Cultivating a Legacy

Some people call it a tradition, others an obsession. There are those who even elevate it to cult status.

However Wegmans Food Markets is described, the Rochester, N.Y.-based chain now, celebrating its 100th anniversary, has become the epitome of the supermarket shopping experience and the benchmark against which all others are measured. 

If, as the old saying goes, imitation is the sincerest form of flattery, then Wegmans should be very flattered. Its European-style market atmosphere has been a model for the one-stop shopping concept in the U.S. for decades—often copied but rarely matched, and never surpassed in terms of cutting edge merchandising, product quality, innovative thinking and commitment to customers, the communities it serves and to its 44,000-plus employees.  

Even Wegmans’ fiercest rivals are its most ardent admirers. It has been called the “anti-Walmart” for its job creation, extensive training efforts and wage rates and benefits that have always been at the high end of the retail market—a great source of frustration for labor unions.

Wegmans has received countless awards for charitable work in its hometown—and elsewhere—and for its commitment to sustainability and affordable healthy eating. It has appeared 19 times on Fortune magazine’s list of the Best Companies in America to Work For, and is at the top of American Customer Satisfaction Index list. Forbes has pegged the chain as one of the top 10 employers in the country and it is consistently ranked as one of the top supermarkets in the country by both Consumer Reports and the Food Network.

It is for these reasons, and many more, that Grocery Headquarters is proud to honor Wegmans as our 2016 Retailer of the Year. 

After 100 years, the Wegmans story is far from over. In fact, the company is opening the book on a new chapter with expansion of its stores and venerable reputation into new marketing areas like North Carolina and a downsized urban format for New York.

The 88-store chain, which had annual sales of $7.9 billion in 2015, is poised to easily top the $8 billion mark this year. Its growth is expected to continue with new stores in the Northeast, Mid-Atlantic and Southeast regions in marketing areas that are anxious for the Wegmans experience. 

The chain’s story began in 1916—the same year Clarence Saunders launched Piggly Wiggly, one of the first self-service supermarkets. A year after peddling produce from a pushcart, John Wegman opened the Rochester Fruit and Vegetable Co., a small food store that was operated in front of the Wegman family home in Rochester. His brother Walter joined him a year later. Six years later, business was so good that the brothers opened a small store in another location to include canned goods, a bakery and a cafeteria. 

By 1930, the Rochester store was converted to a still revolutionary self-service concept, offering such innovations as a café with seating for 300, refrigerated food displays, homemade candy and vapor water sprays for the produce department. These were among the many innovations that made Wegmans something of a tourist destination in the early years. 

This innovative mindset continued in 1950 when Robert Wegman—the son and nephew of the founders was named president and subsequently chairman—guided the chain until his death in 2006. It was Robert, constantly lauded for his prowess as a merchant, who set in motion an expansion and development program that laid the groundwork for the chain’s longevity and transformed Wegmans into one of the largest, and most profitable, private companies in the U.S. 

Included in this transformation was the introduction of private label, pioneering food service operations and the Shoppers Club electronic discount program. Robert also led the way in laser scanning at the checkout and played a pivotal role in the development of the Universal Product Code in the early 1970s.

He invested in businesses that included an egg farm, onsite meat processing facilities, a central bakery, a real estate company and is generally credited with creating the chain’s 40,000 square-foot store-within-a-store one stop shopping concept that included floral, pharmacy and the beginnings of what has become a world-class prepared foods, bakery, seafood and meat departments. All have become Wegmans’ hallmarks, but in stores three and four times the size of the original and in a format that has been successfully duplicated—but customized—in new marketing areas.

That expansion began in earnest in 1993, with the chain’s first stores in Erie, Pa. and Allentown, Pa. From there they went to affluent marketing areas in New Jersey like Windsor Township near Princeton and Bridgewater. Last fall, the company broke ground for a new store in the northern New Jersey town of Montvale, a stone’s throw from the former headquarters of the now defunct A&P.

