From produce stand to stand-out independent

Coborn's Inc. commitment to its community as well as its progressive approaches to merchandising and marketing makes it an easy choice for the 2011 Grocery Headquarters Independent Retailer of the Year award. By Jane Olszeski Tortola When he opened a small produce stand near scenic Sauk Rapids, Minn. 90 years ago, little did Chester Coborn realize how the venture would impact future generations of his family, neighbors and friends, not to mention consumers in the Gopher State and throughout the upper Mid­west. What began in 1921 as a “one-man market” in that small river town has, through hard work, determination and a relentless focus through the decades on treating all with dignity and respect, evolved into one of the grocery industry’s most successful and respected family-run su­permarket companies. Today, Coborn’s Inc. has established a strong niche in its territory, known as much for its well-developed merchandising and marketing strategies as for its commitment to community service and forward-thinking philosophies. For those reasons and many more, Coborn’s Inc. has been selected as the recipient of the 2011 Grocery Headquarters Independent Retailer of the Year Award. Lauded also as Minnesota’s 2010 Family Business of the Year for Community Service and Philanthropy last fall, officials at the St. Cloud, Minn.-based grocer are appreciative of the most recent awards and other well-deserved accolades earned over the years. But, not surprisingly, the 90-year old company, which has 6,700 employee/owners who share equity in the company through an accelerating employee stock ownership program (ESOP) that was established four years ago, remains focused on a singular mission—to be the best place to shop and the best place to work in every market it serves. Now, Coborn’s Inc., under the leadership of fourth-generation president and CEO Chris Coborn and his team, operates 28 Coborn’s conventional supermarkets, 10 Cash Wise Foods and three Save-A-Lot limited-assortment stores, along with numerous convenience stores, liquor stores, video shops and pharmacies in six Midwestern states. In the words of one competitor, “Coborn’s is highly regarded for its innovation, efficient business practices and especially for the mutual respect that is shared among all stakeholders.” Chris Coborn says it takes a lot of work to maintain the momentum. “As our company has grown, so too have the challenges of keeping intact a ‘family environment,’” he says. “We need to be more deliberate and concerted with our focus on people today, continue to provide great benefits and pay and to treat all people fairly. The ESOP program was one way of enhancing the family environment and carrying on the legacy.” The organization is serviced by three main wholesalers (Supervalu, J&B Meats and Russ Davis Wholesale Produce). In addition to its diverse stable of retail stores, it also operates its own grocery distribution center, along with CobornsDelivers, an online grocery and home delivery service, a central bakery, central dry cleaning facility, central commissary and a long-term care pharmacy. Dan Coborn, the now-retired third generation leader of the chain, is quick to point out that the growth of the family business did not happen overnight. “First off, we give credit to my dad, Duke Coborn, for establishing a solid foundation on which we could build,” says the elder Coborn. “He operated with a great love of the business and for the people we served. On weekends, he stood at the back of the store and gave people bags of candy as a way of thanking them for shopping. And every little kid that passed him received a lollipop.” He adds, “I’ll never forget that first conversation I had with my dad when I officially joined the business after college. ‘Expand as fast as you want,’ he said, ‘but we’re not borrowing any money.’” What the 80-year old industry icon did borrow—and ultimately passed on to his own son, Chris, to whom he gives credit for “the real growth of the company” during the past three decades—was Duke Coborn’s steadfast work ethic and aspiration to give back to those who supported his business over the years. Considering that the company has generated annual sales in excess of $1 billion over the past three years and has a penchant for philanthropy that is nationally renowned, it was indeed a wise investment. It has not been easy for Coborn’s to protect its niche. The chain faces hefty competition from such heavyweights as Bentonville, Ark.-based Walmart and Minneapolis-based Target, not to mention a number of well-regarded regional supermarket chains. To gain the customer’s interest and trust, Coborn’s has placed a big emphasis on health and nutrition products, particularly with its fresh section. It has also ventured into the club marketing area, with such programs as its “Baby Bucks” club and “Pet Points.” For every purchase of $150 in either the baby category or in pet items, club members can collect a $10 Coborn’s gift card to be used during their next shopping trip. Join the club Company officials say that vendor participation and partnerships with such brands as Gerber, Procter & Gamble, Full Circle, Nestlé Purina, Arm & Hammer, Hartz Mountain and others help make the clubs work. “Our weekly print ads feature club of­ferings, plus soon our vendors will be able to access our club websites and social media to offer shoppers custom electronic promotions,” says Andy Knoblauch, the company’s senior vice