THE CHALLENGE
It was a bright, sunny winter day in 2009 when Gabriele Hunter welcomed the first customers to Pickles European Deli & Specialty Foods, her newly opened delicatessen shop in Sackville, N.B.
After months of research, planning and hard work, Ms. Hunter was looking forward to a smooth and successful launch. Pickles was the first and only delicatessen shop in the small university town selling specialty meats, cheese and condiments.
The business was primarily organized as a standalone deli counter with a small sandwich menu. Ms. Hunter had calculated that sales would be split 80-20 between takeout deli items, such as meats and cheeses, and ready-to-eat sandwich orders. But after the first couple of weeks, she realized that the split was the exact opposite.
Most customers were more interested in buying sandwiches made from the ingredients than the ingredients themselves. But the shop and its kitchen and systems were all geared to primarily selling deli items rather than sandwiches. The store did not have any seating or booths to accommodate customers, nor was it licensed to sell liquor.
Ms. Hunter had already made a significant investment in the startup and was now faced with spending even more to reconfigure the shop to meet customer demands.
THE BACKGROUND
Ms. Hunter moved to Canada from Austria in 1999. She got married, settled in Coquitlam, B.C., and started a family. In the early years of her marriage, she decided to be a stay-at-home mom.
In 2008, the couple decided to move to New Brunswick to enjoy a slower pace of life and raise their family in a smaller community. With the kids a bit older, she decided to explore opportunities for work and realized that she would be much happier and more fulfilled if she started her own business.
As she began her market research in the summer of 2008, she realized that, despite having a number of restaurants and other food outlets, the town did not have a European-style delicatessen shop.
Around the same time, a store in a prime location came up for rent. Ms. Hunter decided to take the plunge and set up a delicatessen business selling specialty items not otherwise available in Sackville.
THE SOLUTION
Rather than sticking with her original business plan, Ms. Hunter decided to listen to her clientele and tweak her business model.
Over the next couple of months, she moved away from a deli counter focus to a deli-style eatery. She ordered new booths and chairs, reconfigured the kitchen layout, obtained a liquor licence and expanded her sandwich menu.
She also realized that, given the small market size, it was critical to offer a changing menu of deli sandwich options to provide more choice and variety to her clientele.
THE RESULT
Ms. Hunter's agility in rapidly adjusting her business model to serve what her customers wanted has paid off, with a loyal and growing customer base. The sandwich business now makes up 95 per cent of sales, with the counter at just 5 per cent.
Despite her success, she understands the limited growth opportunities available in a town of just 7,500 people. She has already started to think about expanding her business via a licensing or franchise model. She believes that if a niche business in a small town can be successful, the same model could be replicated in a bigger setting.
Special to The Globe and Mail
Nauman Farooqi is a professor and head of the department of commerce in the Ron Joyce Centre for Business Studies of Mount Allison University.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.
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