It was also during this period that the chain began replacing some older stores and refined its marketing and merchandising even further. They added departments like Asian food bars, pizza and pasta bars and sushi bars. They hired chefs for French-style patisseries created by Nicole Wegman, one of Danny Wegman’s daughters, who is now senior vice president of wine and perishable merchandising. His other daughter, Colleen, became president of the company in 2005.

The chain’s private label program, which was introduced in the late 1970s, was expanded in the early 1990s to include items like bread, cereals and frozen meals, as well as vitamins and other health care items.

Wegmans has remained consistently strong over the years, despite the intrusion of alternative supermarkets formats and food sellers that included drug and dollar stores and mass merchandisers like Walmart and Target. 

Despite competitive pressures, the one principle that has guided the company is its commitment to employees and communities. As CEO Danny Wegman said on the occasion of the chain’s 100th anniversary: “As we reflect on how we got here, we remember a simple rule that my dad taught us—never think of yourself, always help others. These words made all the difference… they led to putting the needs of employees first and then to generations of employees’ families working at Wegmans.

“They led to welcoming customers like guests in your home… they led to finding new ways to help families make delicious, healthy, affordable meals… they led to decades of partnering with local growers and producers and they led to giving back to the community in ways that have a significant impact.”

Wegmans continues to push the envelope by expanding its foodservice credentials. The chain now has nine stores containing the Pub By Wegmans. The most recent in Rochester, N.Y. contains what is called the Timber room. It has a fireplace, large-screen television, banquet seating and a full service bar serving craft beer, wine and cocktails along with a broad array of pub food like burgers, salads, snacks and fries. About 90 percent of the menu items used at the pub are developed from products and ingredients sold in Wegmans supermarkets.

Industry observers believe that a big part of Wegmans operational and financial success is due to its relatively slow, but methodical expansion with a format that has stood the test of time. One of the moves that everyone is watching with great interest is its move into Brooklyn, N.Y.’s historic Navy Yard. This  will be Wegmans first truly inner-city store and could be the prelude to further expansion into more densely populated markets.

Wegmans successes in Maryland and Virginia have emboldened the chain to go further. It will open its first store in Cary, N.C., the southernmost location to date. However, the chain is said to be negotiating for land and leases in the Raleigh-Durham area. 

North Carolina may be Wegmans biggest challenge to date. The area is home to no less than 15 supermarkets including Publix, Harris Teeter, Whole Foods and Trader Joe’s, Lowes, Walmart and eventually Germany-based Lidl, which is looking at several sites in the Cary/Apex area. 

However, many believe that Wegmans retail style, as well as its strong bond with employees and local communities will eliminate any obstacles to its growth in this and other marketing areas.

The question many are now asking is where Wegmans might go next. A number of cities in North Carolina would be attractive growth areas and could prompt the chain to open another distribution center to handle expansion in the Southeast. 

Meanwhile, Florida consumers who know the Wegmans name are inundating social media sites with “We Want Wegmans” posts, lobbying the retailer to consider the Sunshine State. Observers say the chain does not want to compete head-to-head with Publix in that area. 

However, in the past, Danny Wegman has stated that the chain did not want to expand further south than Maryland and Virginia and would remain focused on the Northeast.

Observers say: “Maybe yes, maybe no.”    

On Wegmans

Brian Sharoff

president, Private Label Manufacturers Association 

I think everyone in the industry firmly believes that Wegmans has been among the industry leaders for many years and their private label is really the best that private label can be. 

There are few companies that are so responsive to their customers and creative in terms products they have developed for their store brand. And they are very aggressive about marketing their own brand. 

Based on their expansion in recent years, I am sure this strategy will continue as they enter new marketing areas. A good example was their entry into New Jersey years ago. They offered the best products and assortment and people responded to it. They will do exactly the same thing elsewhere.

They are not going into North Carolina just to serve transplanted Yankees. They are going in because they believe there is an opportunity for high quality products. It is what Wegmans is famous for and they will not compromise.” 

On Wegmans

Amelia DeAntonis

key account manager-consumer brands division, Rich Products

We have had a great partnership with Wegmans. Bob Rich is a close friend of Danny Wegman and they have had a close personal relationship. On a business level, Wegmans may not be the size of customers like Walmart or Kroger, but they are unique and very easy to work with. I am not sure “laid back” is the right way to describe it, but you feel at home when you visit them.

They have always been very receptive to new items. I work with products like SeaPak and Farm Rich and we have another division for in-store bakery products like cookie dough that are sold into Wegmans.

A lot of concepts may have been developed for club stores, but when we have new items Wegmans is usually the first of the mainstream retailers to try anything innovative. One example is our SeaPak Lighthouse products. It is geared toward the healthy consumer, which is right in Wegmans wheelhouse. 

They are willing to try new things, whether it ends up working or not. It is a matter of trust between our two companies along with their creative thinking, which has been one of their key strengths. 

We have talked about some long-term collaborative projects and Wegmans has asked us to be their private label supplier on frozen appetizers and seafood. Right now there is a Wegmans initiative to get clean labels for frozen foods with no artificial ingredients. If it was anyone else, the 88 stores and volume might not justify it, but due to our relationship and the fact that Wegmans is usually two steps ahead of everyone else, we will take a close look at it.

And if they are asking for a clean label on frozens, you can bet everyone else will be doing it in the next couple of years. Basically, we are open to working with them on anything they come up with. I see retailers trying to make their private label products better and getting into prepared foods, but they all follow Wegmans. The chain also takes the time to hire the right people and that is a big part of why they win on customer service. It adds to their innovation.

On Wegmans

Julie Stafford

industry liaison, Cornell Institute for Food Systems and the Industry Partnership Program

Wegmans is definitely at the forefront of trying new ideas and I have a lot of respect for that. They are organized, systematic and creative. It is a combination that serves them well.

Food safety has been one of the most prominent areas of our relationship with Wegmans. Their employees have come to Cornell’s training programs in the extension arena on food safety in addition to Wegmans own internal food safety programs. There are also times when they are looking for a read on a particular food safety issue from one of our faculty at the Food Research Laboratory in Geneva, N.Y. 

It is a lot of fun engaging with Wegmans because they are forward thinkers and very strategic. It is refreshing to see how they are thinking about food in the future and their willingness to invest in order to be more prepared to feed people with more nutritious foods. 

Another area of interest has been with high pressure processing. Wegmans and LiDestri Food & Beverage are collaborating to bring this new approach to food processing and food safety to the Rochester area. Cornell will provide the expertise of multiple faculty in the Department of Food Science and will conduct validation studies at the New York State Agricultural Station in Geneva, N.Y. This is a collaborative effort among the university, industry and government that Wegmans helped forge.

The artisanal cheese program has also been a very strong program for several years and Wegmans has really helped make a difference in New York State’s capabilities. They have provided support for the program that enhances the capabilities of artisanal cheesemakers in the state and help them understand the retail market and new food safety regulations.

It is part of Wegmans’ commitment to revitalizing upstate New York and its vision of the State as an East Coast food hub for the nation. 

On Wegmans

John Rand

senior vice president, Kantar Retail

I get to talk to supermarket and supplier audiences across the country and everyone knows Wegmans. They are, quite literally, legendary. 

Coming from Rochester, N.Y., an industrial region that has had both good and bad moments in its history, may have helped Wegmans remain focused on the practical, a down to earth attitude that has been a bedrock of the company. It also has helped them maintain a long-term focus on employees, service and training, a key part of the chain’s DNA.   

Wegmans took a big leap forward in the late ‘80s and early ‘90s by being ahead of the industry curve in understanding the impact and utility of technology and data. They were early adopters of space and category management, EDI, ECRM and other analytical tools that were thoroughly integrated into the retailer’s operations.  

The next great leap was to recognize, sooner than almost anyone, that an undifferentiated center store was insufficient and that an enhanced perimeter would create competitive advantage. That was when Wegmans’ center store went EDLP and the fresh food departments were enhanced.

Often overlooked is how Wegmans’ leadership recognized more quickly than anyone that distance between outlets mattered less than placing stores in areas with the “right” shopper. Among the others that successfully followed this strategy were Whole Foods and Trader Joe’s. Here at Kantar Retail we call these retailers Choosers—they have a chosen audience and know where they live. Combining food excellence, reliable value, superior staff and service, along with measured and careful expansion to areas with the best shopper match has made Wegmans an outstanding performer. Even with fewer than 90 stores they are consistently among the top 10 supermarket retailers in actual dollar growth. We estimate sales per square foot to be the second highest in the channel at more than $800, and they have perhaps the highest level of staffing per square foot in the industry, setting an example of growth through engagement—not cost cutting.  

On Wegmans

Don Knickerbocker

vice president of supermarket sales, Amerlux

We are proud to be a select manufacturer of lighting to Wegmans Food Markets. A wonderful company to work with, it is not just an upscale, top-level grocery store; it is more like a glorious outpost with an indoor street of fine shops.  

We are “Super Fans” of Wegmans, just like the customers that rave about the great service, knowledgeable staff and products. From foreign groceries and organic selections, to tasty subs and exceptional salad bars, many locations offer fine cafés, pizzerias and buffets with seating areas to enjoy freshly made food. Wegmans is a very upscale and comprehensive grocery retailer which is beloved for its large selection of craft brews housed in walk-in beer lockers, bookstore quality magazine sections, top-flight bakeries known for custom-made sheet cakes and decorated cookies and vast candy selections that include classics, nostalgic favorites and quirky finds. With a strong commitment to the health and well-being of its customers, the retailer provides a vast cheese selection, expansive olive bar, unique fish department with seafood galore, in-house florist, DIY nut butter machines and other highly acclaimed departments.

To enhance patrons’ shopping experience, we illuminate specialty sections with a virtuosic composition of lighting fixtures, sleek aesthetics and advanced LED technologies. Our energy efficient fixtures deliver an extra punch of light and color rendition precisely where needed. Second to none, Wegmans utilizes world-class store development and design teams and aligns themselves with premier suppliers and partners. Wegmans is renowned for its wide aisles, perfect displays, vast food assortments and clean floors. Many stores offer daycare, dry cleaning, recycling stations and pharmacies, making it possible for customers to knock out several errands at once. In addition, consumers can choose modern gifts including everything from yoga gear to coffee accessories.

On Wegmans

Leslie G. Sarasin

president and CEO, Food Marketing Institute

The food industry has witnessed mind-boggling shifts in food trends, shopper demands and demographic shifts, store formats, public policy matters and regulatory issues. Wegmans has been an industry leader, successfully navigating these changing currents for 100 years. 

While adapting its philosophy of customer service to every generation the company itself remains a fountain of youth. Even at 100 years old, it speaks to a new breed of shoppers who expect more—a grocer that inspires them and, at the same time, offers safe, affordable, nutritious food. The media has featured Wegmans as a Pied Piper for shoppers, suggesting the space within its four walls constitute more of an exclusive club. They are not wrong. The brand is synonymous with customer service and people are drawn to Wegmans for an experience and to be part of something bigger than conventional grocery shopping.

Wegmans’ slogan, “Every day you get our best,” is a testament to the culture of food and exceptional service that customers have come to expect in every one of their stores. In industry circles, the Wegmans name is synonymous with innovation in the art of food retail. When FMI instituted a new industry award in 2012 in honor of former chairman Robert B. Wegman, it was clear to all that it is an award for entrepreneurial excellence. His 50-year leadership of Wegmans was marked by a creative retail savvy that transformed a family grocery business into one of the largest privately held companies in the U.S. It was his innovative spirit that FMI wished to honor and propagate throughout the industry. Furthermore, when FMI was seeking retailers whose imaginative leadership qualified them to be the first recipient of the Robert B. Wegman Award we did not have to look far, choosing to honor Robert’s son Danny Wegman with the inaugural award. 

Danny, Colleen and Nicole Wegman actively support their trade association and serve multiple leadership positions at FMI. Over the last five years, Colleen has focused on food safety, leading our committee and the FMI Foundation to invest in food safety educational opportunities related to Listeria prevention. Moreover, they support FMI events and programs that help shape and inspire our industry.

