James and Robert Ukrop: 2009 SN Hall of Fame

JON SPRINGER

James and Robert Ukrop built their parents' store into an institution by doing what came naturally.

James Ukrop

By crafting an offering around interpretations of their father Joe's beliefs — that is, treating customers as he himself would want to be treated and by selling only the quality foods he would eat himself — Jim and Bobby, as they are known, have presided over one of the most admired and innovative food retailers in the country and have been named to SN's Hall of Fame.

“When our parents began this business, treating customers, associates and suppliers as they personally wanted to be treated just seemed natural,” Bobby Ukrop, the younger of the brothers and currently president and chief executive officer of Ukrop's Super Markets, Richmond, Va., explained during a 2007 interview with SN. “Today, that natural instinct has proved to be a terrific business policy.”

James Ukrop was born shortly after his parents, Joseph and Jacqueline, founded a 500-square-foot store on the south side of Richmond in 1937. Joe was a former meat manager at A&P.

Within four years, the store had grown to overtake an adjacent Safeway store six times its size, and by 1954 Ukrop's had expanded twice more to 10,000 square feet. But the company remained a one-store operation until son Jim Ukrop urged his father to open a second location in 1963. Jim, 10 years his brother Bobby's senior, became manager of Ukrop's third store in 1965. By 1972, the company had seven stores, with the newest managed by Bobby.

With James named CEO in 1974 (and Joe serving as chairman) the Ukrop family grew the business to become Richmond's market leader. Guided by the golden rule, Ukrop's forged a special relationship with its home city that became a nearly unassailable business strength. The company operates 27 stores today in the Richmond, Fredericksburg and Williamsburg areas of Virginia, including 26 supermarkets and a specialty store known as Joe's Market.

“They were a superb tandem,” Brian Salus, a former director of foodservice at Ukrop's, told SN in an interview. “Jim was the visionary who took the company from one store to around 20. He just exploded that business. And Bobby was the master executor. It was a brilliant combination.”

“James and Bobby truly embraced the community of Richmond and in doing so over a period of years developed a tremendous competitive advantage over the national and regional chain stores competing in Richmond,” Leonard Berry, who holds the Zale chair in retailing and marketing leadership at the Mays Business School at Texas A&M University, College Station, told SN.

Berry, who encountered Ukrop's for the first time while teaching at Richmond's Virginia Commonwealth University, later studied the company and featured it in the book, “Discovering the Soul of Service.” Berry makes the case that the retailer's commitment to creating a “social profit” in the Richmond community in turn contributed to the company's financial profits, and not the other way around.

“It wasn't just the service in the Ukrop's store, which was unusually good,” Berry explained. “It wasn't just the merchandising — the fresh food, the ready-made meals, the restaurants in the store — that made Ukrop's successful, although it was and is exceptional. It wasn't just the approach to one-stop shopping — offering banking and other services — that contributed to their success, although those things did. It was all of those things and then something.”

The “then something,” or as Berry described, the “social profit” Ukrop's sought, led it to pursue innovations that competitors could not or would not, including carving out industry leadership in technological advances like loyalty cards; merchandise expansion into prepared foods; an emphasis on customer service as a differentiator; and positioning itself around ideals of health and wellness.

Team Values

Today, Ukrop's refers to its guiding principals as four “Team Values” illustrated as a series of stacked boxes. The top box is referred to as Vision — “To be a world-class provider of food and services.” Beneath that is Purpose — “To create great shopping and working experiences by sharing our passion for food in a fun and dynamic atmosphere.” The third box is labeled Business Commitments and includes “superior customer service, fresh and delicious food, fully engaged associates and community health and well-being.” At the base is a box labeled Leadership Principles — “Servant leadership, financial stewardship, respect for diversity and continuous improvement.”

Each of these boxes has an accompanying action for employees — “Be hardworking, be safe, be helpful, be honest,” respectively.

Ukrop's roots in prepared foods date to 1976, when the company purchased a major Richmond bakery, Dot's Pastry Shop, and began distributing its goods to its stores. Ukrop's said it still follows Dot's original recipes — baking from scratch and using only the finest ingredients available. More recently, the bakery has become a major supplier of cakes, pies, rolls, biscuits, cornbread and bagels to other retailers.

