Strategic Case 6 Gelson's Markets Where Superior Quality Meets Convenience Bernard and Eugene Gelson, the founders of Gelson's Markets, grew up helping their parents operate a grocery store in Iowa. As the Depression wound down in the late 1930S, the family moved to Los Angeles and opened a new grocery. The entrepreneurial brothers were eager to launch their own business and soon began running their own small grocery store. But at a time when ever larger, self-service supermarkets were pop- ping up from coast to coast, the Gelson brothers dreamed of cutting the ribbon on a stylishly modern supermarket differentiated by superior quality and service. They hired a well-known architect to de- sign the first Gelson's supermarket, a 25,000- square-foot retail store with many innova- tions. Opened in 1951, that first store fea- tured wide aisles for easy browsing, air con- ditioning throughout, and a meat-cutting de- partment in full view of customers, visually reinforcing the emphasis on freshness and quality. In less than a decade, the company was successful enough to open a second su- permarket. Today, through store openings, acquisitions, and mergers, Gelson's Markets owns 28 stores in Southern California. Each store reflects the tastes and preferences of the neighborhood and offers full-service su- permarket amenities. Marketing Driven by Mission The Gelson brothers knew from long ex- perience that good service builds customer loyalty, which is why service has always been an integral part of the company's mis- sion. The formal mission statement of Gel- son's Markets is: "To make shopping any- where else unacceptable for consumers who value quality products, cleanliness, conve- nience, and personal service." As this state- ment indicates, top-quality food products- particularly fresh meats and seafood, fresh vegetables, and fresh fruit-are also key in- gredients. The mission statement touches on two additional elements that customers ex- pect in a world-class supermarket: cleanli- ness, which is a must in any food store, and convenience. Gelson's Markets focuses on convenience in several ways. Consumers with busy lifestyles are increasingly interested in pre- pared foods, specialty takeout, and meal kits. Gelson's caters to these customers with dis- tinctive and convenient offerings. For exam- ple, shoppers can customize takeout pizzas baked on the premises and order other sig- nature favorites at the Wolfgang Puck Ex- press takeout counter. In some stores, cus- tomers can create their own omelet and oth. er breakfast or lunch items to eat there or pack for home or office. At the charcuterie station, customers can watch as carvers slice specialty cold cuts to order. They can also order healthy, flavorful cold-pressed juices made from fresh fruits and vegetables at a Liquiteria counter in select Gelson's stores. In addition, Gelson's has begun selling a rotating, seasonal selection of fresh meal kits from Chef'd. The kits package recipes from famous chefs with fresh meat or seafood, fresh produce, and tasty herbs, making it simple and easy to cook a great meal at home. Although meal kits are usual- ly ordered in advance and shipped to the customer's door, selling them in local Gel- son's Markets adds convenience for con- sumers who decide to buy and cook on the same day. Other supermarkets have also no- ticed the popularity of meal kits and begun offering their own. For example, Kroger re- cently introduced its own branded 20- minute meal kits for two, and Publix mar- kets its private-brand meal kits to feed two or four people. Serving a wide range of customer needs, Gelson's offers catering for every occasion, from birthdays and weddings to picnics and holiday banquets, with recipes developed by the in-house executive chef. The company has a dietician on staff to provide guidance about foods for gluten-free diets, vegan and vegetarian diets, dairy-free diets, low-sodi- um diets, and cooking with locally sourced ingredients, among other customer con- cerns. Customers are encouraged to visit the company's website for healthy-eating tips and recipes, advice about pairing wines with meals, selecting and storing fresh produce, and child-friendly menus. Thanks to a part- nership with Instacart, customers can also order groceries online and receive delivery within one or two hours. Alternatively, they can click to buy fresh meats, floral arrange. ments, gift baskets, and other items on the Gelson's website, and specify pickup at a convenient Gelson's store. Engaging with Customers, the Community, and Suppliers Gelson's Markets engages with consumers and groups in each local community. It in- vites nonprofit organizations to apply for charitable donations, and contributes more than $2 million annually to good causes. Many of its stores host cat and dog adoption events throughout the year. The company also distributes a Pet Gazette quarterly newsletter for pet owners and sponsors pe- riodic pet photo contests. With families in mind, the Gelson's Markets website has a "Kids Corner" section with downloadable coloring pages and a downloadable guide to healthy children's products. The stores also offer behind-the-scenes tours for school groups. Students have the opportunity to see how shipments are received from local farms, watch bakers at work, and learn how recyclables are handled, as well as sample some foods during the tour. In addition to two email newsletters for customers- -one filled with coupons, the oth- er filled with recipes and new product news -Gelson's Markets has an active presence on Facebook, Pinterest, Instagram, and Twit- ter. Tens of thousands of followers watch for the company's latest nutrition and cooking tips, entertaining ideas, photos of special meals, and holiday food suggestions. Com- munication flows both ways: Gelson's Mar- kets asks customers for feedback on its web. site, on its social media accounts, and in its stores, as well as inviting customers to rate its stores on Yelp. Always on the lookout for new products and new suppliers, the supermarket invites companies to pitch" themselves and their offerings through Gelson's link to the RangeMe online portal. First, a prospective supplier submits contact information and a product profile describing what it is offer- ing, along with photos and a target-market description. Next, the system analyzes the products) and automatically transmits the information to the store buyer in charge of that category or department. Once the buyer has reviewed the supplier and the product details, he or she can get in touch for further discussion, to request product samples, or to set up a meeting. Although buyers also hunt for new products at specialty food shows and other industry events, the portal pro- vide a convenient digital framework for suppliers to introduce themselves to the su- permarket's decision makers. Many supermarkets and specialty food stores operate in the highly competitive Southern California market. For differentia- tion and advantage in this marketing envi- ronment, Gelson's Markets is building on its decades of retailing experience, its dedica- tion to service and quality, and its brand reputation to keep customers loyal.* Questions for Discussion 1. How is the mission statement of Gelson's Markets reflected in its decisions about products and in- store features? 2. Why would Gelson's Markets create in-store departments for customers to create their own piz- zas, cook their own omelets, and obtain fresh-squeezed juices? 3. What are the marketing chal- lenges and opportunities of a retail- er like Gelson's Markets partnering with a company like Instacart to of- fer home delivery of food products within about two hours? 4. How is Gelson's Markets keep ing its supply chain efficient and effective as it seeks to serve cus- tomers and counter competition