Food fare with flair

Outstanding service, product selection, happy customers and weekly individual store sales of well more than $1 million a week make Wegmans Food Markets the envy of many. It is just before 2 o’clock on a cloudy mid-September Thursday afternoon and the parking lot of the Wegmans store in Woodbridge, N.J. is packed. Inside, the aisles are equally crowded, filled with a cross-section of senior citizens, housewives, suited businessmen, blue collar workers and a surprising number of parents with children, who really should be in school at that hour. “Dad! Dad! Dad!” one boy of about 10 exclaims as he and his father pass the end of the massive service seafood counter and turn along the back wall into meat. “This is the coolest store!” And he has not even seen the G scale toy freight train that runs on tracks suspended over the dairy department yet. He is not the only excited shopper, as a trip to Wegmans brings out the kid in everyone. It is like going to a Disneyland for foodies—without the Disney prices. Wegmans stores are larger than the industry standard, with newer stores averaging 125,000 square feet. That space is needed to house the vast perishables departments and product offerings. In its largest stores, Wegmans stocks some 70,000 SKUs, compared to 40,000 in a typical supermarket. Many of those are perishables. A Wegmans cheese case is stocked with some 300 varieties, for example. At Wegmans everything is so artfully arranged, fantastically fresh, fairly priced and backed by friendly, knowledgeable sales associates that shoppers cannot help but leave with a lot of impulse purchases that were not on any predetermined shopping list. That may explain the action behind the blue-collar worker in the Woodbridge store grabbing a plastic clamshell to fill with four gargantuan store-made muffins ($1.29 each/four for $4.00) at the self-service muffin stand—one of several stations throughout the several hundred-foot long bakery department—and then eagerly snatching another clamshell to fill with the equally tantalizing doughnuts at the next station. Or that of the twenty-something Millennial stopping at the multi-level refrigerated case in produce displaying store-made veggie burgers, grabbing a pack of veggie sliders and then heading over to the adjoining “Veggie Spaghetti” case filled with store-prepared packages of julienned zucchini, yellow squash, carrots and other vegetables. Then there is the local fare—served with flair. Smack in the middle of the prepared foods aisle in the Woodbridge store sat a portable “Jersey Fresh BLT” station where shoppers could get a made-to-order sandwich of bacon, Jersey Fresh lettuce and world-famous tomatoes. Everyday scenes like this are replicated in each of Wegmans’ 84 stores in six eastern states. “Wegmans is a star among the grocery industry,” says Tod Marks, senior project editor at Consumer Reports Magazine, based in Yonkers, N.Y., where Wegmans came out on top of a reader’s supermarket rating poll that appeared in the May issue. “Wegmans is a store that exemplifies all that is right when it comes to servicing customers across a broad spectrum of our key ratings area,” he says. “Wegmans clearly is America’s best supermarket,” says Dr. Richard George, professor emeritus, at Saint Joseph’s University in Philadelphia. “They get more than 4,000 requests a year from people writing in and saying ‘Can you put a Wegmans in my community.’ They’ve done a really good job.” “When Wegmans does go into an area they impact the competition—fairly severely,” says David J. Livingston, managing partner at DJL Research, based in Milwaukee. “These stores generally have volumes in excess of $1 million a week, and their stores are well over 100,000 square feet. Wegmans is known for quality, service and being competitively priced. They definitely perform well above market average when it comes to sales per square foot.” Citing company policy, officials at Wegmans Food Markets corporate headquarters in Rochester, N.Y. declined to comment for this article. However, industry observers say Wegmans is one of the finest family-run businesses in the country. Founded in Rochester, N.Y. in 1916 by brothers John and Walter Wegman as the Rochester Fruit and Vegetable Co., today the company is run by third and fourth generation family members, with Danny Wegman serving as CEO, his daughter Colleen Wegman as president, and his other daughter Nicole as vice president of restaurant operations. “Family businesses just tend to hit the ball out of the park,” says Patrick Saparito, associate professor, family business and entrepreneurship, at Saint Joseph’s University. “Consistently research shows they just do better than publicly owned firms or non-family-owned