SALT LAKE CITY -- Associated Food Stores here is trying to build passion in the independent retailers it serves.
Through its fledgling Retail Leadership Institute, AFS is seeking to instill in second- and third-generation food retailers the same kind of drive first-generation operators have so they are motivated to take over their family businesses.
"Too often that second and third generation lacks the passion an independent grocer needs," Alan Farrell, vice president, team solutions and support, told SN. "But with education and the greater sense of confidence that provides, their passion can grow."
Associated is trying to give that next generation a push -- at the same time it tries to provide a broader perspective on retailing, wholesaling and the industry in general -- through the institute, which is the brainchild of Rich Parkinson, Associated's president and chief executive officer.
"The independent retail channel is fundamentally a family-owned business segment, and our goal is to help the next generation understand it's a viable career option for them," Parkinson explained. "That generation, sometimes the second and sometimes the third, is often less interested in the family business than the previous generation was.
"But just from talking with the first two interns [who have gone through Associated's program], we've seen the enthusiasm they have for the industry, and they're now looking at their family businesses as a default opportunity."
The institute offers a three-step curriculum for up-and-coming grocers that includes the following:
1 Four months as an intern at Associated, working with each department in a predetermined rotation to understand the wholesaler's capabilities.
2 Four months as a student at the Food Industry Marketing program at the University of Southern California to boost professional management and communication skills.
3 One to two years as an employee of a chain operation, to gain a broader perspective on the industry and to glean new ideas to bring back to their own companies.
The program gives trainees the option of returning to the family business, staying with the company they go to work for or coming to work for Associated Food Stores in the corporate stores division or in retail counseling, Parkinson said.
"It's an attempt to give the next generation more familiarity with how things work here and to improve their understanding of the independent model itself," Farrell said.
Starting Early
Associated believes it's better to start that education process early, rather than waiting until they own their businesses, he added. "Solidifying the working relationship between the retailer and the wholesaler creates momentum, and if we can help these young retailers gain passion early on, it will give them confidence to build for the future and encourage them to look forward to running their stores and expanding.
"Giving them more exposure to our company will enable them to work better with us as they grow in the business. Once they go through our training program, they understand how our organization works and who's responsible for what, so as they grow their businesses, they'll know who to contact. It also gives them an opportunity to help us refine our system to help the members become more competitive in the industry."
The Food Industry Management program at USC -- limited to 35 middle-management executives per semester from all industry segments -- offers courses in strategy, leadership, communications and financial analysis, designed to provide managers with enhanced skills when they return to their jobs. Tuition is paid by supplier donations to the Western Association of Food Chains, with each employer covering the cost of housing, books and other fees for its employees.
While all students are required to return to the companies who sponsored them, the interns Associated sends are the exception and are encouraged to apply to another company at the end of their four months at USC to gain work experience before returning to their family businesses.
In that final phase of their internships, "they see how a chain operates, to learn what disciplines add value and what disciplines add red tape," Farrell said. "That enables them to walk away from those jobs with personal experience to help them determine how they want to approach their own business."
Returning to the family fold after their internship and offering suggestions to their parents can be dicey, Farrell noted, "but this program gives them a basis for their suggestions. Without education, ideas are just arguments. But if someone can reason with confidence about proposed changes, others may be more inclined to embrace those changes."
In the last two years, two interns have gone through the leadership program, Farrell said (see Page 11). Four other second-generation grocers are scheduled to start their internships at Associated next month, he said, "and ultimately we could have 10 to 12 people in the program at any one time."
Eligibility Requirements
To be eligible for the AFS internship program, candidates must have a minimum of one year's retail experience "and a desire to understand the process," Farrell said. They must also meet USC's requirements: a bachelor of science degree, a minimum of 60 semester units and a minimum grade point average of 2.7 on a 4.0 scale.
Interns typically begin their rotation with the wholesaler in August so their four months end before the year-end holidays to enable candidates to enter the USC program, which starts in January. Although Associated is available to help arrange retail positions for the interns once they graduate from USC, the decision on where they work may be based on what the interns learn from other students in the USC program about the companies for which they work, Farrell pointed out.
The first two interns both chose to work at the same company -- Haggen Inc., Bellingham, Wash. -- "but Haggen is just one of a group of companies that understands the value of having our people work at their companies for a while," Farrell said. "These USC graduates are the creme de la creme of the industry, and the talents they bring benefit the employer and his other employees."
Associated's internship program starts with the wholesaler itself "because we realized many of our retail members thought they were on their own," Farrell said. "They had many concerns, and they didn't know how to tap the resources and expertise we offer to help them resolve those concerns.
"Yet each time we were able to help one of them, he'd go back to his business with more energy and more confidence knowing he had somewhere to go to resolve his future problems."
Interns begin their four-month rotation at Associated by spending a half-day with Parkinson and Neal Berube, Associated's chief operating officer, where they sit in on an executive staff meeting to understand the larger picture, Farrell said.
