SAN MATEO, Calif. -- For a group of West Coast independent retailers, running their businesses is all about building relationships -- with customers, employees, vendors and, most surprisingly, each other.
Although some of the retailers actually compete against each other, they have managed to eliminate the distrust that used to exist among them and have united to fight what they see as their common foe -- upscale retailers like Whole Foods, Costco and Trader Joe's.
The vehicle for their union is Raise the Bar -- a share group that meets monthly to exchange best practices and discuss ways for members to become better leaders within their own companies.
"We've discovered there are a lot of common problems that we were taking on individually," Bob Parriott, general manager of Deluxe Foods, Aptos, Calif., told SN. "We realized we were all spending time doing the same thing and if we could conquer those problems together, it would be more efficient."
As a result, even operators that compete directly work together. "Since we became part of Raise the Bar, some of my employees have trained at other stores, including those of my competitors," Parriott said. "It's like we're all family."
Parriott is president of Raise the Bar, which encompasses 27 owners representing 37 stores -- 32 in Northern California, three in Hawaii and single units in Oregon and Washington -- that account for combined sales of approximately $400 million.
RTB was formed in 1999 at the prodding of John Sutti, a Northern California-based architect who saw the need for independents to create a clear identity from that of the chains. Sutti had been talking individually with grocers over the years and sharing ideas that have since become core tenets of Raise the Bar.
RTB members meet once a month, "and the dynamics of those meetings are wonderful -- they take your breath away," Bennett A. Robinson, a consultant who serves as RTB's executive director, told SN. "Although most of the members are competitors, they've figured out they have more to gain by working together."
What they do together, he said, is "share good ideas, motivate each other and become students of each others' successes."
Most RTB members are serviced by either Unified Western Grocers, Los Angeles, or Dallas-based Fleming. However, they said they don't believe their wholesalers can provide the kind of creative input they desire.
"The wholesaler's job is to bring economies of scale, efficiencies and advertising programs to the retailer," Robinson pointed out. "But in terms of creativity, most wholesalers have already shot all the bullets from their guns."
The mission of Raise the Bar, Robinson said, is "to help independent grocers grow their businesses by continuing to raise the level of service within their stores, which results in increased sales and profits."
Several members told SN their sales have increased since they began applying RTB principles.
John Lloyd, owner of Big John's Market, Healdsburg, Calif., said volume at his 16,000-square-foot store has climbed 20% a year over the three years he's been an RTB member -- from $6.8 million in 2000 to $7.4 million in 2001 to $7.9 million last year. Parriott said sales at his 20,000-square-foot store have doubled over the past six years, attributing part of his ongoing success to being an early disciple of some of Sutti's suggestions before Raise the Bar was formed; and Tom Honer, owner of Harvest Market, Fort Bragg, Calif., said sales have increased to $20 million annually at his 30,000-square-foot store. "Everyone in the group has had increased sales," Honer said.
PEER RELATIONSHIPS
According to Rick Piazza, owner of Piazza's Fine Foods, a two-store operator based in Redwood City, Calif., "RTB members compete with each other for the same customers, but we look at each other differently now. Through Raise the Bar, we've learned we can help each other out and not be competitors. Independents who don't have that attitude are dinosaurs."
Lloyd told SN he used to sense a lot of dissension among independents, "but you don't find that at Raise the Bar meetings. Our meetings start with a spirit of cooperation and mutual benefit because we focus on serving customers and employees, not on product selection."
Honer described independent operators as "stubborn mavericks and loners who have always been a bit reluctant to share information with anyone. But in Raise the Bar we've all been able to get beyond that.
"Now we're all moving forward in a unique direction, and the more successful we become, the more willing we are to share. RTB allows us to share best practices with no thought that anyone is stealing our ideas because we're not competing with one another. We realize who the real competition is."
