GRISTEDES CEO: NEW FORMATS HURT NYC GROCERS

Greg Gattuso

NEW YORK -- Everybody loves an old-fashioned American success story. Supermarket mogul John Catsimatidis did not disappoint his crowd of 100 seminar attendees at a Learning Annex event here this month.

Catsimatidis, chairman and chief executive officer of Gristedes Foods, also had sobering words for would-be entrepreneurs interested in the supermarket industry.

"Ten or 15 years ago, the supermarket business was super," he said. "We sold the best quality products at good prices. But now, the supermarket is on the verge of becoming a dinosaur.

"Every drug store that opens now devotes 30% or 40% of its space to supermarket items," he said. "You also have gourmet stores, Whole Foods, electronic grocers, Costco and Wal-Marts moving in. One of those things doesn't hurt too much. But a combination of all of them hurts a lot."

Catsimatidis said the effect in Manhattan alone has been a 50% reduction in the number of supermarkets in the last 15 years. He predicted more reductions ahead. He was particularly concerned about recent plans by Wal-Mart Stores, Bentonville, Ark., to open a store in the borough of Queens. Although plans for that specific site have been canceled, Wal-Mart reportedly continues to seek entry into New York City.

"Wal-Mart comes into a market with predatory pricing and wipes out Main Street U.S.A.," Catsimatidis said. "I testified before the City Council, and I told them, 'If you give [Wal-Mart] tax breaks, and they come in with non-union stores, what happens to Main Street Manhattan? What happens to all the stores on Second Avenue, Third Avenue, Broadway and Columbus Avenue?"'

Although it sounded to some in attendance that Catsimatidis was ready to sell his supermarket holdings, he shrugged off the suggestion and went back to telling his life story. He peppered it with lessons learned from forays into retail, real estate, aviation, oil, religion, philanthropy and politics (as an advisor to President Clinton).

While the evening's theme may have been a bit exaggerated -- the seminar was billed as "Build Your Own Mega-Empire" and "How to Become a Mega-Successful Entrepreneur" -- Catsimatidis came through with enough advice and anecdotes to justify the $29.99 ticket price.

"There are many forks in the road," he said. " Which fork you take will decide where you end up in life."

For Catsimatidis, that road began when he was a college student at New York University, working nights and weekends in a cousin's grocery store. As he approached graduation, the cousin decided to get out of the business and sold his 50% share to the 20-year-old Catsimatidis, who left NYU eight credits shy of a degree in electrical engineering.

Five years later, the only son of immigrants found himself running 10 stores, with a combined $40 million in sales and making $1 million a year. Catsimatidis adopted the name Red Apple Group for his company because it reminded him of "apple pies and America."

He also broke with the industry by keeping his stores open on Sunday.

"On Friday, I wrote all the checks to the vendors," he said. "If I didn't open on Sunday and get some extra money, those checks wouldn't clear on Monday."

By the late 1970s, when economic crisis caused many residents and businesses to flee New York City, Catsimatidis said he decided to buy real estate, realizing "your business is only as good as how long your lease is for.

"Those who own the bricks make the rules," he added.

By the end of the session, some were still seeking the secret of Catsimatidis' success.

He obliged, telling them, "There's no substitute for hard work."

"People ask me why I work so hard," he said. "I come from 135th Street. I work hard because I don't want to go back."

Lessons From a Self-Made Success Story

NEW YORK -- Following are some "words of wisdom" shared by John Catsimatidis, Gristedes' chairman and chief executive, at a recent event here.

On leadership: "Every boat needs a captain, and every company needs a leader. People want to be led. They'll follow you if they think you know what you're doing."

On networking: "Go out and meet people. Talk to people. There are people who might be important to you some time in the future. Go meet them and remember them."

On selling: "We're all salespeople. You sell yourself. You sell your company. You sell your product. If you don't believe in what you're selling, you're not going to sell anything."

On management: "You've got to find good people to run your business for you. But you'd better be prepared to jump in and do the job yourself."

On success: "Success is the conglomeration of a lot of good deals. If you make a lot of good deals, you'll wake up in the morning and say, 'I'm successful."'