Taking Stock

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Weis Markets Vendor Meeting Proves To Be Stellar Affair

 The third time is a charm. Weis Markets hosted its third annual strategic alignment summit and this year the Sunbury, PA regional chain nailed it.

A record 400 vendors attended the conference which was held at the BWI Marriott inLinthicum,MD.This year’s event offered a shorter, more streamlined program featuring four top Weis executives who discussed current market conditions and merchandising and marketing issues.

Under the guidance of CEO Dave Hepfinger, Weis Markets has had a remarkable three year run, elevating virtually every measurable metric and also gaining momentum in the intangible areas such as employee morale and vendor perception.

Hepfinger kicked off this year’s meeting with a review of the current economy, noting the difficulties and challenges all retailers face with significant unemployment and under-employment. He noted that in his nearly 40 year career in the grocery industry he hasn’t witnessed a “down” cycle lasting this long and predicted that it could be another four to five years before the economy normalizes. He noted that in the past four years Americans have lost $12.8 trillion in personal wealth, adding that 9.3 million people have lost their health insurance and that 11 million mortgages remain “underwater.”

In discussing the challenges that face middle-classAmerica, Hepfinger illustrated that while many are struggling, inflation continues to be a significant factor. He produced a slide listing four items – Jif 18 ounce peanut butter, Tropicana 64 ounce orange juice, Hellman’s 32 ounce mayonnaise and a gallon of unleaded gasoline. In 1996, the average cost of those four items totaled $7.76. Today, the combined price of those products averages $16.66.

Hepfinger reinforced Weis’ go-to-market mantra: “We are a sales-driven culture.”

After hearing that remark, one sales rep whose company is based in Pennsylvania, asserted, “It’s refreshing these days to hear a customer that is aggressively seeking to sell more boxes and is not mired in too much process or mind-boggling entry fees that adversely affect the return on our investment.”

Hepfinger then provided the audience with a recap of sales, earnings and capital investment plans which have led to new stores, acquisitions and meaningful improvement in IT and analytics.

He also showed the audience how Weis’ market base is changing, noting that in the year 2000, $200 million in company sales were harvested outside its core Pennsylvania marketing area. Last year volume in Maryland, New York, New Jersey and West Virginia reached $710 million. Hepfinger also illustrated that in the past four years Weis’ annual weekly volume has risen 14 percent, adding for the first time in its 100 year history, the retailer produced first week sales at new or remodeled stores of more than $1 million.

And on the subject of measurable areas of improvements, Hepfinger’s checklist included: better store level operating performance; better supply chain performance; increased focus on talent development and succession planning; record investments in IT support and analytics; and much improved collaboration with its vendor partners.

Following Hepfinger’s speech, executive VP Kurt Schertle who along with his boss, have shaped many of Weis’ policies over the past three years, addressed the group.

He stated that one of Weis’ objectives is to continually seek to upgrade talent, including finding the next generation of its leadership team and its merchandising directors and the revampment of its store managements teams.

He noted the importance of improved category management. “We have conducted an assessment on our category management needs and developed a training and development plan,” said the 41 year old exec. “We have also conducted training on analytics and shopper-centric planning and we currently have joint planning category pilots under way.”

Also soon to be unveiled is a new assortment and shelf presentation and further training on pricing and promotion planning. Schertle also revealed that Weis is investigating and will be implementing additional decision support tools shortly. He told the audience about the retailer’s improved In-Store Execution (ISE) teams which have produced faster markdowns leading to improved “speed to shelf” results.

Additionally, Schertle asserted that Weis’ ISE teams are now expanding into the company’s “fresh” departments where 40 percent of meat, 60 percent of seafood and 15 percent of produce are now CPG-driven.

To illustrate the importance of “fresh” category management and its tie-in with Weis’ ISE team, he noted that last year a four foot set of specialty salad dressing in the produce department generated $1.7 million in gross profit compared to an eight foot dry salad dressing set in center store which generated only slightly more ($2 million) gross profit. Schertle’s point: look to maximize sales opportunities, especially those that aren’t always readily apparent.

Like Dave Hepfinger, he emphasized the importance of Weis’ sales driven culture, illustrating how that mindset helped regain lost sales in pharmacy primarily due to the fact that 20 brand name drugs lost their proprietary status. The $32 million sales hole those changes created was offset by improved immunization marketing and enhanced children’s prescription sales.

