Meijer CEO ‘Committed to Growth’

RAPIDS, Mich. — Meijer still has “a lot to learn” about operating smaller-format stores like the three it has opened in the Chicago suburbs, the company’s co-chairman and chief executive officer told SN in an interview last week.

“We’re still trying to figure out what most approximates that sense of one-stop shopping that most of our customers like to have, but that is a more difficult proposition in 100,000 square feet than it is in 180,000 square feet,” Hank Meijer said.

The company began deploying the smaller-format stores — still twice the size of the average traditional supermarket — in 2010, with locations in the Chicago suburbs of Niles and Orland Park, Ill.

“The smaller format may allow us to take advantage of some sites and serve some more densely populated urban neighborhoods where the real estate just isn’t available for our full-sized store,” said Meijer, who shares the chairmanship of the company with his brother, Doug.

Hank Meijer (right) discussed the company’s views on the future in the wake of the death in November of his father, Fred Meijer, who was instrumental in building the chain to its current status as a regional retailing power.

“We are committed to being a growth company,” he said. “That means opening new stores every year, both in our core markets and expanding into our adjacent markets.

“And even as we’ve recognized the need to develop strength in operating different formats, we’ve been heartened to continue to see opportunities for our supercenter. We continue to see operating that format as our chief means of growth.”

The company went through what it called a “transformational” period several years ago, as Wal-Mart made aggressive incursions into Michigan, where Meijer tallies about half of its $14 billion-plus in sales. It streamlined its operations and revamped its general merchandise offering to revitalize its ability to expand.

“We had some pretty unproductive real estate in the store, and to the credit of our team, we have really shored up our general merchandise offering and become crisper and better and more consistent,” Meijer explained.

“Part of the urge for format diversification is to serve markets you can’t reach with a 180,000-square-foot store, but part of it also was several years ago doubts about whether we going to continue to be viable with a 180,000-square-foot store with all of that real estate dedicated to general merchandise. We have made some real gains there that make us feel much more confident about that format than we were six or eight years ago.”

Another byproduct of the company’s increased head-to-head competition with Wal-Mart was that it prepared Meijer to handle the recent economic downturn. Michigan, Meijer noted, went into recession before the rest of the country.

“The costs that we took out of the business, to be able to be price competitively without going out of business, really in hindsight positioned us well as the low-price retailer to meet the needs of our customers,” he said. “We were in a sense fortunate that competitive realities forced us to restructure in a way that anticipated what we really needed to do when the recession hit our home markets.”

During the downturn, Meijer said the company has see the previously “exponential” growth of natural and organics plateau, while consumers turned to more entry-level price points, such as the rapidly growing Meijer Basics line.

In addition, he said, the company’s private ownership has allowed it the flexibility to price competitively.

“We look at things with a long-term perspective,” Meijer said. “So when our margins are under pressure, we’re not going to buckle too quickly. We’re going to keep prices competitive, and live with what it does to the bottom line.”

The company’s recent personnel moves are also serving to position the company for further growth, he explained. Last month Meijer said it had promoted J.K. Symancyk to the newly created role of chief operating officer and hired Peter Whitsett to succeed Symancyk as executive vice president of merchandising and marketing. Whitsett reports to Symancyk, and Symancyk reports to Mark Murray, the company’s president, and shares some of Murray’s former responsibilities.

Hank Meijer said the company for years has sought to cultivate talent from outside the family, while retaining a culture of family ownership.

“I think we learned from our dad very early on that it was essential that we avail ourselves of the finest talent we could find, and that doesn’t necessarily mean someone named Meijer,” he said. “Just because our name is on the door doesn’t mean we were endowed with any talent from birth.”

He said the family seeks to “in a sense get out of the way” of non-family management, and create opportunities for them to grow their careers with the company.