businesses.” However, it is much harder for a family-owned business to survive into the fourth generation, than from the first to second or second to third, Saparito notes. Much of Wegmans’ success can be attributed to the fact that it is privately held, allowing it to act more like a merchant and not having to answer to shareholders concerned about the bottom line, say observers. “What separates Wegmans from other supermarket chains is that they organize their business to take care of their customers first rather than organizing their business to make money,” says Bill Bishop, chief architect of Brick Meets Click, a consulting firm based in Barrington, Ill. “Because Wegmans has the right people and expertise they have the ability to hold down some costs, but also support larger margins because they are able to deliver more value at the store level than somebody who might be more constrained.” Ken Harris, managing partner in the Chicago office of Cadent, a Wilton, Conn.-based consulting firm, is a big Wegmans fan who goes out of his way to visit one of their stores whenever he is back East. “Wegmans isn’t playing the same game as everybody else,” he says. “You can say that is true about leaders in general, but the reason Wegmans is not is because their higher order of calling is about the customers they serve, but done in a way that is not only interesting to their customers, but also interesting to them.” He cites their extensive employee training programs as an example. “If you go into a store in Hunt Valley, Md., or in upstate New York you are going to get the same impression from the people, which is a genuine feeling that they are pleased to be in the store, but their number-one priority is to help you find what you need. “The wow factor for customers and the reason they have such passion and loyalty exhibited by their customers is because the overall demeanor when you walk into their store is just so positive,” Harris adds. John Stanton, Ph.D., professor of food marketing, at Saint Joseph’s University, is another loyal Wegmans shopper. “Wegmans focuses on really the best quality, but they are not afraid to charge for it,” he says. “They know that when people come into their store and go into the seafood section they want to see a variety of fish and have a fish monger that knows what to do with the fish and will help them with buying the fish.” Wegmans, Stanton adds, is not afraid to spend money to invest in their employees. “Many supermarkets are trying to save themselves to prosperity and in many cases prosperity comes from spending and not saving. Wegmans has a pretty good grip on that,” he says. That formula appears to be paying off. According to Wegmans website, the chain rang up $7 billion in sales in 2013. A nice chunk of this year’s sales will come from a successful Gulf seafood promotion that concluded Labor Day weekend. “Most stores we work with only do shrimp because that is our number-one species, but the partnership that we put together with Wegmans included shrimp, grouper, snapper and blue crab,” says Joanne McNeely Zaritsky, marketing director, www.EatGulfSeafood.com, based in Tampa, Fla. “Wegmans was very easy to work with,” McNeely Zaritsky says. “They are really just a nice group of people which explains their whole retail concept. As part of the promotion they debuted a private label Gulf shrimp retail packaging.” The Wegmans brand Most stores that offer private label shrimp feature product from China, Thailand, Vietnam, India or some other far away low-cost locale, and not a premium high-cost domestic product. It is just one more example of how Wegmans uses private label to set itself apart. “Wegmans is now not a grocery store. Wegmans is a brand,” says Stanton. “And the Wegmans brand private label has the same values attached to it that the store does. If you are satisfied with Wegmans stores then you are likely to be satisfied with Wegmans products because you are buying Wegmans.” “A lot of retailers look at their own label as an entry level way to price promote against national brands. Wegmans looks at it as a way to differentiate their store,” says George, citing their famous honey mustard and trail mix. “Their trail mix is one of their number-one SKUs in the summertime. People go in and look for the trail mix and the Wegmans honey mustard. They are positioning private label as not just a price point and not just value-added, but as a point of differentiation.” Wegmans also differentiates itself by touting its pricing. In the Woodbridge store, a placard in the middle of the meat aisle compares prices on about a dozen popular cuts with competitors ShopRite and Costco, and slyly notes that about a third of the items are not available at the