Taking Stock

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Weis Hosts Best Ever Vendor Meeting 

If, as they say, “the third time is a charm,” then the fourth time must be the “ultimate.” As one DSD vendor told me, “this is not only the best vendor meeting Weis has ever staged, it’s one of the best I’ve ever attended and is a giant leap from its first meeting in Hagerstown (MD) four years ago.”

I didn’t attend that initial confab in swingin’ H’town, but I can also attest that this year’s summit was the retailer’s best session that I’ve been to.

Why? The meeting was fact-filled, the speakers were concise and on-topic and the entire Weis executive team was accessible and willing to answer any questions or concerns that were on the minds of the nearly 500 sales reps, brokers and distributors who attended. Perhaps as importantly, Weis conducted its review in four hours (which included an hour for lunch) and its use of three “breakout” sessions focusing individually on center store (Kevin Broe), fresh (Dan Koch) and logistics (Wayne Bailey) was a creative and effective approach to take a deeper dive into those areas with Weis’ vendors.

As for content, after Jonathan Weis welcomed the audience and gave a brief overview of current events and future direction, he then passed the baton to executive VP Kurt Schertle who provided details about four key areas of focus for the retailer: the economy, Weis’ financial results, its future investments and category trends.

When analyzing the still struggling economy, Schertle noted several key areas as negatively impactful, including the continuing 13 year drop in the national labor participation rate (to a current low of 63.2 percent) to a steady decline in household income (a 6.6 percent decline – $3,700 since 2007 and the lowest since 1988). Schertle also detailed the effects of inflation since 2000 when a gallon of gas cost $1.51 (now $3.49); individual monthly health insurance was $49.85 (now $163.87); annual college tuition was $21,856 (now $34,247); and you could buy a Super Bowl ticket for $325 (now $2,600).

Schertle noted significant increases in SNAP (Supplemental Nutritional Assistance Program) spending among its customers which now account for six percent of Weis’ total weekly sales, too. He added that as SNAP usage increases, the number of participating retailers (c-stores, gas stations, dollar stores) that are now participating in the federal program has increased by seven percent over the past year and with Congressional cuts looming, the reduction of SNAP benefits could play a huge role in terms of sales for all retailers.

He also addressed Weis’ private label initiatives, which are an area of priority for the retailer. However, unlike other retailers, including prime rival Ahold, who have set specific sales target for “own brands” (Ahold would like to see private label revenue constitute 40 percent of total sales in the next three years), Schertle explained that there is no specific external goal they are seeking, noting that private label volume will continue to grow because consumers are more value-focused and that, in an arena of intense multi-channel competition, private label creates a clear point of separation for Weis.

As for future growth, Schertle noted that the company’s investments in improving its store base and IT infrastructure over the past five years (10 new stores, 63 major remodels, 20 minor remodels and the addition of 11 fuel centers), have made Weis more competitive and have provided a foundation for future improvements. This year Weis will spend $130 million on capital improvements, a 60 percent increase from five years ago. Other ongoing priorities include Weis becoming more of a sales-driven organization which includes delivering strong customer service and greater focus on in-store execution (Schertle stated that Weis is not laying off associates at store level as are some other retailers and has added a “load the car” program at its 165 units). Key to that initiative is Weis’ $2.9 million budget for development and training associates.

Continuing to improve its fresh departments and developing merchandising programs for “meaningful localization” are also hot button items on Weis’ plate. Schertle declared that over the past year his company’s fresh business has grown in all segments – produce, seafood, foodservice, meat and bakery – adding that growth trend needs to continue, but not at the expense of center store where he asserted that opportunities lie in a number of categories – cake, cereal, canned cat food, laundry, aseptic, mayo, paper, soda and pasta.

In describing his version of “meaningful localization,” Schertle said that each store needs to be assessed on its customer base and then tailored to best fit that base. He noted that sales at Weis’ store in Lebanon, PA have improved once a more Hispanic product mix was implemented as also was the case at the retailer’s State College, PA stores whose expanded Asian product presentation better reflected that college town’s population. Schertle also addressed Weis’ newly upgraded weekly circular (unveiled on October 6) which offers a “lowest price guarantee,” strong fresh image, sharper feature pricing and an overall improved design.

All of these programs, Schertle declared, are intended to increase Weis’ sales, which have flattened out over the past year. And while earnings remain strong, driving revenue both at new units and existing stores is a vital component in determining Weis’ future results.

Part of that sales initiative will be in full view next month when Weis celebrates grand re-openings at its two State College units (November 3) and four other stores on November 17 (Pasadena, MD; Odenton, MD; Danville, PA; and Brodheadsville, PA). Moreover, Weis will open the former Pathmark store in Huntingdon Valley, PA on November 10.

With Schertle’s newly added store operations responsibilities he will be one busy dude.

Following Schertle’s presentation, Weis veteran Wayne Bailey (who seemingly has had just about every job at the chain in his 37 years of tenure – he’s now VP/supply chain and logistics) addressed the vendors about Weis’ changing supply chain objectives.

Bailey admitted that for many years Weis did not prioritize or efficiently execute its supply chain initiatives.

With an annual budget of $7 million, Bailey, who was named to lead supply chain in February, has focused on improving overall service levels (now up to 97.4 percent) while also reducing inventory. Some of those gains have been achieved through Weis’ new computer generated ordering (CGO) system which has aided in inventory management and significantly reduced out-of-stocks and corrected distribution voids (a 34 percent reduction in dairy alone). Bailey said the focus on supply chain has opened his eyes in several areas including the fact the 74 percent of unsalable items are not from damage, but rather from code date expirations, an area that can be readily addressed. He added that because of the increasing importance of supply chain, he would like to schedule annual vendor review meetings in which specific targets are set and evaluated. “Our goal is simple: we want to offer our customers the freshest products possible,” Bailey declared.

Brian Holt, VP-advertising, marketing and public relations, delivered a very professional and engaging message about the Weis “brand,” its “gold” loyalty card and its digital platform.

He noted that Weis’ “brand architecture” revolved around relevant rewards, customer service and “meaningful localization,” which specifically meant more differentiation, better overall service and strong community affiliations.

In focusing on its “gold card,” Weis is hoping to increase the total spend for those customers who represent 13 percent of Weis’ total and reduce cross-shopping.

Individualized enhancements for gold card members include free items, dedicated sweepstakes and personalized deals. Holt noted that since the ramping up of its top-tier loyalty program in 2012, the results have been very good.

He then provided an overview of Weis’ online shopping program (formerly known as iShop). Currently there are 14 stores participating in the program and Holt expects another 20 units to come on board in 2014. He is encouraged that the “basket size” of online ordering is four times greater than conventional shopping and, even in its early stages, has produced a $1.5 million sales gain. Holt also noted that Weis’ mobile application will be expanded next year to include a GPS locator, push notifications for “specials” and a link to easy prescription refills. Much like Schertle, Holt addressed the importance of Weis’ fresh departments in creating big per transaction sales increases (ranging from 50-150 percent over purchases that don’t include perishable items).

“There are three key ways to deliver on our promise – service, selection and solutions,” Holt asserted. “Our goal is to under promise and over deliver.”

After lunch, Broe, Koch and Bailey hosted individual breakout sessions for an hour and then Weis presented its Strategic Achievement Awards to its top suppliers. Winners this year included Catalina Marketing, EMD Sales, Huntsinger Farms, Inmar, McCormick, Pepperidge Farm, Samuels Seafood and Sanderson Farms.

Having been to a number of vendor meetings in my 40 year career, this gathering was one of the best I’ve ever attended and the finest presentation that Weis has ever offered.