On the “fresh” side of the business, Weis has made major strides with its cut fruit and vegetable efforts and its gourmet burger program which has yield a 30 percent sales gain over 2011.

In dairy, the dip in fluid milk sales has been somewhat mitigated because Weis is now adding products and promoting dairy items that are organic, soy-based and grass-fed.

Schertle also discussed Weis’ improvement in attracting younger customers (the average customer is now 49 vs. 54 three years ago), and the company’s gains in average transaction size (up 6.3 percent since 2009).

And finally, Schertle left the vendors with this message: “There is still room to grow. To grow sales, we need to convert more secondary customers into primary customers and increase our average transaction to $35. This is where we’re headed, but we need your help. We need your simple ideas for sales. As we’ve said earlier, we may not be your biggest account but we want to be the one that gives you the best sales growth. Today we are a more nimble company, and unlike some of our competitors, we’re not bogged down by process, we have empowered our people to be responsive and decisive. It’s what good companies do.”

After lunch, VP-marketing Brian Holt gave an overview of Weis’ multi-faceted marketing programs, many of which are new. He urged vendors to become proactive in seeking out partnerships with the company and pointed to successful frozen food and dairy month promotions that provided sales lifts.

With 2012 being Weis’ 100th anniversary, the company placed a high priority on its “gold” loyalty card, targeted towards its best customers. Holt detailed the sales successes associated with related mailings and coupon offers, while also informing the audience of the “misses” that they experienced (and learned from) with this new initiative (large ticket items, low penetration items, low purchase frequency and new items). Next year, Holt asserted, there will be fewer offerings but those mailers and email blasts will be improved.

Like other retailers, Weis has increased its stake in digital marketing and Holt showed examples of utilizing such social media platforms as Facebook and Twitter to drive increased sales though contests and promotions. These programs have in turn created more interactivity between the retailer and its customers. He added that Weis has developed a mobile application that can create shopping lists and locate the closest Weis store for a customer and has begun a blog called “It’s In The Bag,” which communicates company news, sustainability updates and healthy living tips.

In closing, Holt informed the vendors that they are now selling digital advertising, utilizing its website www.weismarkets.com as well as Facebook and tie-ins with other local media.

Dan Koch, VP-fresh merchandising, capped off the day by outlining his departments’ priorities for this year. In the area of improving quality and freshness perception, Koch disclosed that offerings such as cut fruit will be prepared more frequently and in smaller batches. When discussing sales penetration, Koch’s goal was for a “100 basis point improvement across all fresh departments.” And in the area of increasing and improving training programs, he noted, “The focus is on selling up, and we must continue to prioritize service, service, service.”

On the merchandising side, Koch told the attendees that there will be more vertical sets in the fresh departments as well as better signage and improved décor to highlight “local” items. Also on the rise at Weis is more specialized merchandising and broader selections of items in those categories such as organic and vegetarian.

In touting Weis’ overall effort to bring greater service, quality and value to its customers, Koch asserted that interaction between the company’s associates and its customers is vital. Koch also spent some time discussing food safety, a huge concern for every retailer and manufacturer. He noted that thus far in 2012 there have been 72 recalls involving 417 individual items. In that regard, Weis is working hard to increase education and awareness with producers, processors and food handlers. He encouraged all manufacturers in the audience to join Rapid Recall Exchange (www. rapidrecallexchange.org), the non-profit group that serves as a centralized online notification system for food and consumer goods recalls.

In summary, Koch declared, “Fresh departments are on the rise. At Weis, we are and continue to localize where possible.” He added that Weis still needs to upgrade its talent in the fresh department and the entire fresh portal has benefited from a strong corporate commitments and store operational support.

As you’ve heard me say before, I’m a big fan of this type of vendor meeting. Any forum in which retailers can communicate directly with their vendors, especially in a relaxed and somewhat interactive setting, can only be termed a good thing.

And when the event begins at 10:00 a.m., gets everybody on the road by 3:00 p.m. and covers as much ground as the four Weis speakers did, that’s a really good thing.

Simply stated, Weis’ third Strategic Alignment Summit was by far its best yet.