Born in a grocery cart
Mourelatos's overnight success was forty years in the making

From outside, Mourelatos grocery stores look pretty much like traditional outlets. They tend to have big parking lots, and three of them in are located buildings that used to house Steinberg stores.

But if you want to know how this small six-store chain has carved itself a niche in Quebec's $10.5 billion grocery market, you just have to walk in the front door of the company's Ville St-Laurent location.

The first products you'll see are niche items like Polish bottled water, Greek cheese and Italian sausage that are targeted to the tastes of local community.

"We adapt our merchandise for each of our stores," said Efty Mourelatos, the company's CEO. "Look at this lamb," he said, pointing to generous slabs of meat. "Ville St-Laurent has a large ethnic population and they love lamb. You would never see that at our downtown store."

You could say that Efty was born in a shopping cart. His father Peter was co-owner of Mourelatos Brothers, a mid-sized grocery store that operated between 1956 to 1980, moving several times during that period.

Efty grew up in the business. He has been stocking shelves and doing odd jobs at the store level ever since he can remember. In 1985 he joined the company full-time, followed by his young brother Chris a few years later and their sister Cathy. The three siblings work as a team.

By 1990 Mourelatos was till a single 4,000 square-foot outlet operating on Notre-Dame street in Laval. But a series of expansions followed, and by 1995 the store had grown to 8,000 square feet. That year, Efty made a crucial decision.

Mourelatos had been scouting numerous locations for a second location. But the one that attracted him the most was a 25,000 square foot ex-Steinberg store on St-Jean Boulevard in Pierrefonds.

It was a huge gamble. Mourelatos had to sign a 15-year lease for a store that was three times the size of their current operation. Worse, the store was in a new neighborhood where he had never operated before. In addition the shelves had to be filled with costly inventory, with no certainty that sales would follow.

"If I had sat down and thought about what I was getting into, I probably would never have done it," Mourelatos said. "It was an enormous risk and a lot of work."

In the end, Mourelatos needn't have worried. The store was an instant success, and generated profits from the beginning.

Fueled by Mourelatos innate ability to listen to his customers and anticipate their demands, store racks were immediately stocked to take into account the Pierrefonds rich ethnic diversity.

In what was to be a Mourelatos trademark, a special emphasis was placed on the fruit and vegetables sections.

"While for us these stores are a big undertaking, in today's grocery market, they are relatively small," Mourelatos said. "That means shoppers can come into the store, buy what they want, and get out quickly."

Today, while the store's customers' average orders are smaller than those in the larger supermarket chains such as Metro and Loblaws, many customers come in two or three times a week.

"It was like hugging a rocket," Mourelatos said of the Pierrefonds store's success, whose profits financed new locations in Laval, LaSalle, St-Laurent in quick succession, and earlier this year a 10,000 square foot outlet on St-Catherine Street.

The new stores built on the St-Jean store's success. Decision-making was decentralized, with three of the managers motivated through minority equity participation.

But Mourelatos's St-Jean success was quickly tempered, when soon after its opening, Ontario food giant Loblaws set up a huge outlet, more than twice the size of his own, literally next door.

"It was a bit of a shock," Mourelatos said. "But we've been able to maintain sales, and the store is still doing well."

While Mourelatos has been producing circulars and radio ads for several years, recently the company has been experimenting with different media, including billboards on highways, buses and in Metros.

According to Dominik Dloughy, who covers the Quebec grocery market for Dloughy Merchant, the success of smaller stores like Mourelatos in standing up to larger competitors should come as no surprise.

"A lot people don't like those huge monster stores," Dloughy said. "Quebec is a much more service oriented market, than the rest of Canada. There is a stronger tradition of independent operators here."

In fact Mourelatos does not see Loblaws as a competitor at all. "They are a destination store. But not everybody has the time to walk through those huge parking lots and long aisles," Mourelatos said.

"A lot of our customers shop at Loblaws. But they come to us for convenience, our fruits and vegetables, and our specialty items," Mourelatos. "We don't even try to take them on directly. We try to complement them."

 

Photo caption: According to Efty Mourelatos, shown here with his brother Chris, the company has managed to carve itself a niche in Quebec's competitive grocery trade through targeted price cuts and merchandise selection.

 

 

Sidebar: Secrets to success

o Mourelatos, his brother Chris and their sister Cathy grew up in the grocery trade, and learnt the business from the ground up.
o The company took a big risk by opening its St-Jean boulevard store, which was three times the size of its existing outlet.
o Mourelatos stores have extensive fruit and vegetable sections. But merchandise at each stores is targeted to the tastes of the host communities.
o Rather than take on the big-box outlets directly, Mourelatos tries to complement them. Its outlets are smaller, so customers can get in and out of a store faster, which minimizes shopping time.

 

 

peter@peterdiekmeyer.com

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