Susan Smith, Staff Reporter
Hi-Lo supermarket in Liguanea, St. Andrew. - FILE
HI-LO FOOD Stores has cut its losses on the flagship Basix branch in Kingston but is opening two new-style branches elsewhere.
The Hi-Lo Basix branch established four years ago at 83 Hagley Park Road in Kingston was closed on July 31. Basix supermarkets represented GraceKennedy's concept of a full service supermarket with a specified range of high demand products offered at low prices. Hi-Lo is a GraceKennedy subsidiary.
A new Hi-Lo supermarket and wholesale was opened at 76 Main Street Ocho Rios, St. Ann in the last week in July and there are plans to open another in Port Maria, St. Mary within the next three months.
LOSSES
Chief Executive Officer of the retail division of Grace-Kennedy, John Mahfood, said the Hagley Park Road branch had been operating at a loss.
"It was a new concept we were testing but the main [challenge] was that the location was a difficult one," said Mr. Mahfood. The challenge of travelling long distances with perishable items such as butter, ice cream or meat was a major consideration for customers.
"We were anticipating a lot of persons using the location to shop on their way home to Portmore or Spanish Town at the end of the day, " he explained. "The drive from that store to their home was a long one; an hour or so, and people were not willing to do that."
NEW MARKETS
They decided to redeploy the resources which had been employed at the Hagley Park Road Branch. "Kingston is saturated with supermarkets and we are going to communities which are not adequately serviced."
At present, there are 13 Hi-Lo supermarkets, five of which are Hi-Lo Basix supermarkets island-wide. This is down from the peak of 15 stores in 2003.
Mr. Mahfood said there are no further plans to close down or establish any more supermarkets in Kingston.
He said the Ocho Rios location should be successful as it has a good location in a prosperous community and provides adequate parking. It is a full service supermarket with a wholesale component.
EXPANSION PLANS
The new St. Ann operation was established at a cost of $50 million. The planned branch in Port Maria is expected to cost $100 million.
With a turnover of about $3.5 billion, the Hi-Lo branch network has been expanded rapidly in recent years, although not as fast as their main competitors, SuperPlus. In a previous interview Mr. Mahfood said the chain aimed to expand its sales volume which could give it the scale of operations to enhance its profitability. But he added that the efficiency of the operation was as critical as the scale.
To control the cost of its expansion and enhance the likelihood of success, Hi-Lo had been growing its branch network by leasing existing successful family-run supermarkets and repositioning them in its network. The negative aspect of this strategy is that with a long term lease on the Hagley Park location, Hi-Lo is now trying to sublet the property.
