OATS to Emphasize In-store Service

BOULDER, Colo.—As part of its continally changing repositioning plan, Wild Oats Markets (OATS), based here, has been conducting focus groups in 18 U.S. towns and cities. Among the conclusions: Natural foods shoppers rate service as their No. 1 priority.

“[Focus group response] was a lot different than what I thought it would be,” says OATS Chairman Mike Gilliland. “Service was clearly so much more important than any other thing, like facilities and pricing. It was the only thing that mattered.”

As a result of the focus groups, Gilliland says Wild Oats will revamp its priorities to emphasize in-store service. Gilliland and OATS President Jim Lee will, as part of what Gilliland calls a “nonstop road trip,” oversee internal focus groups at Wild Oats stores around the country a couple of times a year.

The two-hour external focus groups were conducted last summer by Minneapolis-based Fame consulting group and cost “tens of thousands” of dollars, Gilliland says. They were held in cities where OATS is the sole natural foods store, in cities where it has competition, and in cities where it doesn’t have any stores. Targeted cities included Minneapolis; Boulder, Colo.; and Portland, Ore.

Focus groups were made up of a mix of regular OATS shoppers, people who shopped at both Whole Foods Market (WFMI) and Wild Oats, and people who shopped solely at OATS’ competition.

The groups yielded what Gilliland jokingly calls “18 hours of really boring videotape” that will be shown to employees and directors. The results will make up the core of OATS’ new strategic plan, Gilliland says.

One surprising outcome of the focus groups was that “a lot of people at the end of the day don’t have a clue about something as simple as ‘What does organic mean?’” Gilliland says. As a result, OATS will also emphasize education in its stores, he says.

Another discovery the company made is that many consumers shop at both Wild Oats and Whole Foods. “They’re not hostile, so to speak, to either chain. A lot shop at both. It surprises me that people cross-shop as much as they do,” Gilliland says.

OATS will use the focus groups to improve its customer response, but they could also help the company’s stock price, says Carole Buyers, senior VP at Tucker Anthony Capital Markets.

“With 35 new stores last year, OATS needs to be saying, ‘Who are we?’ From a marketing standpoint, it’s important to take a step back and re-evaluate,” she says. “They have to turn it around by defining and branding who they are. They need to focus on operations and strategy.”