History of Excellence
By Jenny McTaggart
PG looks back on its past 15 Retailers of the Year, many of which have strong ties to the original 'Progressive Grocers.'
As Progressive Grocer crowns Harris Teeter 2012 Retailer of the Year in the midst of its ongoing yearlong 90th anniversary celebration, it seems appropriate to take a look back at past Retailers of the Year winners.
And though it would be intriguing to be able to examine 90 years of individual retailers' successes across the industry, the history of excellence among previous Retailers of the Year — a coveted award that PG began bestowing in 1997 — is worthy of recounting as part of our nine-decade industry retrospective.
While much has changed for many of these retailers throughout the award's history, the successes of the country's top grocers can still be traced back to the legacies of their founders and past executives, all of whom are part of the rich history of the original "Progressive Grocers."
1997: Giant Food
The company was dealing with challenging union negotiations at the time, but aimed to improve efficiency with minimal job cuts while investing heavily in developing freestanding pharmacies in inner-city locations, as well as working on a next-generation store prototype.
The article also recognized the chain's historical feats, including hiring Esther Peterson, a former labor lobbyist, activist and outspoken consumer adviser to presidents Kennedy and Johnson.
"For years, people asked my father [Publix founder George W. Jenkins] the same question hundreds of times — would he ever consider being acquired? I'll tell you the same thing my father told me," said Howard Jenkins, chairman and CEO, in 1998. "He said he'd rather cut his throat than sell Publix."
The nation's sixth-largest chain at the time, Publix focused on the "basics" — customer service, community relations and commitment to employees.
1999: Ahold USA
Under the tutelage of 40-year industry veteran Bob Tobin, Ahold USA — encompassing Stop & Shop, Bi-Lo, Giant Food Stores, Giant Food and Tops — had become a "model of synergism — where everyone from the CEOs on down park their respective egos at the door; where five seemingly disparate operating companies constantly communicate, encouraging a steady flow of knowledge throughout the organization."
Ahold Support Services, set up to help assimilate the individual retailers' operations, tackled issues ranging from produce and private label, to technology, trade relations and supply chain initiatives.
Walmart was becoming a global powerhouse while still following founder Sam Walton's principles, including the idea that the real bottom line lies in the attitude that "the customer is No. 1."
When Tom Coughlin, then-president and CEO of the Walmart Stores Division, was asked, "What do you see as the biggest challenge facing Walmart today?" he responded: "Near-term, it's an evolving process in developing what we refer to as our store of the community. Having [nearly 3,000] stores, it becomes mighty easy to try to cookie-cutter assortments into stores. And it's just not the right thing to do."
Coughlin expected that Walmart would be doing a quarter-trillion dollars in business in a couple of years. Yet he admitted, "I live in fear of not doing all that we should do and all that we can do to be No. 1. Staying at the top is harder. You have to take a customer base that is changing and be able to change with it. And yet you have to stand for bedrock principles on which the company was founded."
2001: Stater Bros. (West Coast) / Ukrop's (East Coast)
With a store count that was just topping 150 in its 65th year of operation, Stater Bros. was upholding the low prices, staff development and civic involvement that had long been its hallmarks. Chairman, President and CEO Jack H. Brown was lauded for his leadership not only at retail, but also in local economic development.
The company had capitalized on a major growth opportunity two years earlier, when the government ordered Albertson's to sell off more than 100 supermarkets in connection with its acquisition of American Stores. Stater Bros. snapped up 33 Albertson's and 10 Lucky stores in Southern California.
In Virginia, Ukrop's was recognized for "raising the bar for the industry with meticulous stores, innovative merchandising, customer service, exemplary employee relations and outstanding corporate citizenship." In an age of cutthroat competition, 24-hour shopping and supersized supercenters, Ukrop's was seen as a throwback to simpler times. Closed Sundays, late at night and all major holidays, and refusing to sell beer and wine, it had maintained its position as the market leader, with a share approaching 41 percent — and growing — despite the encroachment of Kroger and Walmart on its turf.
2002: Giant Eagle
Hailed as being "the ideal competitive combination of a retail chain and corporate wholesaler that offers the great procurement power and the additional size, scale and distribution efficiencies of a voluntary wholesaler," Giant Eagle took wing as a powerful local brand and industry leader, thanks largely to the vision of the chain's then-chairman and CEO, David Shapira.
At the end of its fiscal year in September 2003, Hy-Vee's 220 locations had reached $4.2 billion in sales, with an average same-store growth of 3.5 percent. "We have Walmart supercenters in the markets of almost 70 percent of our stores," noted former CEO Ron Pearson. "And we've had record sales increases for the last four years."
Pearson pointed out that the autonomy of its employees was key to the company's success. "It rewards people for making decisions," he said. "It makes them feel good about the ability to make decisions, because it's not only the store director, it's everyone throughout a particular unit."
