“There are many great chains that do a good job, but when they get into markets with different customers, and it’s not the norm, they tend to struggle,” said Phil Gentile, SVP grocery. “Being an independent, we make decisions on a daily basis, and once we make the decision, we go to market immediately.”
Breaking it down
KV Mart operates 25 stores. Six are Top Valu Markets, which are conventional full-service supermarkets. Eleven are Valu Plus Food Warehouses, price-sensitive operations with full-service bakeries and meat departments.
Five locations are under the Buy Low brand, which are focused mostly on low-priced meat and produce. In addition, KV Mart operates one of each of the following: Price Rite, a price-driven operation; Amar Ranch, which falls into the same category as Top Valu; and Value Mart, which is the same as a Valu Plus but with a different ownership structure.
Although each location is important, Gentile said Valu Plus and Top Valu are the two brands that speak for the entire corporation. The first Top Valu was opened in 1977, and the brand was the driving force behind KV Mart until 1992, when it opened its first Valu Plus.
“From that point on, our focus has been more on the Valu Plus banner,” he said. “We still operate six Top Valu Markets, but Valu Plus is the focus of our new operations.”
This focus brings into play another important element behind the personality of KV Mart: it’s the largest minority-owned grocery chain in California. Gentile said this designation gives the company a true understanding of its consumers, who are 95% minorities, and ensures it never loses focus of what is important.
“That’s why we cater to each individual area we’re in,” he said. “Our culture is intertwined with how we get into a community and build roots. It’s how we continue to grow and be successful.”
KV Mart’s customizable formats start with demographic studies. The merchandising, layout, and price structures are different for each store, so understanding exactly who shops where is critical.
The company gathers this information from the companies that handle its advertising, but it also does online research about zip code census results. “We can pinpoint our demographics, from an eighth of a mile all the way out to five miles by zip codes,” said Gentile. “We usually target the three-square-mile range around a store and pinpoint the ethnicity within that area.”
KV Mart’s marketing messaging is also unique to each location. Altogether, KV Mart writes 13 different ads for the 25 stores. For a heavily Hispanic market, the company advertises with billboards and radio. It also does a lot of guerilla or drop marketing in certain zip codes.
“We use the same approach for English-speaking neighborhoods and areas that are more ethnically diverse,” said Gentile. “In San Pedro, for example, there are many ethnicities, so we pinpoint zip codes with that diversity and go from there.”
Although this method is operationally challenging, both from a marketing and merchandising perspective, making sure its consumers can buy what they need and what they prefer is more important. It also helps that the company’s supply chain is flexible enough to handle its needs.
Unified is KV Mart’s main distributor, but the company also has a 150,000-square-foot warehouse, which allows for flexibility to send specific products to specific stores. “We deliver all of our own products, whether they’re coming from Unified or KVDC, from our warehouse,” said Gentile. “We developed this capability because we realized that to be successful, we had to be diversified in what we do and what we carry.”
Stay in touch
Staying in touch with its consumers’ grocery needs is important, but KV Mart likes to keep in touch with its communities as well. This year marks the 14th annual Educational Foundation Golf Tournament, the proceeds of which go to the elementary schools in communities where one of the company’s supermarkets are located.
“Last year, we donated $125,000,” said Gentile. “Over the past 14 years, we’ve given well over $1.2 million.”
Giving back to schools in inner cities is one more way KV Mart stays connected to its roots. Gentile said the company firmly believes elementary schools build strong foundations for children, but educational cutbacks make it more difficult. “Our community involvement benefits the people,” he said. “We want to enhance the quality of life our consumers live.”
That hasn’t necessarily been easy over the past few years, however. KV Mart’s consumer base has been the hardest hit from the recession, especially as service jobs continue to disappear and families are forced to cut back. The company’s greatest challenge is to maintain its low pricing by driving out the costs of its operations and maintaining strong partnerships with its vendors.
“With our vendors, it’s a give and take relationship,” Gentile said. “They drop their price, we drop our margins, and we work together to drive that customer into the store.”
These longstanding vendor relationships are just another way in which KV Mart’s history and current standing as an independent grocery chain are an advantage. Being independent gives the company the flexibility to make decisions for the customer rather than an unseen corporation. In addition, most of the executive staff has been with the company more than 25 years, and 80% of its office management has been with the company for more than 10.
“There is a lot of longevity here, and we all understand what our consumers are going through because we’ve all grown up in the same circumstances,” said Gentile. “We’ve also grown up in the company and the culture. You don’t really lose that focus.”