Conversation condensed and edited for space by Clay Barbour.
The retail market is struggling. We hear people refer to it as a “retail apocalypse,” with most pointing the finger at online sales as the culprit. Have things really changed that much from when you ran Farm Fresh?
Online shopping is nothing new. I introduced online shopping in this market in 2003. And we did very, very well. We had a great deal of success with that.
So why are so many other industries struggling with online competition? Department stores are closing at an alarming rate.
Well, I can’t really speak to industries other than the one I worked in, but I can tell you that we did things at Farm Fresh that were more important to the community and to the welfare of the customers and our long-term growth – as opposed to what’s going to happen this next four weeks.
So, you thought about growth and brand loyalty as a long-term investment, instead of focusing on quarterly dividends?
My philosophy was simple: If we don’t take care of the people who work for us and the people who shop with us, we’ll never be successful. And if we get greedy and try to gouge customers, we’ll never be successful. Back in 2003, when Hurricane Isabel came through here, I made it clear to every employee that worked for me: If you raise the price one penny from what it is today during the storm, I’ll fire you.
Is it true that some of your ideas were not immediately popular, that some people worried about the fiscal impact of some of your customer-centric rules? I remember hearing that you would read all customer complaints and that led you to open more aisles after work so people didn’t get frustrated by long waits.
Well, I announced in our staff meeting that we were going to have all lanes open from 4 p.m. to 6 p.m. every day – the rush hour. And some of our staff objected. They said, “We can’t do that. It’ll hurt us. It’ll hurt our business. It will hurt our profits.” I said, “OK, fine, fine, fine. I understand what you’re saying. So effective immediately all lanes will be open 4 p.m. to 7 p.m.” And they stopped arguing. So, 4 p.m. to 7 p.m. every day, Monday through Friday, all lanes open, no ifs, ands or buts.
And did that end up hurting your bottom line?
I will tell you this, in the 13 years that I was running that company, we increased sales every single year over the previous year and we showed increased bottom-line profits every year over the previous year. And some years the increases in both were dramatic. No, it obviously didn’t hurt us. It helped us.
I’ve read that your approach was heavily focused on providing variety.
Absolutely. And that is, outside of Wegman’s, something that is seriously lacking today. When I was at Farm Fresh, we carried the kind of variety that was unheard of in the market. And I had detractors. The people I answered to in Minneapolis thought that we didn’t need to do that, but we did it. And it drew a tremendous amount of customer loyalty.
As did the way Farm Fresh handled beer and wine, right?
Yeah, back then beer was a margin killer. You didn’t make a lot of money off it. Wine had a higher gross profit. So, by expanding the variety in wine – again, those items that you simply could not buy anywhere in this market, except the specialty stores – we saw a dramatic increase in wine sales and an increase in the overall gross profit. That allowed us to lower our beer prices to a level that the other stores just could not compete with.
Do you think this approach could help other stores, outside of the grocery industry?
Yes and no. The thing is people don’t have to buy a new pair of jeans, but they have to eat. So, what we did was to make sure that the consumer could take advantage of not only good pricing but great service and extreme variety and the fact that we were invested in the community.
Couldn’t that approach be applied to other industries?
I think it could help anybody.