2016 ROFDA Report

A Shelby Publishing Special Section

The RoFDA

RePoRt

2016

Doing More Together

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December 2016 • A Shelby Publishing Special Section

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2016

ROFDA Chairman’s Remarks

Neal Berube, President and CEO, Associated Food Stores, Salt Lake City Berube has been president and CEO of Associated Food Stores (AFS) in Salt Lake City, Utah, since 2011, succeeding longtime leader Rich Parkinson.

Berube, who has a degree in accounting, started his career with AFS in August 1990 as controller. He served as CFO and COO over the years leading up to his promotion to president and CEO. Berube was named chairman of ROFDA at the group’s November 2015 Fall Conference and will serve in that role until the November 2017 conference.

Two things that stand out in this first year of his chairmanship are Associated Wholesale Grocers in Kansas City, Missouri, becoming a member of ROFDA, and the increased involvement of the ROFDA Advisory Council (RAC), made up of associate members, Berube says.

“Obviously, the big one is the opening of the door for AWG to join,” he said. “As you know, that’s been an issue probably for a number of years, why AWG wasn’t a member of ROFDA.” With the Kansas City, Kansas-based wholesaler’s purchase of Affiliated Foods Midwest, which has been a member of ROFDA for a number of years, the way was paved to ROFDA membership.

Asked what impact AWG’s membership in ROFDA is expected to have, Berube said, “I think it attracts more of our vendor partners. I know at this upcoming conference (the Fall Conference in San Antonio, