Role Model

GEORGE ELLIS

It's a time-honored precept that the local grocer is a hub of the community, and today a great many supermarket companies continue to pay close attention to helping meet the needs of their communities. In choosing the winner of SN's Community Service Award for 2008, the task was to find a grocer setting the best example for the times we live in.

The community grocer is alive and well in western Virginia and the eastern parts of Tennessee and Kentucky, the territory where K-VA-T Food Stores operates. Selected to receive this year's Community Service Award, K-VA-T — named after abbreviations of the three states it serves — is a role model for supermarkets that seek to form stronger ties with the communities they serve.

Under the leadership of Steve Smith, president and chief executive officer, K-VA-T currently operates 95 stores under the Food City banner from its Abingdon, Va., headquarters. Throughout its history, the organization has slowly and carefully built the kind of community ties that serve to keep a regional chain strong.

The humanitarian efforts grew from the vision of the company's co-founder, the late Jack C. Smith, Steve's father. The elder Smith, along with other family members, established the business in 1955 when they opened a single 8,800-square-foot Piggly Wiggly store in Grundy, Va.

“He loved the grocery business,” Steve said of his father. “I was honored to work with him for almost 30 years.”

When the Smiths purchased their second Piggly Wiggly store a couple of years later, they acquired a special asset in the form of Claude P. Varney, the store's manager, who went on to serve the company until his death in 1994. It was under Varney that Steve Smith learned the ropes.

Varney was so committed to community involvement throughout his career that the company named its own community service awards program after him. The Claude P. Varney Volunteer Recognition Program was created in 2002 in response to President Bush's call for increased volunteerism across America through the Business Strengthening America campaign. K-VA-T store associates are recognized at many levels each year for their charitable efforts within the community.

K-VA-T strongly encourages employees to become involved in community work, and it gives them exceptional support to do so.

“We encourage our folks to get involved,” said Smith. “Not only encourage them, but we empower them to do some of those things, whether it's financial budgets for the store managers or whether it's time for our store supervisors or store managers to be part of a civic organization or other local project. It makes our towns and counties much better places to live if you have your folks involved.”

Cheryl Gowan, head cashier at Food City's Louisa, Ky., location, was the Claude P. Varney Humanitarian Award recipient for 2007.

Upon accepting the award last year, she said, “I'm not only honored to serve my community, but to work for a wonderful organization like Food City that supports and encourages my involvement.”

“Our company has had a long history of community involvement, and that has been instilled in us by the founder, Mr. Jack Smith,” Emerson Breeden, director of community relations at K-VA-T, told SN. “Food City associates are dedicated to supporting the community's needs. They're encouraged to be involved with the schools, universities, churches, civic organizations, hospitals, local agencies, and our commitment is to give back to a community that supports us.”

“That goes back to empowering our store managers and our folks who operate the stores for us,” Smith said. “We do consider ourselves a hub of the community, a place where activities take place, and we give them budgets. If you come in and you're with the local Little League or Cub Scout pack and you want to get a donation from Food City, it doesn't come to me. I don't make those decisions. We empower our store managers to make those decisions, and they have pretty sufficient budgets to handle things like that, and they'll never get in trouble for going over their budget.

“We know that if a community is a good place to live, a good place to raise your kids, a good place to work, then guess what: People are going to want to live there. If people want to live there, they're going to shop for groceries there.

“So in the long run, we have a vested interest in making sure our communities are neat places to live, work and educate your kids. That's our whole philosophy, and we try to drill that down to the newest courtesy clerk. We talk about our corporate philosophy of having ties to the community and giving back, and if you're going to be part of the Food City team, you need to understand that philosophy.”

Every January the company presents the Claude Varney Humanitarian Awards.

“Mr. Varney was my mentor, and he was very involved in the community,” Smith said. “We recognize every individual in our company who volunteers — whether it's with their church or their Little League or their community, at the hospital or the hospice or whatever they do — each one who does that gets a certificate of appreciation from our company. And then we have 10 awards that we give by district, and it's a cash award that they can donate to their particular charity, and then we've got division awards, and we've got an overall winner.

“We give about $10,000 away to these winners at various levels for their charities,” Smith continued. “The winners come in and have lunch with our senior staff at our monthly staff meeting, and we take their pictures, and we put them in the newspaper. I think that goes a long way at the store level to celebrate what our corporate philosophy is.”

Breeden noted how well the company's associates embrace that philosophy. “Anytime we mention a project that would help the agencies in our community, our associates always step up to the plate, and they're very enthusiastic about it,” he said. “It's an attitude that permeates through the whole company.”

K-VA-T is an ESOP company, 16% employee-owned; some 6,000 associates, both full-time and part-time, are members, representing about half of the employees. Associates are eligible for membership after one year of service and 1,000 hours. Members' participation in the company's profit-sharing plan comes in the form of stock.

Track Record

Not only does K-VA-T have a broad slate of activities supporting its communities, it tends to generate a lot of excitement in the process of raising money for a variety of causes. For one thing, the area the company serves is a hotbed of motorsports interest and is home to a great race track facility: Both NASCAR and drag racing fans are well served by the state-of-the-art Bristol Motor Speedway complex in Bristol, Tenn., deep in the heart of K-VA-T's territory.

For the past five years, K-VA-T has been raising money to fight hunger through Falls Church, Va.-based Food For All, of which Smith is vice-chair. K-VA-T invites store customers to donate to a “Race Against Hunger” drive at checkout with their loyalty cards, with each dollar donation becoming an entry in a sweepstakes whose top prize is a season pass to the speedway.

“We worked with K-VA-T with Steve and with Kellogg and some of the other manufacturers, and developed a really good cause marketing program during the holidays in NASCAR,” said Denis Zegar, president and CEO of Food For All. “Every time a customer purchases a $1/$3/$5 coupon, they get one, three or five entries into the sweepstakes.”

“For our customers who make contributions to our Race Against Hunger campaign, we give away some race packages where they can come and sit in the suite, go for track tours, meet some of the drivers,” Smith said. “A lot of people participate. Last year we raised $257,000 to be able to give to the local food banks.”

To raise additional funds, Food City puts on Family Race Nights, drawing throngs of racing fans from nearby and other parts of the country to downtown areas of Bristol, Tenn./Va., and to the Knoxville, Tenn., Convention Center to see the race cars and meet the drivers.

“There's a couple of things we've made signature events with NASCAR,” said Smith. “One is the Food City Family Race Night, where we bring the drivers and our vendors into a pre-race activity, typically Thursday night before the races here in Bristol. We take the downtown, and we'll have about 50,000 people who come down there to get autographs, to sample food products, to have all kinds of activities for the kids. We charge $5 for the folks to get in, and the proceeds go to a local charity.”

Other community-oriented activities through the year include a Miss Food City pageant, presented by the Twin City Woman's Club of Bristol as a fund-raiser; an Apples for the Students program to raise money for local schools; participation in the Upromise college tuition savings plan; and the Santa Train, a local tradition dating back to the 1940s.

“The Twin City Woman's Club in Bristol handles the Miss Food City pageant,” Smith said. “We lend our name to that. It's a fund-raiser for them in Bristol. The young lady who wins will help me give the trophy in Victory Lane to the winner of the Food City 250 and Food City 500.”

The Apples for Students program provides school supplies and computer equipment to local schools. “We'll donate — this year it's $850,000 that we've committed to schools,” Smith said. Over $10 million has been donated to the program through Food City so far.

A 'GROWING' ECONOMY

One key aspect of the surrounding community has been championed by K-VA-T in recent years: the local farming economy. Strawberries were the first big success, followed by corn and now a broad variety of local produce.

“We've started over the last six or seven years a real initiative with locally grown produce,” Smith told SN. “It takes a lot of work to organize the farmers and to buy from this farmer or that farmer. But the rewards of it are three- or fourfold. The first reward that you get is the fact that your customers love what you're doing, because it's great product. Now, that says that you're doing the right thing.

“But beyond that, we were in the heart of tobacco country, and the tobacco farmers here made their living on tobacco for years and years and years. And the subsidies went away, and now the tobacco's going away. So we've got generations of farmers that are good farmers, know how to raise crops, but they just haven't had an outlet.

“We've empowered our produce procurement people to have some seminars, meet with farmers, talk about the quality standards we must have, and talk about the timing, and talk about how we've got to run it through our distribution network,” said Smith. “We tell them, ‘We'll put refrigerated trucks in your field, and we'll backhaul the produce to our distribution center, and you meet these qualities and we'll pay you a fair price,’ which we negotiate up front.

