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NUMERO UNO MARKET SHOPPER'S SHUTTLE SERVICE CASE STUDY
NIJMERO UNO MARKET SHOPPERS' SHUTTLE SERVICE Numero Uno Market is a small and growing chain of supermarkets, principally located in the inner city areas of T=os Angeles. It is a privately owned operation that has bolstered its business and profits through innovative marketing of its products and services. A key part of that marketing is its Shopperst Van Shuttle Service. According to its General Manager, by capitalizing on the availability of public transportation services and the high concentration of transit dependency in the inner city, Numero Uno has implemented a unique transportation service for its customers. The service is so successful for the customers and the Market, it is being replicated by supermarket competitors. The most successful operation of this service originates at the Peterson Blvd./San Pedro Street location which is in the South Central area of the City of Los Angeles. The nine vans that operate from this location are providing complementary transportation services to the Los Angeles County Metropolitan Transportation Authority, boosting Numero Uno sales and profits, employing scores of people that might otherwise be unemployed and all at no expense to public taxpayers. ORIGIN OF THE PROGRAM The owner of Numero Uno Market some years ago recognized the difficulty for a majority of his transit dependent customers to buy and then carry their groceries home without their own automobile, very often with one or more children and at a cost and ease that could not be met by the public transit system. It made sense to him to provide a service that would facilitate customers shopping at his market often and preferably over other competitors. Thus the van shuttle service from the store to home was initiated. Over the past seven years the service has been increased as the demanc! and need for shoppers to be taken home has increased. Initially, the market owner attempted to use full size school buses to transport his customers home. This proved to be unsuccessful due to the size and lack of maneuverability of the buses, maintenance and operation costs, and having too great capacity for the average runs being made. Numero Uno began to better provide the service by purchasing and remodeling used vans from hotels, and car rental agencies. Numero Uno's fleet has increased from four vans six years ago to eleven vans currently operating within the system. The only criterion for being able to ride the vans was for the customer to have purchased at least $30 in groceries. There was no cost to the customer for the service. 1
CURRENT PUBLIC TRANSIT SERVICE AND AREA DEMOGRAPHICS Since the service has been initiated based on the availability of public transit and lack of access by the majority of residents to their own automobiles, it is important to know what the current services and demographics are in Numero Uno's immediate market area. Using a radius of approximately 2-miles from the Jefferson Numero Uno market and analyzing ~ zip codes within that radius, evidence is provided to support the thesis for Numero Uno providing this service. There are 77,212 households in the area, of which 46,698 (60.5%) are Hispanic. The total population is 294,231 of which 10S,425 work and 65,052 have access to their own car or carpool. That means that 78% of the population is dependent on some other means of transportation than their own vehicles. In addition, the median income of all households is $15,001, with 58603 (75.9%) of households bringing in less than $30,000 annually. (1) Numero Uno Market is located at an intersection where two Los Angeles Metropolitan Transportation Authority (MTA) bus lines also intersect and provide services East/West and North/South, and one other East/West line is 1/2 half mile north. These lines (51 and 102, and 14) average 10 minute headways and provide multiple transfer points with other major MTA routes. The 51 and 14 lines according to the MTA planning department bus routes of the MTA. (2,3) CURRENT OPERATIONS 1' are in the top fifteen percent of the 200 The current operations of the van service are fully integrated into the market's operational plans and budget. The van service operates as follows: A shopper arrives at the market by walking, being brought or dropped off by automobile or public transportation. When a customer purchases $30 or more in groceries, he/she can then take one of the vans from the store directly to his/her front door, still at no cost. · Van operators decide the routing for each trip as they load their customers, bags and other customer family members. A typical van may carry 14 seated passengers along with approximately thirty-two grocery bags. The vans are in communication with a dispatcher via walkie-talkies. Peak periods of use are usually 4-9 p.m. Monday through Friday. Saturday and Sunday afternoons are also very heavy. Average distance for trips is 3-S miles. However, vans have delivered customers as far as twenty miles from the market. 2
