Vail Seeks to Guide Sweetbay to Long-Term Success

MARK HAMSTRA

TAMPA, Fla. — Mike Vail helped play the role of midwife during the birth of Sweetbay Supermarkets — now he's charged with ushering the chain into adulthood.

The president and chief operating officer of Sweetbay since last June, Vail is completing the transformation of the formerly run-down Kash n' Karry chain into a viable regional brand that can compete profitably with the likes of Publix Super Markets and Wal-Mart Stores, all against the backdrop of a hard-hit Florida economy.

The 108-store banner, owned by Brussels-based Delhaize Group, is progressing through the typical early lifecycle of a start-up company, Vail explained.

“We went through that initial phase, where there was a sort of unbridled optimism, and chaos, when a lot of new creation was occurring, and a lot of the excitement that comes with being a start-up company,” he told SN in a recent interview. “Then, when you move to viability, you hope to have more predictable results, consistent growth, more expertise and you are moving the company toward profitability.”

After the departure of Shelley Broader, who had been sent to Florida from Kash n' Karry's sister chain, Hannaford Bros., to lead the transition, Vail found himself at the helm of a chain that had lost much of its leadership. Not only did Broader leave — to join craft retailer Michaels Stores — but within a short time Sweetbay also saw the departure of its heads of human resources, marketing and merchandising.

In addition, Vail, who had been senior vice president of operations and diversity, left a vacancy at a top operations post when he became president.

He spent the first several months assembling a new staff , bringing in some veterans from Delhaize's other banners and some talent from outside the organization — a group he calls “the right team” for Sweetbay's current situation.

As his New England accent betrays, Vail is a bit of an outsider himself — like Broader, he first came to Kash n' Karry from Hannaford Bros. But Vail arrived in 2001, ahead of the team that was installed to convert the chain to Sweetbay.

He had joined Hannaford in 1985 through its vaunted Retail Management Training program after attending Colby College in Waterville, Maine. He spent the first 10 years of his career at Hannaford working his way up through retail operations. He then spent the next several years in merchandising, primarily in perishables, before joining Kash n' Karry.

In that first position as vice president of merchandising at Kash n' Karry, Vail coordinated the transition from Kash n' Karry's procurement function from Food Lion to Hannaford Bros. Food Lion had done a good job driving some costs out of the Kash n' Karry operation, but there was some unwanted “baggage” that came with Kash n' Karry, he explained.

“There were several challenges around getting to where we are now,” Vail said. “Certainly we had the issue around procurement and some of the services, where we were looking for synergies where they didn't exist as well as they should.

“But the other piece that never can be overstated is the people issues that I faced when I came down here,” he pointed out. “I came from a company that has always viewed people as its No. 1 asset — that was the only company I knew and the only environment I'd been in. As an up-and-coming manager I was always trained well for the job I went into, I was always exposed to great leadership opportunities, and I was fully trained on things like diversity. As a naive young manager, I had assumed that was the way all companies developed their people.”

What he found at Kash n' Karry was a corporate culture that had become stagnant amid cost-cutting and financial losses.

“People knew the tactical aspects of their jobs, and knew how to run stores and do those kinds of things,” Vail explained. “But we didn't have strong processes in place in terms of training programs and disciplines, and so what we had was inconsistency in our execution and people who hadn't been properly trained.”

He said expanding diversity at the chain fast became a priority.

“I found this was a very diverse market in Tampa, and there was an opportunity to incorporate that diversity of ethnicity, culture, beliefs and heritages into our brand,” he said. “Having a much more diverse mix of associates allows us to develop the Sweetbay brand, which is a very elastic brand, so that it really appeals to all consumer groups.”

Now Vail's focus is on taking care of all the details that will drive Sweetbay out of the red and into the black in terms of profitability, something he anticipates will happen next year.

Once that occurs, he said the banner can shift its focus onto growing the store base. Sweetbay is still in a “right-sizing” mode, he pointed out, following the announcement last month that the chain would close seven stores by about the end of this month.

Vail said he sees the chain positioned in the middle of the continuum between the discounters on one end, and Publix, with its high levels of service and strong local reputation, at the other.

“We feel we've got to really ‘chin the bar’ so to speak, and meet Publix head-to-head on what we call ‘universal needs,’” he said. “They set a pretty high standard around clean stores, basic customer service and a pretty easy shopping experience.”

He said Sweetbay's research indicates that customers are giving Sweetbay credit for those attributes.

“People tell us our stores are clean, refreshing and well-merchandised,” he said. “The carriages work properly, and our people are friendly and knowledgeable — those are things you can't take for granted.”

In fact, the company for a time might have emphasized some of those qualities a little too heavily, he explained, giving consumers the impression that it had become too highly priced.

Kash n' Karry had always had a good reputation for fair prices, Vail said, but he believes Sweetbay, in transitioning the stores to the new banner, “took its eye off the ball” and assumed that reputation would carry over.

“We talked a lot about the Sweetbay brand, and the produce and the meat, and all the variety of food we were going to have in our stores, and what the experience was going to be like,” he said. “We also spent a lot of money, because we wanted stores to be well-built and clean. But I think when people walked through our stores, they thought, ‘Well, this must be expensive to have such nice stores and have all this variety.’

“We really didn't spend a lot of time talking about our pricing in the early days, and we probably got the image we deserved,” he said.

He said the chain has since had success in repairing that impression, using its “Sweet Sale” and “Sweet Deal” slogans to highlight both short-term promotions and longer-term EDLP-style price changes on Center Store grocery items.

“Now we're even tagging the end of our quality [ad] campaigns with those icons,” he said. “We feel that's a platform we can rely on for a considerable period of time, and we have seen our price impression improve significantly in the last year and a half.”

In an effort to further differentiate Sweetbay from rivals in the market, Vail noted that the chain has sought to further enhance Kash n' Karry's strong reputation around produce, and to extend that reputation to other perishables.

Last month, for example, the chain conducted a strawberry promotion in which it essentially co-branded with a single grower, and generated more than $1 million in sales. That represented a “significant” increase over the inaugural campaign of the preceding year, Vail pointed out.

“We are capitalizing on the supply here in Florida, and making sure people know we have local buyers and that we are committed to the best local growers,” he said.

He also noted that the company launched a “very successful” Angus beef program last March.

“We feel very confident about our ability to ‘own’ the meat image here in the marketplace,” he said. “We feel there are certain markets where we have passed all the competition in terms of our meat image.”

In addition to the perishables offerings, Vail noted that Sweetbay's pharmacy departments also have benefited from the conversion from the old Kash n' Karry banner, in part because of the quality image the new banner carries.

“There are other areas where we can differentiate ourselves from the competition and from Wal-Mart, and we're working on plans to develop those areas,” he said.