“And literally they can go down and get a bank loan, or a tractor loan, whatever, based on the fact that Food City has given them a commitment. If you'll raise 40 acres of corn, and you'll stagger this corn where it comes in here, here, here and here, then I've got a guaranteed market for my crop.

“And we have literally saved a lot of family farms for people, because now they can raise crops,” Smith noted. “They can keep their farms. They can keep their family here, on their property, and in the whole scheme of things we're satisfying a need that people love, and that's locally grown, fresh produce that is grown by Mr. Jones or Mr. Smith or Mr. Brown down the street.”

“We have customers on a few of our items, such as our locally grown corn, our locally grown strawberries — we'll have customers actually come in and prepay, and wait for the product,” said Mike Tipton, director of produce operations at Food City. “And they'll buy it by the sack, because they know how good that farmer's corn is, be it Mr. Scott's or whoever it is, and they want to go ahead and buy it.”

“In July and August, our peak months, $1 out of every $5 we sell in our produce departments is locally grown product,” Smith added. “I think we can take that up to probably $2 out of every $5, because we're getting into crops that have never been grown in this area before. We had Virginia broccoli this year, and something you don't typically get in Virginia, cauliflower. You can say, well, all that comes from California; our farmers have been able to grow it here, and it's absolutely beautiful.

“Think of the pollution that you're eliminating,” Smith said, “when you truck something 15 or 20 miles to your distribution center vs. taking a whole truckload of broccoli from California.”

“It's a big commitment on our part, because it's a lot of hard work when you're sitting up there at the buying desk,” said Tipton. “It's a lot easier for them to place the orders out in California than to try to work with the farmers around here to get the product scheduled to come off when we need it, and to get it shipped into our distribution center and out.”

“We've also partnered with some lamb farmers,” Smith said. “I went to a meeting about five years ago, they were going to raise Katahdin Hair Sheep — it doesn't have wool, it's raised for the meat, and it's a small animal. The people had such passion when they started talking about this. And, of course, we can sell a lot of lamb. They started an association; we found the harvest facility that would pack it for us — they did all the work, and we gave them a guaranteed price, and they've gone from about 10 farmers up to about 200 farmers now.

“Right now we're between 5,000 and 6,000 head of lamb,” Smith said. “We promote that during the holidays and during Christmas and Easter and all the traditional lamb periods. And all that money stays here.”

The local produce effort began eight years ago. “We started off with just purchasing about a half a million dollars worth of produce in 2000 to $6 million this year,” said Tipton. “About 10% of our produce sales will be locally grown product this year.”

'Twas the Night Before

Perhaps the most sentimental community activity Food City participates in is the Santa Train, which has run since the days of World War II. Each year, on the Saturday before Thanksgiving, a special CSX train carrying jolly old St. Nick and a marquee country music star travels through western Virginia and eastern Tennessee and Kentucky, handing out gifts and entertaining local crowds at stops along the way.

“It's a neat story about that, and it's been going on for about 65 years,” Smith said. “It started with the Chamber of Commerce in a small city here, Kingsport, Tenn., right on the Virginia line, and a lot of folks from Virginia and Kentucky in the coalfields used to come to Kingsport to shop. The Chamber, years ago, wanted to say thank you for coming down here. There were a lot of folks up there who didn't have a lot of money, so they got with the railroad and they started running the Santa Train.

“About 15 years ago, one of our competitors, a local independent, was head of the Santa Train, and he was getting ready to retire. He came to our store manager in Kingsport, a gentleman named Ed Moore, and he asked Mr. Moore, he said, ‘Ed, you're young; I'm getting ready to retire. Will you take the Santa Train over?’

“Ed agreed to it, and he's been doing it for about the last 15 years. The train goes up into eastern Kentucky, and it comes a full day through Kentucky and Virginia and it ends up in Tennessee, and Santa Claus is on the train, and he meets the fire trucks in Kingsport and they have a Christmas parade right before Thanksgiving. We'll have a couple of country music stars — Patty Loveless was on this past year — and there have been lots of other folks who ride it.

“It's quite an honor to be selected to ride the Santa Train,” said Smith. “Fact is, it's hard work,” he added, with 15-20 tons of merchandise aboard to be given away at stops along the way. “Just bring a good handkerchief, because you won't have a dry eye.”