They spend the next week with the human resources staff to learn about the company's alignment and how people are selected and trained; a week with perishables procurement managers at the distribution center; a week with category managers, learning about best practices and sitting in on vendor meetings; and a week with marketing and advertising executives.
During the subsequent four weeks, interns work at Associated's distribution center, learning to pick perfect orders, riding in delivery trucks to see how inbound and outboard orders are handled, working shifts as order selectors, spending time working in the produce coolers and working on the docks loading and unloading trucks.
The next two weeks are spent on general office functions (accounts payable, accounts receivable, payroll, information systems and insurance), followed by a week on retail support functions (store development, engineering, retail financing and real estate), a week on member retail functions (demographic analyses, best practices and labor scheduling), then four weeks working at Associated's corporate stores to develop leadership and merchandising skills.
At each step they work with the heads of the department and are also directed to talk to hands-on people, Farrell said.
They spend the final day of their internship at Associated with Parkinson, sharing what they've learned and offering suggestions on how the wholesaler might be able to do a better job for the retail stores and what might be improved in the progression to help the next intern.
Interns Primed as Operators
The first two interns making their way through Associated Food Stores' Retail Leadership Institute told SN they believe they will be better operators once they return to their family businesses.
John Badger and Brandon Peterson said they are anxious to implement some of the things they've learned in the last couple of years.
"I've definitely developed some good ideas that would improve our family business," Peterson said, "and my dad is looking forward to the time I'll be able to come back there and implement them."
Badger said he's already shared some of his ideas with his father, "but I want to wait till I get back there to try them, because if I'm not there to oversee them, they'll turn out to be different programs," he explained.
Badger and Peterson are both 27. Badger is the son of Lee Badger, chairman of Associated's board and owner of two Lee's Marketplace stores in Logan and Smithfield, Utah; Peterson is the son of Monte Peterson, owner of Peterson's, a 45,000-square-foot, single-store operator in Salt Lake City.
Badger, Associated's first intern, completed his four-month rotation at the wholesaler late in 2003, graduated from the Food Industry Management program at the University of Southern California in April 2004 and is in his second year working as an assistant store manager at Haggen Inc., Bellingham, Wash. Peterson completed his rotation at Associated in November, graduated from USC in April and began work in May as an assistant store manager for Haggen as well.
Badger said he had worked at his father's stores since he was 12 and always knew he wanted to go into the family business. He jumped at the chance to become Associated's first intern "because it gave me the opportunity to get a step ahead and to understand more about the industry. My father is not yet ready to retire, but this program gives me the opportunity to be ready when he does."
The four months he spent working his way through all departments at Associated "gave me a lot of respect for what those people do [for retail members] and an understanding of how the wholesale side works. When I worked on the warehouse floor, for example, I learned what it's like to select orders, as opposed to unloading orders at the store and complaining, because now I have a better understanding of where and why problems can occur."
When he ended his rotation, he said he suggested that Associated allow interns to sit in on vendor meetings -- a suggestion that was incorporated into Peterson's rotation, the company said -- and spend more time walking the floor with merchandisers.
He said he also suggested the program be a bit more personalized to emphasize areas in which interns may be weak while de-emphasizing those where they already have extensive knowledge. "Brandon's background is in meat, so he probably needed less time in that area, and my degree is in marketing, so I probably could have spent less time in that area and more somewhere else," Badger said.
The USC experience taught him a lot about strategies, he said, "but more importantly, I learned a lot about emotional intelligence -- how to understand and manage myself and how to communicate with people."
After talking with several students at USC who worked for Haggen and subsequently visiting the company, Badger decided that was where he wanted to complete his internship. "The Haggen's people I talked to said they really enjoyed their jobs, and I liked that. But I also felt Haggen's was similar to my family's business -- it's a privately held company that started small and grew, and the ability to learn how to grow from a small operation to a larger one made it seem like a good place for me to work."
Badger spent a year as an assistant store manager, overseeing the Center Store, then moved to the perishables side in May. He said he's not sure how much longer he will remain at Haggen.
"At first I thought I'd be here just one year, but after spending a year learning about Center Store, I'm now learning about the perishables side, and it's important for me to stay here and gain that knowledge before I go back to my family's business," he said.
Peterson signed on for Associated's internship program "because I thought it provided an excellent opportunity to get exposed to parts of the industry I wasn't familiar with. Once I began, I was inspired by the dedication of the people at Associated who serve the independents and make sure they are successful."
When he ended his rotation there, Peterson said he suggested that Associated consider outlining more specific criteria and expectations at each level of the company "because it was never clearly defined what the intern is supposed to take away from each experience," he explained.
What he learned from his time at USC was "an understanding of how people from other companies think."
He opted to take a job with Haggen not because of any influence from Badger, Peterson said, "but because the company does a good job being different and staying on top of the market it serves in terms of customer perception and service."