To expedite the shopping trip for customers who use the van service, operations within the market are systematized to minimize waiting time for the customer: To begin with, during peak periods twelve checkstands are open. Each stand has a checker, a bagger and an additional banner to escort customers to cars, MTA buses or the vans. Secondly, shopping aisles are wider (~-feet vs. typical 6-7 feet in width). This allows for easy and quick movement of customers with children to go up and down aisles. · Finally, shelves are stocked all day long so that food merchandise is always readily available for the customers. There are four Numero Uno supermarkets in the Los Angeles area with three more planned for opening in 1998. Two will be in the City of I,os Angeles, (Pico & Alvarado and Figueroa & gist Street). The third is in the city of Pomona (east end ~ . . . ~ _ ~ .. .. Or loos Angetes county'. ot tnose currently open, one is ten blocks away from the 701 Jefferson site, another is near Dodger Stadium in Cypress Park and the newest store is in the city of South E! Monte. There are nine vans operating out of the 701 Jefferson location. Vans travel anywhere the shopper needs to go. The General Manager stated the average distance is 3-S miles. The new South El Monte store has two vans assigned to it at the present time. It may not be as successful as the 701 location primarily due to the lack of good public transportation in South E} Monte, according to the General Manager. COSTS AND USAGE The usage of the service provided is estimated to be twenty-seven thousand van trips per year, transporting over one hundred and fifteen thousand patrons to their homes. Table A reflects the most recent counts/estimates taken of patronage on the van service. It also reflects cost calculations for each trip and passenger. The Nonhero Uno market on Peterson is a very successful operation, principally due to its location and interaction with public transportation and its store to home van shuttle service. Key characteristics and facts on this store include: · It is one of the top five revenue supermarkets in all of Los Angeles, with a volume of $26 million a year. 3
TABLE A NUMERO UNO SUPERMAR~h'T VAN SERVICE PROFILE (4) Day | Shift | Trips | Vans | Psgr. | Total | Week | Year | Y . Cost Time per per per Psgr. Psgrl Psgr] PsgrJ S h if t S h if t Tri p Day Tri ps Tri ps Tri p MONDAY 1 8a-4pm 1 0.5 12.5 12.5 166 1 21 ~1 10812/ 4-9pm 6.5 4.5 5.0 146 55.5 2831 TU ES. 8a-4pm 10.5 2.5 2.5 66 212/ 10812/ 4-9pm 6.5 4.5 5.0 146 55.5 2831 WEDS. 1 8a-4pm 1 0.5 1 2.5 1 2.5 1 66 1 21 ~1 10812/ 4-9pm 6.5 4.5 5.0 146 55.5 2831 THURS. 1 8a-4pm 1 0 5 r2 5 1 2.5 ~ 66 1 21 ~1 10812/ 4-9pm 6.5 4.5 5.0 146 55.5 2831 FRIDAY 1 8a-4pm 1 05 1 2.5 1 2.5 1 66 T 21 ~1 10812/ 4-9pm 6.5 4.5 5.0 146 55.5 2831 SATUR. ~ 8a-10a ~ >.5 ~ 4.5 ~ 3.0 ~ 34 ~619/ T 30950/ 1 0-8pm 13 9.0 5.0 585 128 6400 SUNDAY r8a-10a 1 .5 1 4.5 1 3.0 1 34 1 619/ 1 30950/ 1 0-8pm 13 9.0 5.0 585 128 6400 TOTALS 1 r 1 1 1 1 2298/ T 115960 1 $:I.16p . 1 1 1 1 1 1 534 1 26955 1 $927t Shift Time: Those periods in which van service provision and utilization averages vary. Trips Per Shift: Derived from dividing the number of hours (in minutes) in a shift and then dividing by 45 minutes---the average time for a van round-trip. Vans Per Shift: Based on past year's average number of vans in service during designated time shifts. Passengers Per Trip: Conservative average of number of passengers per trip during peak and non peak shifts. Total Passengers Per Day: Trips X Vans X Passengers Per Trip. Total Weekly Passengers: Combination of M-F (Fives times weekday total) and Saturday/Sunday (Two times weekend day total). Total Weekly Trips: Combination of weekday and weekend daily trips. Yearly Passengers: Combination of weekday weekly totals X 51 weeks, and weekend weekly totals X 50 weeks. Yearly Trips: Combination of weekday weekly trips total X 51 weeks, and weekend weekly totals X 50 weeks. Yearly Cost Per Passenger: One percent of Annual Sales Volume divided by Total Annual Passengers. (.001 X $25,000,000= $250,000/1 15,960) Yearly Cost Per Trip: One percent of Annual Sales Volume divided by Total Annual Van Trips. (.001 X $25,000,000= $250,000/26,955) 4