president of sales and marketing. Recognized as the leader in fresh meat and produce, Coborn’s offers customers more than 700 signature products that are produced in the company’s own meat and deli manufacturing facility and available exclusively under the Coborn’s, Cash Wise and Aunt Mabel’s labels. It is said that the smartest leaders surround themselves with great people and that is appears to be what Chris Coborn has tried to do with his operation. Working alongside the tech-savvy CEO, who also serves as the chairman of the National Grocers Association and was recently named a member of the Coca-Cola Research Council, is an exceptionally talented and empowered management team. Amongst this group, two executives—COO Bob Thueringer and Knoblauch—stand out. To say that Thueringer, a 43-year veteran of the company, is highly regarded by the Coborn family is an understatement. “He espouses what all of us at Coborn’s should be,” notes Dan Coborn. “He’s made many of the hard decisions over the years to insure people’s success.” Whether he is deciding which locations will feature in-store health clinics, how not to be the “last man standing” in video, why produce should be featured at the first corner of new stores and no longer at the third, or how best to capitalize on the emerging growth of natural/organic foods and pharmacies, the confidence the Coborns have in Thueringer is undeniable, and the feeling is mutual. Investing in stores and people “What I admire most about the organization is the family’s recognition of the importance of continued change and growing the business,” says Thueringer. “Coborn’s has done an excellent job of reinvesting in its stores and its people. “We’re a company that has a lot of respect for those who work with us and we realize that, in general, people are always trying to do their best.  It’s about balance.” Knoblauch, who is charged with increasing top line sales for the organization, is another recognizable face around the industry. He is responsible for sales, marketing and advertising. “Our job is simple,” Knoblauch says. “We are to sell to consumers what they want to buy, when they want to buy it, at a price they want to pay.” Nonetheless, Knoblauch, who participates in a number of industry share groups, including one organized by Harold Lloyd and another led by Pat Davis of the Food Marketing Institute (FMI), concedes that in today’s environment, creating successful sales promotions can be challenging. “We’re often in the position of buying sales today and we understand that we have to give up gross margin to keep the sales.” Knoblauch, who prides himself on developing and maintaining trusted business relationships with the company’s vendors and suppliers, explains that it’s not always creative direct mail pieces or strong ads alone that sustain top line sales. In-store functions such as inventory control and programs that assist consumers in improving their overall health, among others, play a major role, he says. “Five years ago, at the urging of Chris Coborn, we implemented a computer-assisted ordering program,” he says. “And during the past two years it’s been pretty much perfected. Today, we can walk into any one of our stores and discuss with our ICMs [inventory control managers] what out of stocks we may be experiencing and the reasons why.” Knoblauch gives high marks to the program, powered by INGEN software (www.ingen.com). “Controlling inventory levels has freed up tremendous cash for our organization,” he adds. Healthy score Helping consumers to become smarter about their health, Coborn’s collaborated last fall with CentraCare Health Foundation’s ‘BLEND’ Program (Better Living: Exercise and Nutrition Daily), Blue Cross and Blue Shield of Minnesota and numerous local health professionals to introduce in eight of its stores the NuVal nutritional scoring system developed by the renowned Dr. David Katz,, the director of the Yale-Griffin research center and one of world’s leading experts in the areas of health and nutrition. He helped to celebrate the program’s launch in person with Coborn’s and spent several days enhancing the training of the company’s staff, community leaders and health professionals. The NuVal scoring system, which appears currently on more than 8,000 items at Coborn’s, gives food items a score of one to 100; the higher the score, the higher the nutrition.  Scored categories include seafood, poultry, salty snacks, milk, yogurt, vegetables, cereal, bread, cookies, soft drinks, crackers and more. “We have a responsibility to provide information to consumers to help them determine what they can eat to live healthier lifestyles and I don’t see that reversing,” notes Thueringer. “NuVal is a tool to help them make good and informed decisions.” The community-based model with Coborn’s is a first of its kind for NuVal, which was formed in 2008 in a joint venture by Topco Associates, LLC and Griffin Hospital. Coborn’s has a lot planned for the immediate future. The chain plans to open two conventional stores this year and hope to have a pharmacy in every supermarket in the near future. It also plans to increase its e-commerce business through CobornsDelivers and make acquisitions where they “make sense,” Chris Coborn says. “At the end of the day,” says Chris Coborn, “We must remember that we are people serving a lot of people. As we grow, so will the challenges of keeping in tact that all-important family environment. And we’ll have to have a lot more wins than losses.”