Bright Ideas

MARK HAMSTRA

Beth Newlands Campbell, executive vice president at Hannaford Bros., was recently digging through some meeting notes from the early leadership of the 125-year-old company.

What she found, she said, was that while the company's convoluted history threaded its way through wholesaling, various retail-ownership structures and multiple acquisitions, many of its core values remained intact.

“What was really neat to find — all in handwritten words — were that some of the things that are part of our culture now were part of the company's values back in 1883,” she said in an interview with SN this month. “Some of the words and terms we use today are different — the words ‘corporate social responsibility’ weren't specifically used in 1883, but there was a lot about providing a safe work environment, with reasonable hours, and starting to be one of the first companies in the Northeast to provide benefits, even way back then.

“There were words about being a good neighbor, about being dedicated to customer service, integrity, valuing our associates and community involvement,” she added. “We started out as a produce wholesaler — so what we do has changed over the years, but who we are has not changed.”

Now wholly owned by Belgium-based Delhaize Group, Hannaford operates 165 stores in New England and eastern New York.

The chain's focus on staffing — starting at the hiring level and continuing through its training and development programs — has long helped distinguish Hannaford as one of the more innovative and progressive supermarket operators in the country.

“They have recruited the best and brightest from food-industry teaching colleges and universities in the U.S. — most notably Cornell, Harvard and St. Joseph's University,” said Burt P. Flickinger III, managing director, Strategic Research Group, New York. “And they have really developed the best technology tools for management, both in store operations and departmental operations, and in corporate.

“Hannaford's management talent, along with Kroger's, has arguably been consistently the best in the industry,” he said. “In addition to the best financial and buying and consumer management, they were also the fiercest fighters of Wal-Mart — Hannaford really pioneered promotional everyday low pricing. Hannaford Bros. prevailed when many competitors either contracted or perished.”

Hannaford's deep-rooted, aggressive approach to supply chain efficiency has kept it on the leading edge of the industry, enabling it to price competitively with a mix of promotions and EDLP, yet still provide a high level of in-store experience.

Its recent innovations have included private-label lines like Inspirations and the Guiding Stars nutritional rating system, which just last week was rolled out throughout its sister chain, Food Lion, and is now being offered to other retailers.

“There's a real institutional focus on innovation — much like Wawa and Wegmans — but Hannaford's is institutionalized even more,” Flickinger said.

Patrick Roquas, an analyst who follows Delhaize at Amsterdam-based Rabobank, told SN that Hannaford's success has been “partly driven by a consistent focus on creating customer value on the one hand, as well as a structural focus on supply chain efficiency.”

Although many observers were incredulous when Delhaize announced its plans to buy Hannaford Bros. for $3.6 billion in 1999, Flickinger noted that the company bought much more than just a network of supermarkets — it acquired a wealth of supermarket savvy that it was able to leverage throughout the company.

“The institutional intelligence that Delhaize bought in the Hannaford acquisition really revolutionized Delhaize as a retailer, and took it from a company that was surviving to a company that was really thriving,” he said.

Rick Anicetti, the current chief executive officer of Food Lion, was a former Hannaford executive, as was Shelley Broader, who oversaw the conversion of Delhaize's moribund Kash n' Karry chain in Florida to the Sweetbay format. Mike Vail, the current president of Sweetbay, also is a Hannaford veteran.

Recruiting for the Future

At the heart of Hannaford's penchant for talent development is its Retail Management Training program, through which it seeks to select the best candidates for future leadership positions at the chain. Newlands Campbell estimated that Hannaford interviews a few hundred students per year for the program and hires about 12-15, most of whom begin as assistant store managers. She herself began her career at Hannaford Bros. through the Retail Management Training program 21 years ago as a graduate of Cornell University's food management curriculum.

Participants spend a year working in various departments within the store, learning operations on the ground level.

“Really what we are trying to do is hire senior management,” Newlands Campbell explained. “The next CEO of the company will probably come out of that program, or the next vice president of marketing.”

Rather than looking for industry-specific skills in hiring and developing its people, Hannaford Bros. focuses on qualities like intelligence and aptitude for learning, she explained.

“I think we have a healthy mix of promoting from within, and also instilling talents from new people,” she said. “I think one of the things that makes us unique in the industry is that you don't have to go through the same series of jobs the way that a lot of people move up in retail. We are looking for people who are very intelligent, who are good at communicating, good at leading people, and people who can learn. There isn't just one way to get promoted — there are a lot of different career paths. So you don't always get the same kind of people who are moving up in leadership positions. That's one of the reasons we have a diverse group of leadership at Hannaford.”

Flickinger explained that Hannaford benefits from its practice of making its recruits gain real experience at the store level.