warehouse club. A similar sign in the neighboring liquor store compares prices on popular wines and spirits against the Joe Canal’s and Wine Country liquor superstores. Another huge banner sign suspended over the paper products aisle alerts shoppers that buying the family packs of paper products can save them upwards of 30%. Value is also touted in the prepared foods departments. Single-serve meat and seafood entrées—packed in a friendly unwrap and pop in the oven aluminum tray—starting at $6.00, bear bright pink stickers that emphasize their pocketbook-friendly price. In the meat department a family-size ready-to-cook sausage and pepper tray can be had for $6.00, while a pulled pork roast is pre-priced at $12.00. Another large coffin case in dairy merchandises all the makings for a Cheese & Spinach Ravioli dinner recipe that is featured in the chain’s Menu magazine. The simple dish includes private label refrigerated ravioli, bags of spinach and tubs of refrigerated marinara sauce. “In the grocery world there are people who shop just for price and there are people who shop for experience and quality,” says Barbara Kahn, professor of marketing/director of the Jay H. Baker Retailing Center at The Wharton School, University of Pennsylvania, in Philadelphia. “Wegmans has decent prices. They are kind of a category killer in the way they are hitting all of the things that a consumer wants in a grocery store.” “Wegmans has been very clever at projecting a stronger grocery price image,” says Bishop of Brick Meets Click. “They hold their private label prices for a year. There are only 75 items they do that with but it is all over the front of the store, inside the store, so you think they are making a major commitment.” Golfing partner Wegmans is also renowned for making major commitments to charitable causes. One example is Wegmans partnership with the Ladies Professional Golf Association (LPGA) for the sponsorship of the Wegmans LPGA Championship, which concluded this year after a 38-year run. “They were tremendous, tremendous partners for us and set themselves apart by giving all of their net proceeds to benefit United Way and the Graduation is the Goal Fund,” says Ricki Lasky, vice president, tournament business affairs, at LPGA based in Daytona Beach, Fla. The partnership ended this summer, because “sometimes partnerships run their course,” Lasky says. “Wegmans did everything from soup to nuts. They did a phenomenal job not just with putting their name on it, but getting the community actively involved. They had a great expo area where you could sample kind of everything from Wegmans, which is pretty cool. Wegmans reached out to the community and invited them to be a part of the championship, which is really the way to do it. They made it much, much more than a golf tournament. It became a community event, which is what made it so special,” she says. Touches like that are what spur thousands of consumers to send love letters to Wegmans asking them to open up a store in their town. Most end up jilted because Wegmans grows at a snail’s pace opening two or three stores a year. “Their decision making process based on where they want to locate a store is based on office buildings,” says John Connelly, a real estate developer and supermarket consultant based out of Reading, Pa. “They want to make sure that there is enough office use around to support their food court.” “When it comes to real estate site selection, Wegmans is very slow and methodical about prospects,” says Livingston of DJL Research. “They are looking at certain demographics. They generally like a well-educated customer, a higher-income customer. You are not going to be seeing these stores go into low-income areas. They are going to be in the well-heeled suburbs of Washington, D.C., New Jersey, etc.” One of those well-heeled suburbs is Cherry Hill, N.J., outside of Philadelphia. That store counts Professor Kahn as one of its customers. “Wegmans expands in a very prudent fashion,” she says. “When their Cherry Hill store opened it was quite the event. People were waiting for it to come. Wegmans first needed to find the space. They need a very good location with a very large floor plan, and it has to be in a neighborhood that can support that kind of store.” Wegmans is, however, adapting with the trend towards opening “smaller” more urban locations. Take its new Chestnut Hill store, six miles from downtown Boston. It is a mere 80,000 square feet with the major selling floor located downstairs beneath the liquor store. According to a YouTube video the chain posted just prior to the store’s April 27 grand opening, departments and selections were edited to fit into the truncated space. One feature that was eventually added was a pharmacy department. It measures only 300 square feet, which is the legal limit, the store manager says on the video. “In some ways Wegmans is like the Michael Jordan of retailers,” says Harris of Cadent. “Michael Jordan makes everybody’s game better. So whether you are looking at real estate, chambers of commerce, or the population base, Wegmans makes it all better. I think that is something unique in the industry because people want to be associated with the fact that they do business with Wegmans. There is a real virtue because of the way they do business,” Harris says.   