On Wegmans

Craig Rosenblum

senior director, Willard Bishop Consulting

The industry as a whole has nothing but respect for Wegmans. Wegmans’ major strength has to be its phenomenal brand equity and differentiation in the marketplace while driving the shopping experience through the overwhelming size of the stores and presentation of food service and perishables.

Not many hold a candle to what this innovator does. In this case imitation is the greatest form of flattery, and because of Wegmans success others in the industry that are building a differentiated experience work. Danny Wegman is trying to stay ahead of the curve with innovative thinking that makes the stores more than just a place to buy groceries. They are a place where you become part of the community and that is the format they are using to work their way down South.

The 130,000 to 140,000-square–foot box works for them. They are going to tweak it by refining the local component around produce and are always incorporating what works for the community in their hot and cold foodservice. The whole pub concept is part of their expertise, but I do not think it has been a game changer for them or a staple of their business.

They are also focused on getting the right people and paying them well. The Wegmans name is a brand with certain connotations attached to it. You expect certain things when you walk in a store. Matching up their culture with the right people is very important to them. People who have been interviewed for the stores say it is comparable to what it takes to be an executive in other companies.

Those expectations are carried through with private label. Shoppers firmly believe that the “W” and Wegmans brands are just as good or better than any national brand item or other private labels.

Wegmans is expansion minded, but not in a hurry. Years ago the thought process was to get out of saturated areas in New York State and go to contiguous areas in New Jersey and Pennsylvania. They have had great success in Virginia and Maryland, but I do not think they want to be in Florida. They have yet to face a Publix-type competitor. As they move South three things have to make sense: cost of logistics, the right real estate and the competitive landscape.

On Wegmans

Burt Flickinger

managing director, Strategic Resource Group

Goliath success story of the retail, restaurant and wine industries; fighting competitors against sometimes overwhelming odds and emerging victorious. Yet some in the industry fail to give the Wegman family credit for building an Eastern powerhouse in economically challenged markets against some formidable competitors.

Wegmans wins out not only because it has the best stores, but also the best people and for being the price leader that raises the standard of living for people in all the communities it serves. This includes leading the industry is college scholarships for employees, which has been a very important factor in increased loyalty and productivity. 

The chain is a transformational economic engine that has helped stabilize and save a number of upstate New York areas. By developing its own stores and supporting manufacturers, Wegmans has helped create more than 100,000 jobs. This helped save its home city of Rochester, N.Y. when its three largest corporate employers—Xerox, Bausch & Lomb and Eastman Kodak—were either contracting operations or collapsing into bankruptcy.

It has a geometrically higher degree of difficulty due to its locations in economically shrinking states compared with food retailers that are expanding in the fastest growing Sunbelt and high tech states. Unlike many other third-generation grocers, Wegmans typically invested four to five percent of annual sales in CapEx to accelerate profitable sales growth, continually developing some of the most innovative stores to succeed in even the most difficult areas of New York State. 

This has made Wegmans a clear No. 1 in its New York State markets with a 35 percent share. As it moves to its first $10 billion in corporate sales, it is also building meaningful market shares in Pennsylvania, Maryland, Virginia, New Jersey and New England.

These same factors that gave Wegmans exceptional growth in “rust belt” regions will be the key to the chain’s future throughout the Northeast and into North Carolina against some well-capitalized, highly capable competitors. 

To understand the depth of Wegmans success, simply look at the chain’s evolution in its first 50 years. Wegmans carved out a meaningful niche in the Rochester/Monroe County area, but was unable to achieve significant size and scale in the region.

On its 60th anniversary, the chain faced a transitory corporate crisis. In fact, it was reportedly was under pressure to make payroll as a result of unprecedented below-cost price wars, including triple couponing by 51 high volume Tops stores. At the time, Wegmans had only 31 stores with a less than five percent share of the west central New York state market. But Bob and Danny Wegman matched every major competitors’ price. After the price wars, nine of Wegmans 17 key competitors went on to file for bankruptcy or liquidation and three others exited the market. 

By its 80th anniversary, Wegmans was No. 1 in the market.

Colleen, Danny, Nicole and Bobby Wegman continue to provide exceptional leadership for the chain as it starts its second century and continues its legacy as one of the most successful multi-region retailers in the U.S.