropolitan market.

Q: Has the opening of Ruler Foods and the smaller Wal-Mart supermarket and so forth, and they're pretty close to where you are here, is that going to have an effect?

A: Ruler opens next week here. ALDI is a formidable competitor. We're seeing that the value-conscious customer segment is the segment that's really growing. It ... means that people have less discretionary money. A good example is when the government cut back on SNAP benefits, food stamps, and things like that, we have a group of stores whose customers really depend upon that. ... Our sales went down in those stores, which means people just didn't have the money to spend, so they're forced to find the lowest-cost alternative they can, even if they don't want to shop in that kind of a store. So we've adjusted our merchandising and our pricing to really go after a bigger value segment in the marketplace.

Q: What's ahead for your company?

A: We just opened ... a replacement store in St. Charles County in St. Louis. We have a store under construction in Farmington, not too far from here. The residents and community leaders in Farmington have tried to get a Schnucks store there, and Dennis, [has] been jawboning us for a long time that there's a market there, so we're going to open up a store in Farmington this fall, which will be another great, strong market. We're going to open up another store or two in Springfield, Illinois. We're going to build two more stores in Evansville, Illinois. One's a replacement store; the other is a new store. We have five there. Within St. Louis, there's going to be an extensive amount of remodeling of existing stores because it's important we keep our core and our base modern and up to date.

rcampbell@semissourian.com

388-3639