Events in 2001
Sales were nearly $15 million and, though Super AM’s first store had an operating
loss of $670,000, an incentive bonus pool of over $60,000 was paid out to an
enthusiastic group of associates at a banquet paid for by EXPO AM’s headquarters.
Labor issues dogged the store over the year. First, twenty percent of Super AM’s
operating loss was attributed to inexperience employees. This problem was
considered “solved” by year-end. A more serious problem was a result of the limited
number of full time workers. It meant that the store was short of management
when anyone was ill or went on vacation. And when employees were in the store,
they were so busy training new part-time workers that they did not have enough
time to perform ongoing maintenance. The time spent training part timers was
especially onerous because of the high turnover of staff—on average part-timer
workers only stayed for eight months. Exit interviews indicated that they were
leaving because their starting wages were low. This problem could not be resolved
by raising wages through merit increases because of restrictions in the labor
agreement. Ironically, the first store had more employees than planned during the
first year because some were being trained for the second store.
The GSP process worked well within the store, but personnel at the regional level
had trouble adjusting to questions and suggestions from people at the store. For
example, shoppers at Store 1 were often greeted with the smell of rotten fish. This
happened because the prevailing winds blew the exhaust from fans in the seafood
department across the roof of the building to the store entrance where the odor was sucked back into the store by the fans. The regional people responsible for
buildings made the necessary physical adjustment to solve the problem only after
three months of shoppers’ complaints and associates’ suggestions.
Other employees in the EXPO-AM started telling stories suggesting that Super AM
was a “problem child.” Once while in head office, Edwards overheard one vice
president say to another executive “Super AM’s departmental margins are so low,
some weeks they could save money by just giving merchandise away.”
Each of the major competitors responded in its own way to the entry of Super AM.
Shop Smart reacted immediately by matching every one of Super AM's advertised
prices—a very costly tactic for it. Alberts did not react until April, when it reopened
the Super Center on Liberty Avenue as an Alberts Food and Drug
combination store. Management at Alberts had been critical of the Super Center,
its sister chain, for invading its hometown and now had a political and financial
need to make the newly renovated site successful. It increased advertising, offered
additional specials, and lowered prices. This brought back many previously
disappointed customers, putting pressure on store margins at Super AM. Edwards
lowered prices to maintain sales. Surveys conducted by Super AM indicated that it
was having trouble attracting customers from Alberts, but good success attracting
them from Shop Smart.
Edwards expressed disappointment when Perez left EXPO-AM to take a more
senior position at Franklins. Perez was replaced by Davis, a more conservative
executive from the senior ranks of EXPO-AM.