BAA311 Business Strategy Case Study – Hill Street Grocer

Introduction and history (read more on www.hillstreetgrocer.com)
Hill Street Grocer is a name now synonymous with high‐end grocery and retail in Tasmania. They are a
family owned and run business, and food and family are central to everything they do. As per their
website, the company aim is:
“to delight each and every customer and go ‘above and beyond’ at all times to provide a
fun and enjoyable shopping experience in a beautiful environment. We embrace
excellence and difference and encourage team members to ‘have a go’, in order to grow
and succeed in a business they are proud to be a part of, and where they feel happy and
have fun. At Hill Street, we work hard to be the first choice in Tasmanians’ minds when
shopping for food. We aim to give our customers the best food shopping experience in
the world.”1
The Hill Street story commenced around 40 years ago, when John and Irene Varsimidis opened their
mixed corner store and takeaway in West Hobart.2
In 1994, their daughter Dianna married a
bricklayer, Marco, and together they took over running the store, which was then known as ‘Rite‐Way
West Hobart’.3
In 2001, this successful but small corner store was renovated and rebranded as Hill
Street Grocer, and additional family members (such as co‐owner Nick) were brought into the
business.4
Fast track to 2020, and the company operates 10 stores around Tasmania: Blackmans Bay,
Devonport, Dodges Ferry, Latrobe, Lauderdale, Longford, New Town, South Hobart, West Hobart and
the most recent store opening in Sandy Bay. This rapid expansion has enabled the European‐style
grocery chain to capitalise on opportunities in the external market and bring a wide range of
Tasmanian made and grown products to greater numbers of consumers.
Many of the now Hill Street stores were previously small, independent grocery outlets. In this sense,
the company used acquisition to expand their store network. In 2017, for example, the company
expanded into Northern Tasmania when they acquired the well‐established Brown’s IGA Store in
Longford. The store was renovated and converted into a Hill Street Grocer, re‐opening on Sunday 12th
of November.5
A similar strategy was used to convert the IGA Store in Latrobe into a Hill Street Grocer.
In other cases, the company have constructed stores on previously non‐grocer sites, such as the 2019
renovation of the former UniPrint in Sandy Bay.6
Being part of the Tasmanian IGA network (of independently owned and operated stores) gives
independent retailers like Hill Street access to volume buying and negotiating power.7
It also assists
Hill Street to offer consumers a wide range of household consumables, many of which are advertised

as catalogue specials. This complements their focus on “gourmet and locally sourced products,
delicatessen and fresh produce sales and in‐store experiences”,8
and serving their local communities.
To further complement their wide range of food and grocery products, in 2015 Hill Street added to
their core business when they launched Hill Street Home; a division which incorporates homewares, a
cheese room, kitchenware and an in‐house florist. This new range of products and experiences are
available in the business’s larger stores (e.g. Devonport and West Hobart). All Hill Street stores share a
contemporary and aesthetically pleasing format. This physical layout and atmosphere contribute to
the family‐friendly, and somewhat ‘up‐market’ shopping experience customers are increasingly
seeking. Some stores (e.g. Devonport) also house a café, which serves breakfast and lunch, and
provides takeaway options. Customers can now also pre‐order their café drinks and meals via the Hill
Street website.
Customers can also do their Hill Street grocery shop online and ‘click and collect’ their purchases
either in‐store or arrange home delivery within the company’s expanding delivery zones within
Tasmania. Customers can check if the business delivers to their suburb by entering their postcode on
the Hill Street website. In addition to selling pre‐prepared meals in store, Hill Street’s Catering service
offer a range of entertaining/function plaƩers, which customers can pre‐order online and pick up from
any store the next day.
The external environment and consumer trends
The introduction of ‘click and collect’ has transformed the retail industry and greatly benefited small
independent grocers and supermarkets, particularly during the COVID19 pandemic, when many
businesses were unable to fill the enormous demand for online orders. Consumers who were initially
reluctant to shop online, have slowly moved into this market. Although online grocery retailing is not
at the same scale as the overall online retail sector, a recent report from IBISWorld suggests industry
revenue will rise at an annualised 29.7% over the five years through 2019‐20, to total $5.8 billion.9
Not
surprisingly, the two biggest online grocery retailers in Australia are the two major supermarkets:
Coles and Woolworths.10
Consumer shopping habits are changing in other ways too, particularly in urban areas where
household disposable income is on the increase, alongside changes in eating preferences and lifestyle
choices. A growing number of businesses in Australia are tapping into this trend and catering to
specific niches in the market. Specialised food stores are thriving, and according to a recent Bankwest
report, were up by 2.1% between 2017 and 2018.11 Farmers markets are also rising in popularity and
becoming a routine outing for many locals and ‘inner city foodies’. In Tasmania alone, several farmers
markets are now well‐established, including the Farm Gate Market in Hobart, the Harvest Market in
Launceston, and the Devonport Farmers Market.12