Fame and Fortune People who think working in a supermarket is a dreadful, dead-end job apparently have not worked at Wegmans. In fact, when it comes to happy employees, Rochester, N.Y.-based Wegmans Food Markets is a Fortune 100 “all-star,” having appeared on the magazine’s Top 100 Best Companies To Work For list for 17 straight years. The 84-store chain, which employs some 43,564 people, is praised for its young, dedicated and diverse workforce. “College students, take note: Almost half of employees are 25 or younger at this family-owned grocery retailer on the East Coast,” Fortune editors wrote. “Flexible scheduling, an employee scholarship program, and stretch assignments help young employees grow within the company, and 66% of jobs are filled through internal promotions.” Wegmans only has a 4% voluntary turnover and offers employees job sharing, compressed work weeks and an average of 65 hours of training per year for both salaried and hourly employees. “Wegmans has a program to reward employees with a gift card,” says Christopher Tkaczyk, senior editor at Fortune, a publication of Time, based in New York. “In most retail jobs you don’t get a lot of incentive other than if someone is working on commission, which doesn’t happen in supermarkets. So for building a team-based workplace and allowing your employees to reward one another that way, it just provides the kind of incentive that would not be available in a retailing job. That is just one thing that sets them apart.” Companies have to apply to Fortune to be included on the list, Tkaczyk says, noting that Publix, Whole Foods and Nugget Markets are also on this year’s list. Stew Leonard’s is another frequent winner. This year 257 companies applied and were vetted by the Great Place To Work Institute, a San Francisco-based consulting and industry research firm. “The companies have to reapply every year and the process is quite extensive,” Tkaczyk says. “It is not only a matter of whom from human resources has access to all of their employment figures and all the survey questions, but there is also the employee survey process, which is quite involved.” This year Wegmans ranked number 12, down from number 5 in 2013. “Our rankings change every year,” Tkaczyk says. Google has been number 1 for the past few years. Consumers' Favorite Earlier this year Consumer Reports conducted a survey among its readership of what they consider their favorite supermarket and—no surprise—Wegmans came out on top. The survey was of 27,208 of the magazine’s readers who told it about a collective 48,076 shopping experiences at 55 of the nation’s largest food chains, including national players like Trader Joe’s, Costco and Whole Foods, and regional chains like Acme, Pick ‘n Save and the Vons division of Safeway. On a scoring basis of 100, Wegmans got the top score of 88, followed by Trader Joe’s with 87, Publix with 85 and Costco and Sprouts Farmers Market with 84. Walmart came in last. “We are not rating them—it is the American consumer,” says Tod Marks, senior project editor, at Consumer Reports magazine, based in Yonkers, N.Y. “What makes our surveys different from a lot of other surveys is that they are not attitudinal surveys, but behavioral surveys. We asked the customers of each chain how they perceive the quality of the perishables, the price/value equation, cleanliness of the shopping area, the attitude, helpfulness and friendliness of the staff, impediments that might make a store difficult to shop, checkout lines, out-of-stocks on specials, etc.,” he says. “Wegmans was a standout in many categories: exemplary service, top quality perishables—meat/produce and very good price perception among shoppers,” Marks says. “In terms of prices, Wegmans got four blobs, which is what we call the little colored circles in our charts, which is considered very good.” Wegmans did not score negatively in any aspect, Marks says. “They are stellar all around and they’ve been that way for many, many years,” he says. “I’ve been personally doing this story for over two decades and for the time that they have been rated they have been a standout exemplary operator in every way,” he says.