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Identity, innovation driving popular grocer at anniversary

The way CEO Dave Hirz sees it, there are no other grocery stores that have Smart & Final’s business model.

“It’s completely unique in our industry,” he said. “What makes our model so successful is that Smart & Final is the only place where household customers can come in and find everything on their shopping list and do their club store shopping at the same time. Smart & Final can effectively replace a shopping trip to a conventional store, while eliminating the need for a club membership.”

As the Commerce, California-based chain celebrates its 150th anniversary in 2021, what better time to explore the evolution of its innovative – and successful – approach. In this month’s edition, The Shelby Report of the West takes a deep dive into what makes the company thrive.

“The business customer foundation is difficult to build,” Hirz said. “Honestly, we’ve proven that it’s easier to build a household customer base than it is to build a business customer base. Before we introduced our Extra! store format, we were mostly focused on our business customers.”

Read more from the CEO on page 26.

One way the company has been able to attract and retain customers is through its high-quality private label brand.

What began as “Iris” in 1895 – making it likely one of, if not the earliest, private labels in the U.S. – has grown to include other brands such as First Street, Simply Value, and Sun Harvest, Smart & Final’s line of natural and organic products.

Hirz said the private label offerings have really resonated with consumers. In fact, he regularly sees the products while out in the community at places such as county fairs, chili cookoffs, Little League snack shacks, and even on TV shows.

Learn more about the company’s private label on page 36.

But to truly see the private label phenomenon in action, the Shelby Report team visited a Smart & Final Extra! store as part of this commemorative feature.

Find out what the VIP team leading the exclusive tour had to share starting on page 60.

Smart & Final has established a reputation as a reliable grocer for businesses and households. However, for decades it has also strived to make a community impact far beyond the checkout lines.

The Smart & Final Charitable Foundation focuses its efforts around five pillars: disaster relief, health and wellness, education, hunger relief and team sports and youth development. Its goal is to give back to the communities the company serves. In 2020, the Charitable Foundation raised almost $2 million to support nearly 1,500 causes.

For more on the philanthropic endeavors, see page 42.

Hirz emphasizes S&F’s uniqueness, teamwork, future

Format of company’s stores lets customers ‘do two shops in one stop’

From staff reports

Eleven years ago, when Dave Hirz first took the call to consider becoming the CEO of Commerce, California-based Smart & Final, he wanted to visit multiple store locations to see what differentiates the brand from its competition.

“I visited more than 30 Smart & Final stores from Northern California to San Diego,” he said. “I spent a lot of time visiting Smart & Final stores to understand its unique model before I joined the organization. Mostly, I wanted to understand Smart & Final’s potential. How could we better serve Smart & Final’s customers and make it an even better retailer to attract new customers?” Once on board, Hirz quickly embraced the company’s unique approach of catering to both households and business customers. Competitors weren’t (and aren’t) doing the same.

“It’s completely unique in our industry,” he said. “What makes our model so successful is that Smart & Final is the only place where household customers can come in and find everything on their shopping list and do their club shopping at the same time. Smart & Final can effectively replace a shopping trip to a convenDave Hirz tional store, while eliminating the need for a club membership.” “Surprisingly, we discovered that when we started adding household items, our business customers started purchasing them as well,” he said. “Many of our business customers now take care of all of their household shopping at the same time, which allows them to do what they refer to as two shops in one stop. We’re the only place where they can find everything that they need for their small business, such as takeout containers, their toilet seat covers, cooking oils, etc. – and do all of their household shopping – including that oven-roasted chicken they want to have for dinner tonight.” Hirz shared the Smart & Final, which is celebrating its 150th anniversary this year, attributes approximately 30 percent of its overall sales to businesses, clubs and organizations, while the remaining 70 percent comes from Please see page 30

From page 26 its household customers.

“The business customer foundation is difficult to build,” Hirz said. “Honestly, we’ve proven that it’s easier to build a household customer base than it is to build a business customer base. Before we introduced our Extra! store format, we were mostly focused on our business customers.

“We added 6,000 items into our SKU count to support the new Smart & Final Extra! format, which focused on great value and high-quality private label and a broad assortment of perishable products for the household customer. The result was that our business customers became household customers as well.”

Although it can take some time to build up a business customer base at new locations, Hirz pointed out the patronage that comes with it.

“Once you get that business customer, they’re extremely loyal,” Hirz said. “It’s very difficult for competitors to steal our business customer. They appreciate our product offerings, the service they receive from our store managers and store teams, and the ease with which they can shop our stores. They also really value the quality of our private label. Many of our food service customers have our private label products built into the recipes on their menus.”

Hirz is grateful to see the Smart & Final team still following the same values as when he joined the company 11 years ago.

“The thing I’m most proud of during my 11 years at the company is that the culture is still as strong and unique as it has always been. I really am proud of this,” he said. “It’s such a great company with incredible store associates with such a great culture.”

After his first year of working with the company, Hirz and Human Resources leadership monitored group meetings to help better understand and define the company’s core values.

“In every meeting that we held, the No. 1 core value by a longshot was teamwork, which was really surprising to me,” Hirz said. “I’ve done this process before at other companies and teamwork had never hit the radar. That is when I discovered that teamwork was the biggest differentiator of the Smart & Final culture.”

He attributed this in part to the Smart & Final legacy stores, where employees are cross-trained in all departments, a tradition he is pleased to continue today.

“Everyone does a bit of everything in those stores, and even today in our Extra stores, and it’s a formula that works. I didn’t create the Smart & Final culture – it was created over the past 150 years – but I am really proud of the fact that I have been able to help the Smart & Final team to maintain our unique culture.”

Hirz is quick to praise others.

“I couldn’t do what I do every day without my team. Naturally, I depend on my senior leadership team, but also all of the associates across the company,” he said. “What I’ve learned during my 50 years in the industry is to surround yourself with great people, and really smart people – smarter than you. Most of the people who work for me are smarter than me, and it’s a diverse group of people. My current senior leadership team is the Please see page 32

From page 30 strongest I’ve ever had the pleasure to work with, and they have a wide variety of experience and backgrounds, which is extremely valuable.”

In the unforgettable year of the COVID-19 pandemic, Hirz highlighted Smart & Final associates for their dedication. “They came to work every day. They did their job, and they helped us to protect each other and our customers,” he said. He went on to credit Sean Mahoney and the senior leadership team for requiring masks in stores before the state mandated them in order to protect associates and customers.

For the past two years, Smart & Final has spent a significant amount of time, energy and capital focusing on the company’s IT infrastructure. The company has invested in a loyalty program that will be introduced this year.

“Our focus for the past two years has really been IT and digital infrastructure,” Hirz said. “Going forward, I anticipate new store openings and growth to become more organic. There is plenty of opportunity even in the markets in which we currently operate.”