“The difference is that unlike some of their multi-regional competitors, they don't take graduates who are one or two years out of Harvard or out of business school and make them an officer in the company after a quick tour of 10 departments,” he said. “Hannaford took people and made them run the night crew, they made them run profitable stores, and then districts and regions, before they even had a shot at being promoted to a regional manager or had any hope of being a vice president.”

Newlands Campbell said working at the store level helps executives gain a true appreciation for the business.

“It's like going back to school for another year — basically, you learn from the ground up,” she said. “What you get is an appreciation for the person who does a certain job all day long. You realize that the man or woman who frosts cakes all day long is incredibly talented, and you learn how to manage and lead and work with someone who works the night shift, for example.”

The company also has a District Manager Training program, which develops store managers and assistant store managers.

Newlands Campbell said Hannaford has been seeing a lot more personnel crossing back and forth between retail operations and corporate positions.

“At some companies there can be big walls between corporate and retail, but it's not that way at Hannaford,” she said. “We really appreciate someone coming in from the stores who can speak the language and can appreciate things as simple as how to send a memo to a deli manager that gets their attention, for example.”

Increasingly, Hannaford has been enjoying cross-Atlantic knowledge transfer with Delhaize's European operations as well, Newlands Campbell pointed out.

Experimental Store

Among Hannaford's most recent innovations is its new experimental store in Dover, N.H., about 50 miles from the company's Scarborough, Maine, headquarters. Although Hannaford has not released many details about the test, Newlands Campbell said the chain is staging a host of experiments in merchandising, checkout and back-of the-house operations at the store.

The 35,000-square-foot location has been remerchandised, with some products grouped together by type, for example, and with deli meats and cheeses as a focal point in the center of the store.

Among the goals in opening the store was to preserve the breadth of the chain's offerings at its larger stores — it also operates 47,000- and 56,000-square-foot supermarkets. To achieve that goal, the chain is testing new product groupings and seeking to eliminate redundancies that arise from merchandising the same products in multiple places within the stores.

“It's about trying to get the variety of a larger store into a smaller store,” Newlands Campbell said, noting that the store also includes a distinct decor package.

She said it takes a while for customers to get used to the new product groupings, but they do eventually see the logic of it.

In a conference call with analysts last December, Ron Hodge, CEO of Hannaford Bros., said the company also reduced the size of the back-room area of the store, added more product per square foot and deployed higher shelving.

“We see this store as very experimental, but we do have high hopes,” Hodge said. “It's very revolutionary. We think it will be a while before we understand all the ramifications, but it may have some long-term profit possibilities for us.”

Newlands Campbell echoed that assessment, describing the location as being a research and development laboratory for the chain.

“One of the things that's been a core value at Hannaford is innovation, and that's what that store is all about,” she said. “Some of the things we are doing there are going to work really well, and are going to apply to 164 other stores; some of them are not — it's R&D.”

One of the more innovative features of the store is the experimental checkout system, designed to accommodate large orders. Customers can choose to simply hand off their carts to the checkout staff, and then go get their cars, pick up their bagged groceries and pay at a drive-up window.

“If service to you means you want to check out your own groceries, we have that,” Newlands Campbell said. “If service to you means, ‘Here's my cart of groceries — I'm going to take my kids out to the car, and let you put it through the lane,’ then you just hand off your cart so you don't have to stand in line.

“The customers that use it love it, and the ones that don't still acknowledge that it's there if they want it,” she said.

Newlands Campbell said rethinking in-store service played a big role in developing the store.

For example, the store eschews Hannaford's traditional service seafood section in favor of an extensive prepackaged selection.

“There's a whole experiment with how we're running the store from the back-end side that is evolving,” she said. “We're looking at what in our mind are some very innovative ways to look at retail payroll for the back end, particularly with fresh.”

She declined to elaborate on specifics of the test, noting only that the store has revamped some traditional job functions.

Perhaps the most telling aspect of the experimental store is the way Hannaford undertook its development, Newlands Campbell explained.

“It was about identifying a couple of very capable leaders, having them look not just inside the industry but outside the industry as well, and then just letting them do it,” she said. “Then we went deep within our company for ideas, and then put a bubble around them to protect them, and not put them through a big approval process.”

The company's extensive research department uses a variety of tools to communicate with consumers, including an online panel that can generate feedback on ideas within about 48 hours.

“We try to stay in touch with what consumers want today, but also look for emerging trends — consumers might not be talking about something that may not exist yet, but there are ways to get at that with research,” she said.

“I think our gut feeling is important, but the science is very important as well — there's an art and science involved.”

As the chain celebrates its 125th anniversary this year, it is hosting a series of barbecues for its 27,000-plus employees and their families throughout its operating area.

“We're putting the emphasis on our associates with this ‘celebration tour,’” Newlands Campbell explained. “We have live music, and people can bring their families. That's a core piece of what Hannaford has been — it's about product and people. So our people are having fun, and we are getting an opportunity to say thank you.”