The store is has 32,000 square feet with only 16,000 square feet of sales floor. N,~n~ero Uno employs 175 people at this location. This is compared to an average of 76 employees in supermarket chains which are two to three times larger in retail space. The store does have 165 parking spaces in its parking lot. Less than 1% of the gross volume pays for all van operators and the maintenance and operational costs of the van service. There are no public funds used for this operation. Benefits It is very clear that several entities have and are benefiting from this service, and will benefit even more in the future. 1. Numero Uno Market benefits through its ability to retain and expand on its customer base and increase its profits. 2. Residents in the area around Nonhero Uno stores benefit from employment opportunities. 3. Transit-dependent customers benefit from being able to accomplish a basic need, with minimal difficulty and cost. 4. The MTA in Los Angeles benefits from being a part of facilitating a specific need of these transit-dependent shoppers (in unison with Numero Uno's service) and thus having a more favorable image and credibility with at least this segment of the community. MTA may also be benefitting in a small amount at the fare box, by those who use public transit vehicles as the means to get to the Numero Uno market. These trips may not otherwise be taken on the MTA. (3) 5. Other residents of inner city areas of Los Angeles are beginning to benefit as other supermarket chains are replicating the service of Numero Uno. 6. 7. The MTA is looking at incorporating more of its bus operations and intermodal transit centers at shopping centers throughout its service area. In inner city areas, these centers are usually anchored by supermarkets. (3) Taxpayers are benefitting as more people are employed and transit- dependent needs are being met, even in small increments, tax dollars can be utilized in other areas of public need. 5
HEY ELEMENTS OF SUCCESS The General Manager of Numero Uno made it very clear that the "key" to their operation is good. accessible. reliable public transportation for the shoppers to get to their respective stores. The MTA, though bombarded with charges of providing less than enough bus transportation services for residents in Los Angeles, does have a basic transportation system in inner city areas that benefits transit-dependent consumers and employees, and private sector businesses and corporations. This basic transportation system of buses has been interwoven into the business plan of one private entrepreneur to create a successful operation that is benefitting the greater community being served by that business. That business plan incorporates: 1) Recognition of needs of the consumer and potential consumers of Numero Uno Market. 2) Identification of resources (MTA) available to help address those recognized needs (better transportation services). . 3) Creation of niche marketing within the business being operated to attract consumers. 4) Capital investment necessary to facilitate meeting the consumer transportation needs and the entrepreneur's desires. 5) Investment in the community through employment, fair pricing, philanthropy, good service and being involved in other community projects, programs and needs. Numero Uno is continuing to expand its supermarket chain. The experiences and successes of its current business operations are directing its expansion program. Numero Uno intends to repeat its formula for success by identif ding areas for expansion that meet the niche market segments criteria desired, and most importantly have access to good, reliable public transportation. The I os Angeles County Metropolitan Transportation Authority is clearly a part of this business expansion for Nonhero Uno and those other chains who are now replicating the store to home shuttle services. 6
REFERENCES 1990 US CENSUS DATA, Database C90STF3B; Summary Level: ZIP CODE. 2. Los Angeles County Metropolitan Transportation Authority (MTA) Customer Relations Department bus schedules, system maps. Interviews with MTA staff from Planning, System Analysis, Customer Relations and Area Teams. Data and information based on in person interview and discussions of operations with General Manager. 7