2004: Food Lion
With more than 1,200 stores in the Southeast and Mid-Atlantic regions, the 47-year-old retailer was working to transform from a cookie-cutter, low-priced operator into a market-specific chain willing not only to make a statement with freshness and friendliness, but also to experiment with revolutionary retailing. It certainly helped that Food Lion — the main banner of Delhaize America, the U.S. division of Brussels-based Delhaize Group — shared best practices with its sister banners, Hannaford Bros. in the Northeast, and Kash n' Karry and Harvey's in the Southeast.
Whether the Chandler, Ariz.-based company paid for an employee's business or language classes, donated uniforms to a community soccer league or hosted a weekend event to raise money for a local charity, its prevailing belief was, whatever you give, you get back tenfold. By 2005, the then-73-year-old retailer had 155 stores encompassing four distinctive formats, and was bringing in around $2 billion in sales.
"When we prosper, Arizona prospers," noted Eddie Basha Jr., the chain's chairman and CEO, whose second-generation leadership had helped keep the family firm intact.
By most measures not a small company, Meijer was still moving like the most entrepreneurial of startups, thanks to its leaders' leadership and vision. PG called the company "a modern-day version of the quintessential family-owned grocer, writ large on the supercenter canvas and supported by many of the latest technological tools, but still driven by traditional maxims of integrity, thrift, and deep knowledge of, and empathy for, the needs of shoppers."
In 2006, Forbes listed Meijer as the nation's 10th-largest private company, with estimated revenues of $13.2 billion in 2005, up 5.6 percent from the year before.
Safeway's work in health care reform had attracted national attention, including from one governor who sought advice from Chairman, President and CEO Steve Burd. Meanwhile, October 2006 marked Safeway's third consecutive quarter of identical-store sales growth across all 10 of its operating areas, and the 11th consecutive quarter of market share growth.
Burd and his team saw an opportunity to differentiate themselves from other players in the supermarket channel, with a plan to place the consumer at the center of all strategy development and decision-making, and transform stores into places where shoppers could turn to for "solutions for life."
The retailer brought its store-brand program to new heights with O Organics and Eating Right. In addition, its Lifestyle store format, showcasing high-quality perishables, as well as dry grocery items tailored to local preferences, reached a milestone when the 1,000th Lifestyle store opened its doors, representing about 60 percent of the retailer's total store count.
Having perfected its retail strategy with a laser-focused, customer-centric mission, the nation's largest pure-play grocer controlled about 9 percent of the U.S. retail food industry at that time; only Walmart surpassed it.
By 2008, Kroger was operating nearly 2,500 supermarkets and multidepartment stores under a variety of retail brands in 31 states, as well as nearly 800 convenience stores and 400 jewelry stores. Meanwhile, the company was positioned to exert control over its profit margins in a variety of key categories, thanks to ownership of 42 food-manufacturing plants in 17 states.
"I like to dance, and it's a good thing, because in this environment, the need for flexibility, and the ability to move in the ways in which the customer wants us to move, [are key]," said Chairman and CEO David Dillon, who noted that the company's overall strategy was "about the 'Four Keys': price, the shopping experience, employees and products."
2009: Jeff Noddle
The retail veteran started out bagging groceries in his hometown of Omaha, Neb. His grocery management career began at Omaha-based Supermarkets Interstate. Noddle then spent the next six years working in Miami; running a store in Lake Charles, La.; and serving as a sales director in Los Angeles. In 1976, he accepted a position at Supervalu, where he would spend the balance of his career.
In 2006, Noddle's highly publicized $17.4 billion deal tripled the company's size and vaulted it to the position of the nation's third-largest grocer, transforming it from a $19 billion entity with 50,000 associates to a $44 billion company with 200,000 associates, and flipping its former 50/50 balance of distribution and retail businesses to an 80/20 national retail powerhouse.
PG noted that the retailer "thrives on the countless talents and unique skills of its many diverse and dedicated partners, who embody its commitment to excellence and ultimately provide the regional retailer with a powerful competitive advantage in its extremely competitive Texas home turf."
H-E-B's success was predicated on four strategic pillars — service, quality and value for its customers; fostering an employer-of-choice culture; stable long-term sales and profits; and building authentic bonds with local communities.
H-E-B grew its market share from about 39 percent in 1989 to an estimated 55-plus percent in 2010 — no small feat, considering the gains were achieved during the same 20-year time frame that Walmart site-saturated Texas with some 400 stores.
Serving more than 5 million customers weekly in one of the nation's most challenging, densely populated and competitive geographic corridors, the once struggling concern grew to become the largest retailer-owned co-op in the United States, with sales of $11.8 billion.
"Wakefern Food Corp.'s 230 member-owned and corporate stores have steadily chiseled out and aggressively retained one of the strongest market share penetration levels of any retailer within or outside of its core metro New York/New Jersey/Philadelphia turf," PG noted a year ago.
At the heart of ShopRite's success was the pragmatic, forthright and highly respected Dean Janeway, president and COO of the co-op's Keasbey, N.J.-based wholesale, merchandising and distribution arm Wakefern, who retired at the end of 2011 after more than four decades with the company.
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