Ukrop's bolstered its fresh baked business by opening a central commissary in 1989, inspired in part by the brothers' trips to view prepared-food departments at various stores in Europe. The kitchen today produces more than 160 chilled items.

Salus, a local food broker who sold deli items to Ukrop's, was hired by the brothers in 1988 to direct its burgeoning prepared-food program. He lauded the brothers' vision and commitment to building an offering that at the time was considered a radical change in how grocers approached the business.

“Jim and Bobby understood that their customer was changing, and that they needed to provide solutions to their needs,” said Salus, who today operates Salus and Associates, a food consulting group in Midlothian, Va. “They said, ‘We may be a small company, but we're going to bet the farm on the fact that people were looking for an easier way to feed themselves.’ People in the industry asked, ‘Have you lost your mind? You're grocers.’

“But it created great differentiation and separation from anybody else in the marketplace.”

According to Bobby Ukrop, one important distinction that prepared foods added to Ukrop's was helping to position the store as a kind of community gathering place not unlike a restaurant. “People say a supermarket can't be a restaurant, but we're doing what people said you can't do,” he remarked in 2007.

“Supermarkets run the risk of undifferentiated offerings because so much of what one supermarket sells is sold in the competing supermarket,” added Berry. “But when you study Ukrop's what you see is not an undifferentiated competitor but a highly differentiated competitor.”

Health and Wellness

Ukrop's was also at the leading edge of the movement to position stores toward health and wellness. This was a natural extension of its concern for employees and community health. Its efforts — including the addition of wellness centers and community health-related organizations as store co-tenants, product labeling and community outreach based on nutrition — earned Ukrop's recognition as the first Whole Health Enterprise award winner by SN's sister publication, SN Whole Health.

Jim Wisner, president, Wisner Marketing, Libertyville, Ill., in a recent SN article detailing Ukrop's health advocacy said Ukrop's is “probably the best” of all supermarket operators in terms of tying in health-related promotions throughout the store.

“If there is something going on involving health and wellness, from immunization clinics to diabetes screenings, they are probably doing it, and they tie in the entire store,” he said.

Other manifestations of the Ukrop brothers' embrace of their values are simple (a longstanding policy of walking bags to shopper's cars) and sometimes extraordinary (the practice of closing their stores on Sundays to provide employees with a day of rest, and declining to sell alcoholic beverages). The latter actions put Ukrop's at a seeming disadvantage to competitors, but the Ukrop brothers in many ways have thrived because of them, observers said.

“They have foregone business to give their team members more family time and spiritual time by having their stores close on Sundays, and they refused to sell categories they felt could damage the health and lifespan of consumers,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN. “Their stores really stand out. People have come from around the world to see innovations in designs, customer service and excellence in operations.”

The Ukrop brothers, Flickinger added, are also leaders in promoting diversity as a business benefit, both in terms of promoting minorities to leadership positions and in supporting minority-owned suppliers. “They've given great opportunities to minority entrepreneurs to get distribution for the first time in a supermarket chain,” he said.

The Ukrop's name is visible outside stores too, where its support of activities and events around Richmond has made it a part of the community fabric. It sponsors an annual Christmas parade, a well-known 10K run and numerous charities. Its customers have donated more than $12 million to their favorite charities through the annual “Golden Gift” program that directs donations toward a shopper's chosen charity based on store purchases over a set period.

“Being generous citizens of the Richmond community, the owners of Ukrop's truly created the sense that Ukrop's was Richmond's own store,” Berry said. “It wasn't a national store. It was the community's own store.”

Bobby Ukrop took over his brother's role as CEO in 1998, when Jim assumed his father's role as chairman. Joe Ukrop served as chairman emeritus until he passed away in 2003. The co-founder, Jacqueline Ukrop, died at age 89 in 2005. Recent reports said the Ukrops are seeking to sell the chain, but the company has not cornfirmed those reports.

Observers describe the brothers as possessing different personalities but sharing the same values.

“They are both very humble and magnanimous men,” Flickinger said.

“Very giving and generous, tremendously thoughtful men who live by the proverbial golden rule.”