Lucky's crowds cut sales at some other natural-food stores

2014-03-22T01:00:00Z 2014-03-24T08:07:06Z Lucky's crowds cut sales at some other natural-food storesBy JAN FALSTAD jfalstad@billingsgazette.com The Billings Gazette

After opening 45 grocery stores during his career, Mike Phillips has the experience to judge a successful opening.

Still, the March 12 debut of Lucky’s Market in Billings, the chain’s fifth grocery, blew past his high expectations.

“This is the No. 1 store in sales by 20 percent. We were expecting half of that,” Phillips said.

Last year, Lucky’s, based in Boulder, Colo., opened stores in Longmont, Colo.; Columbus, Ohio; and Columbia, Mo.

Phillips expected a rush on fresh produce during the first week in Billings, but meat sales were off the charts.

“Let’s say we sold about 20 tons, or triple what we expected,” he said.

Meat is harder to replenish because the natural-fed cattle need to be butchered, processed and shipped. By Friday, Lucky’s had run out of its signature product: bacon cured and smoked in-house.

Billings already has five natural-food grocery stores in a city of 120,000. So how can a sixth store succeed, especially when it’s the only one of its brand in Montana?

Phillips said it’s a combination of borrowing the best ideas from the best stores, spending money where it counts and being cheap where it doesn’t.

Lucky’s saved about $100,000 by leaving the cracked concrete floor in place and sealing it. Eighty percent of its equipment is used.

“We’ll spend $1,500, instead of $12,000, on a cooler and put in $1,000 to fix it and still be money ahead,” Phillips said.

To get the Billings store finished, stocked and open, Lucky’s has since January spent many thousands of dollars to feed and house workers on loan from other Lucky's stores.

A dozen in-house contractors did the remodeling; a crew of nine stocked shelves and up to 20 extra clerks came to Billings to help the 160 local employees handle the crunch of customers.

“We’ve spent at least $100,000 in meals, hotels and travel just in the last few months,” Phillips said, plus $36 per day per diem per employee.

The new competition is pinching sales at some other natural food stores.

Bonanza Health Foods at 923 Grand Ave., has been selling natural foods since 1976, longer than any other similar Billings business.

“I know they have pulled sales from every store,” said manager Gerry Vincent. “You only have a certain size of a pie and every time a new store comes, a piece of that pie gets smaller.”

Montana Harvest Natural Food Store at 1710 Grand Ave., is practically across the street from Lucky’s and is feeling the effect a little bit, said manager Denny Crick.

“We’re more of a specialty store. We carry a lot of supplements that a lot of other stores don’t carry,” he said.

Crick said Montana Harvest’s milk price is 50 cents cheaper than Lucky’s and the Silk milk, or soy and almond, is a dollar cheaper.

“They sell natural foods, but they also sell Tootsie Rolls and candy, which we don’t. We focus on GMO-free products, plus organic,” he said.

Mary’s Health Foods at 2564 King Avenue W. said it hasn’t felt its sales drop yet.

“But I’m pensively looking at numbers and waiting,” said Rebecca Coley, one of the owner’s daughters. “I felt it a lot more when Natural Grocers opened. I felt it the next day.”

Shoppers will always check out the latest store, she said. But most probably will return to their normal patterns, rather than drive all across town to a new store, Coley said.

Good Earth Market manager Joshua Jackson said while the customer numbers at the downtown co-op have stayed steady, sales haven’t.

“We have seen a hit in sales over the last week, mainly due to our average basket. People aren’t buying as much,” he said.

Lucky’s is buying products from about 30 vendors and runs a dozen semi trucks a week to Billings, Phillips said.

The roll-up doors at the front of the store are its “best feature,” Phillips said, because when they are open, Lucky’s has a market atmosphere and the produce is the first thing the customers see.

“We’re nimble and quick enough we can re-merchandise in a quick minute,” Phillips said.

Danielle DeVries and her 3-year-old son, Austin, who usually shop at Albertsons, were making their second trip to the store Friday.

“I like that there is another option in Billings. I like the bulk food options for sure,” DeVries said.

The 88-cent special for a pound of fresh strawberries during the first week was a big draw, Phillips said, but at a cost.

“It’s a ridiculous hit to the profits, but it brings people in,” he said.

Lucky’s is owned by Bo and Trish Sharon, of Boulder, Colo., who plan on opening a sixth store in Louisville, Ken., in May and in St. Louis, Mo., in July.

Two more stores are planned next year in Montana, but no locations or cities have been announced.

While no hard numbers are available, Phillips said he believes Lucky’s has pulled 20 percent to 25 percent of the sales from the two nearest Albertsons stores on Grand Avenue.

In a keenly competitive grocery industry, Phillips said Lucky’s has even a smaller profit margin than its competitors, although he declined to cite a specific number for the privately-owned chain.

“We’re looking for the fast nickel, to keep the food turning and keep people’s pantries full,” he said.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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