"Walmart will have an effect on us," John Zagara said. "The question is how much of an effect and what happens after six months? How well prepared are we to handle our customer when they tire of that big box experience? How can we thrive, not just survive?"
CLEVELAND HEIGHTS, Ohio -- At Zagara's Marketplace, shoppers who can't find something they need can request it at the customer service desk.
Store President John Zagara will hunt it down and special-order it -- even if the person who asked for it ends up being the only customer who wants it.
"That customer is going to come in and buy that tea she wanted and is going to buy other items when she's here," he said.
That pledge to "exceed our customers' expectations" has helped Zagara's Marketplace outlast other family-run grocers since it was founded in 1936.
He said his father always told him, "If you listen to your customers, they'll help you run your business and make your business better."
But a new competitor coming next summer -- a 180,000-square-foot Walmart Supercenter that will be open 24/7 -- has prompted Zagara to sharpen his focus on winning over his customers.
"Walmart will have an effect on us," he said. "The question is how much of an effect and what happens after six months? How well prepared are we to handle our customer when they tire of that big-box experience? How can we thrive, not just survive?
"They're going to take some business from me when they open, because people will want to see what it looks like, they'll want to check it out. There's an incredible attraction there, not only for price but the breadth of product they carry. Whether Walmart can keep them after 90 days or six months is the real battle."
To welcome customers back after they've seen what Walmart has, and to reinforce the idea that his store is different, Zagara has launched an effort called ZMP1, for Zagara's Marketplace (All for) One.
Signs posted throughout the 42,500-square-foot store remind employees to "Say hello to your co-workers," "Smile at everyone," and "Discuss ways to work better together."
"What tactics can we use to compete against Walmart? They're a $200 billion company, we're an $18 million company. There's no comparison," Zagara said.
"We're not about price, we're about value and delivering quality and customer service. We're going to get them with smiles and 'Thank yous' and by taking care of them."
From baggers to department heads, "they have to understand that they have the ability to make a difference to that customer and to other shoppers," he said.
"Getting ready for Walmart is more about communication and cultivating loyalty. It's all the basics we sort of lost in the shuffle. There's a new normal now.
"We can't be the same old supermarket," he added.
His younger sister, Mary-grace Healy, the store's informal ambassador, customer service specialist and all-around "gofer," agreed.
"First of all, the employees here are fabulous," she said. "We have a buyer who goes down to the market and picks out the best fruit. Our meat is cut fresh every day, and you can't beat it.
"Don't try the catering," she joked, "because if you eat one bite you won't be able to stop, it's so good."
Not only have shoppers followed the family from store to store, longtime customers remember when she and her brother pitched in as students and often ask about their children by name, she said.
"I think if you treat your customers right, they'll keep coming back," she said. "It doesn't matter what Walmart does; they can't beat the knowledge and friendliness of our employees."
When Frank Zagara moved the family store to Cleveland Heights in 1988, there were four other grocery stores in town: DiVita's Bi-Rite, Russo's, Tops and Heinen's.
John, a 1982 Mayfield Heights graduate, joined the family business in 1989 after his elder brother died.
"We've always competed against bigger operators," he said. "My father competed against A&P and Kroger. A&P was doing a billion dollars in sales in the '30s! Kroger was up here in the '70s.
"The difference now is that there are more players in the market, more players than ever selling food." From Walmart and Giant Eagle to Marc's and Whole Foods, to Walgreens and CVS, "it's all clawing away at our core business," he said.
As an independent grocer competing against a nonunion employer like Walmart, Zagara's has less wiggle room to cut prices below wholesale costs.
Robert Grauvogl, president of United Food & Commercial Workers Local 880, which represents Zagara's workers, said: "Zagara's has long been a responsible employer, caring as much about his employees as his customers.
"Local 880 members working at Zagara's . . . provide higher productivity and better service than nonunion employees who lack the protections and benefits that a union provides. We are confident that [they] will more than meet the challenges of 2013."
The way Zagara sees it, the new Walmart Supercenter will pull customers from other big-box stores, including other Walmarts in Bedford, Steelyard Commons in Cleveland, Macedonia and Aurora.
Also, there aren't many 24-hour businesses in the neighborhood because Cleveland Heights, University Heights, South Euclid and Shaker Heights are mostly residential.
"It's not like there's a shift ending at the local Ford Motor plant with workers who might buy groceries on the way home," he said.
Stacy Mitchell, a senior researcher at the nonprofit Institute for Local Self-Reliance in Minneapolis and author of "Big Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses," said many longstanding grocery stores have fallen after a Walmart Supercenter comes to town.
"Even very popular grocery stores sometimes close because the local market just isn't big enough to support that much grocery capacity and Walmart can afford to lose money at a new store indefinitely -- basically outlasting the independent," she said.
Among the independent grocers who have managed to survive in Walmart's shadow, "the keys seem to be communicating your value to your customers, including the substantial benefits to your local economy and community of choosing a locally owned business instead of a chain," she said.
"It's also important to remind customers that the store won't be there if they are not there to support it.
"Sometimes people take a local business for granted. They assume they can start doing a lot of their shopping at Walmart and still count on the local grocer for specialty items, extra services and special orders. But if you want those choices to be available, then you need to make sure you are supporting that business week in and week out."
Deanna Bremer Fisher, executive director of FutureHeights, which promotes civic engagement in Cleveland Heights and University Heights, said: "Zagara's is a well-known and well-regarded business with a lot of loyal customers in the Heights, they contribute to local causes, and I think people appreciate that. I'm hopeful that our residents will recognize that difference and continue to support them."
Earl and Adella Blount of Cleveland Heights say they've shopped at Zagara's for more than 30 years and have no plans to switch to the new Walmart.
"We're not worried about it, because we know the people who work here and they're your friends," Adella said, smiling as a bakery worker walked over with a loaf of bread to replace the one in her cart. "He knows I like fresh bread and brings me a fresh loaf whenever he sees me," she explained.
The new Walmart "is going to bring traffic in from all over, but it's not going to drive that many customers away from this store," her husband agreed.
Jamie Owen of Cleveland Heights, browsing the cereal aisle, agreed.
"They've kind of got a personal touch here," he said. "It's a large family grocery store, it's closer, they have a variety of stuff and they do a heck of a job keeping this place clean.
"Fortunately, my wife and I are in a position such that price is not always the deciding factor in the food we buy," he said.
They split their food shopping between Zagara's and Whole Foods, buying their favorites from each store, "and Walmart's not part of that at all."
Follow me on twitter: @janetcho