According to Jim Trimble, owner of Village Market, Oakland, Calif., "Our biggest competition is not another independent, even if it's close by, nor is it chains like Safeway and Albertsons. Our biggest competitors are Costco, Whole Foods and Trader Joe's because they are upscale and progressive and operate on the leading edge, whereas Safeway and Albertsons, along with Wal-Mart, are bland companies that don't execute well."
EMPLOYEE RELATIONSHIPS
When the group was originally conceived, "we thought maybe we could buy together to get better prices," Piazza recalled. "But with some stores in upscale parts of the Bay Area and the [San Francisco] Peninsula and others on the outskirts in less upscale areas, we realized buying together wasn't going to work.
"We wanted to find ways to build better relationships with our employees so they would treat customers better."
One way RTB members improve employee attitudes is by holding daily huddles -- five-minute meetings before the store opens or, occasionally, in the afternoon as shifts are changing -- to give everyone a chance to discuss their concerns.
"It pumps everyone up and gets them excited, interested and involved," Piazza explained.
To Honer, the huddles "allow us to start the day with common goals and have a few laughs. It's a daily affirmation of why we're there. We often share positive customer stories at our huddles. In fact, since we hold the huddles in front of the store's deli, some customers occasionally participate."
Being an independent retailer means hiring a lot of young people who may be working for the first time, Lloyd said.
"Improving employee training was the reason I was interested in joining RTB, and we've gotten a lot of customer comments about the improvements in our customer service, which is the best indication of our success," he said.
Each RTB member designates an in-store coordinator who works with new employees on their first day, helping them with paperwork and making sure they understand their job responsibilities. "That approach has helped us make huge gains," Piazza said.
According to Trimble, one of the biggest lessons he's learned from his RTB membership is the need for personal change. "I've realized I've been an anchor holding my store back by not delegating and giving employees enough freedom to make their own decisions. Now I'm taking a more hands-off approach and giving my employees the option to change a policy if they need to.
"The reality is, with 40 people working together, there are obviously a lot of potential solutions to a problem, and one of them will be better than the rest. I used to solve problems with one solution -- my own. But now I listen to several people and choose one solution, and that makes for a better decision."
For Parriott, the challenge was to stretch his management team's abilities as his store was remodeled. "It's been a process of how to leverage employees best by delegating as much authority as they are willing to take."
CUSTOMER RELATIONSHIPS
Raise the Bar encourages members to focus on fulfilling any customer request.
"If a customer asks for a particular product, someone needs to make sure that product is ordered and then call the customer to let him know the product is in," Robinson explained. "If a retailer is willing to order a small quantity of that product, he'll have a customer for life. That's one simple way to grow your business."
In the lexicon of Raise the Bar, that approach is called CCL -- "creating customers for life" by providing extraordinary service.
"The way you create customers for life is by providing the absolute best service you can and by exceeding their wishes about product selection," Lloyd said. "In the past we were paying more attention to what brokers and our wholesalers told us we should carry."
His thoughts were echoed by Trimble, whose 4,000-square-foot Village Market is the smallest of any RTB member. "Our wholesaler was not providing the impetus for us to keep growing. They prefer to supply stores with the same mix of products as Albertsons or Safeway carry, rather then helping a store like ours that carries basic groceries as well as natural and organic products.
"Since joining Raise the Bar, we've gone more upscale by listening to customers who asked for specific items -- not necessarily gourmet items but items that are perceived to be better or more healthful."
According to Parriott, one of Raise the Bar's core principles is "to let customers choose what products you bring in. It doesn't matter what you think because it's the customers that are voting with their dollars."
According to Honer, "One of our goals is to redefine ourselves to be Wal-Mart-proof by altering the product mix. We listen to customers and go to great lengths to get what they want. And we have weekly postings among the RTB members so if we can't find a product, we ask other retailers for help."
Another basic RTB principle is to get each customer to buy just one more item per visit, Robinson said. "We know most people shop at multiple stores, and they can become our customers if we add more items that they want, particularly in specialty, natural or organic foods or value-added product."
