Introduction to Retail Business

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PIGGLY WIGGLY : A SUPERMARKET FRANCHISING GIANT

PIGGLY WIGGLY (WWW.PIGGLYWIGGLY.COM) is a franchisor with over 6000 supermarket units that span the southern states from Louisiana to north Carolina. In addition, Piggly Wiggly franchises about 20 stores in Wisconsin that are owned and operated by fresh brands (www.freshbrands.com) , a wholesalers that uses the fresh brands name. Any independent supermarket can become a Piggly Wiggly franchisee by signing a franchise agreement and paying a percentage as sales as a royalty. In 2002, progressive grocer honored Piggly Wiggly with an award of excellent, based on the firm’s successful marketing efforts for its franchisees. The company pays strict attention to such elements as developing specifications for store signs to assure a uniform image managing a private-label program, arranging for special purchases for its franchisees, planning special promotion, and so on. Piggly Wiggly provides extensive purchasing assistance for its franchises by arranging for both private-label and national-brand programs. Piggly Wiggly’s private-label program includes about 1000 products in more than 200 categories. The franchisor handles all of the management responsibilities for its private-label line, including setting product specifications, choosing suppliers, monitoring quality, and package design. Although

Piggly Wiggly is owned by Fleming companies (www.fleming.com) , a major grocery wholesaler, its franchised store do not have to purchase from Fleming. Some of the privatelabel products are bought from Fleming; others are acquired from various sources.

Through a centralized purchasing program for national brands, Piggly Wiggly franchisees have access to deals that would be otherwise unavailable to them. According to Piggly Wiggly’s president, “we do top-to-top meetings with manufacturers in which we present ourselves as a conventional chain. If you counted all our stores as a single chain, we’d be at $4 billion in sales. That gets the attention of the coca-colas and the Frito-lays”. Through the franchisor’s effort, its independently owned franchised units can better compete against national chain. As Piggly Wiggly’s president says, “nothing will replace running a store efficiently. A store has to be clean, well-stocked, safe, have an easily accessible parking lot-that’s the cost of doing business. But, when you’re on your own, you need a few things that you can’t provide yourself in order to compete with the big chains. You need buying power, a recognizable name, and marketing power that goes beyond one store in one market. That’s where we come in. We’re the icing on the cake”. Piggly Wiggly’s mascot, Mr. Pig, has high awareness through-out the south. Franchisees can even borrow a Mr. Pig costume to use at local parades and events. Piggly Wiggly employs field representatives to periodically visit each franchise location and apprise franchisee operators and their staffs of its current marketing programs. Stores operators can also review the programs at a dedicated Website, Pignet.com. One recent program featured a Mr. Pig Pack of three Kellogg cereal varieties-and coca-cola vending machines at Piggly Wiggly locations showing Mr. Pig drinking an ice-cold bottle of coke classic. In contrast with its southern stores, the units Wisconsin use the fresh brands name and do not participate in some promotions with a distinct southern emphasis. However, these units use the same logos and trademarks as the southern stores. Many of their promotions involve the green bay packers, the Milwaukee bucks, and the Milwaukee brewers sports teams.

Questions 1. As an independent supermarket operator, would you want to become a Piggly Wiggly franchisee? Why or why not? 2. What are the advantages to Piggly Wiggly of having franchised outlets instead of its own stores? The disadvantages? 3. What criteria should Piggly Wiggly use in evaluating potential franchisees? 4. Should Fleming require Fresh Brands...
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