Despite the advancements in community‐driven retailing, major retailers such as Coles, Woolworths,
Aldi and IGA still dominate the national supermarket industry, and (except for Aldi) have a strong
presence in cities, towns, and suburbs around Tasmania. According to their 2019 annual report, the
Woolworths Group operate over 1000 food stores in Australia,13 of which there are 30 in Tasmania.14
On the other hand, Coles, which belongs to the Wesfarmers Group, operate more than 800
supermarkets across Australia,15 but have around half the number of stores in Tasmania (i.e. 14 Coles
stores in Tasmania).16
Consumers increasingly want premium, speciality and authentic food, including access to high‐quality
products grown and sourced from their local area. This supports an overarching movement towards
sustainability, and pressure on business to support local providers and minimise food wastage. The
shiŌ towards understanding ‘food mileage’ and consuming food produced and grown within a close
geographic region has recently gained traction. “Health, wellness and the environment continue to be
key purchasing factors for Australian consumers” according to a 2019 report on the retail food
sector.17 The supermarket and grocery sector has also seen an increase in demand for convenience
products, such as ready‐to‐eat meals, pre‐cooked packaged meals, pre‐prepared deli options, and
food boxes delivered to the consumer’s home.
According to market research company Market Research Future, higher demand for on‐the‐go bakery
products and changing consumer preferences are driving the market for artisan baked goods, such as
sourdough, pastries and gluten‐free bread. 18 Hill Street have partnered with leading bakeries such as
Lipscombe Larder, Pigeon Hole Bakery and Jean Pascal Patisserie, to deliver breads and baked treats
fresh daily to their stores. In recognising the special place cheese holds in many consumers’ hearts,
the company launched a dedicated Wine and Cheese Club, which is marketed as an ‘opportunity for
like‐minded folk to experience and learn about all the different cheese’ available in Hill Street stores.19
To join, customers pay a one‐off membership fee, which is easily recouped via price discounts they
receive on cheese and wine purchase in‐store, or from 9/11 BoƩleshops if the customers are located
in Northern Tasmania.20
Marketing, branding and supplier relationships
Since their rebranding and major renovation in 2001, Hill Street have demonstrated a strong focus on
marketing and branding. The business uses social media such as Facebook and Instagram to connect
with their strong following of customers, promote their weekly and daily specials in‐store, share
recipes and tips, and other interesting content they develop and make available on their website.
The company have also expressed their strong commitment to sustainability and the environment. As
per their website,21 some of the ways the business is reducing their environmental footprint and

encouraging customers to do the same include: eliminating plastic shopping bags from their stores,
encouraging customers to bring their own containers when purchasing food from their Deli, recycling
cardboard and working with not‐for‐profit groups to offer a ‘deposit and return’ cloth bag library,
replacing plastic cutlery with wooden options and removing plastic straws in their stores, and offering
used cooking oil and waste to farmers to be recycled into bio fuels.
Because Hill Street pride themselves on stocking a wide range of Tasmanian produce using a
provedore‐type approach, developing strong relationships with suppliers (producers) is a vital
component of their strategy. The company sources as much of their produce from local growers,
which reduces the transit time and ‘food miles’.22 They have dedicated staff who are responsible for
quality control and ensuring the produce in store is of excellent and consistent quality. As part of this
commitment to total quality management, the business offers consumers a 200% refund and replace
guarantee if they are not completely satisfied with what they buy from Hill Street Grocer.23
Managing supply chains to deliver fresh produce and grocery items to several stores in a timely and
efficient manner is a key activity for any grocery or supermarket business. Tasmania’s major grocery
distributor, Statewide Independent Wholesalers, is co‐owned by Woolworths (via the joint venture
company Tasmanian Independent Wholesalers)24. This ‘unique for Australia’ co‐operative
arrangement is used by Woolworths, and some small independents.25 The long history Woolworths
has in Tasmania impacts on how well competitors like Hill Street can access produce grown and
distributed in the state. In Australia, Coles and Woolworths continue to dominate the supermarket
sector. Through their sheer size and vertical integration strategies, they command power over the
market and control supply chains. Many suppliers sell only to Woolworths, which means in Tasmania,
businesses like Hill Street are oŌen forced to go to the mainland to “compare prices and seek beƩer
deals”.26
Strong relationships with employees are also important to Hill Street Grocer and their ability to
provide exceptional customer service. The company offer a variety of career and work options, from
‘local school kids gaining experience in their first job, to our most senior staff, some of whom have
been with Hill Street for over fiŌeen years!’.27 The company organises employees according to the
area of the store or business they work, for example: fruit and vegetables, deli, counter, stock,
managers and support centre.
For many years Hill Street have supported the community, through sponsorship and active
participation in community events and initiatives. In recent years, the company’s focus has shiŌed
specifically to the welfare of children. As per their website, Hill Street is working with the Australian
Childhood Foundation to raise funds to create Tasmania’s first specialist trauma recovery centre for
children.28

Conclusion
Hill Street Grocer are well‐regarded as a Tasmanian success story for their commitment to Tasmanian
produce, sustainability and the environment, and for their baƩle against the big retail giants. In his
2015 novel,29 author Malcolm Knox cited Hill Street as a rare example of a family business surviving
against the odds.30 At that stage, the company had around three stores in Southern Tasmania. They
have grown rapidly since then and are considering further expansion. Other businesses, such as
Salamanca Fresh, have also expanded their presence in the Tasmanian independent grocery sector by
opening new stores and acquiring existing ones. According to Hill Street co‐owner Nick Nikitaras, who
was quoted in a recent newspaper article, “It’s good if they do well and it’s good if we do well. It’s
important the smaller independents do beƩer. We have to give people a reason to shop locally and
independently”.31

Instructions
You may supplement the knowledge gained from this case study with your own research on the
business and the industry (or industries) in which they compete. Please do not contact any staff or
managers from Hill Street Grocer either electronically or in‐person. We do not expect you to have
visited a Hill Street store to engage with this assignment – use only freely available sources (online or
in print) for research purposes.
No financial information could be obtained for the purposes of writing this case study. This is
recognised as a potential gap in knowledge, however, even in the real‐world, strategists never have all
the information they would like or need to make decisions. For the purposes of this assignment,
please make reasonable assumptions regarding Hill Street’s financial resources and position.
If you have questions, post to the Ask the Class Discussion Board; or, speak to your lecturer.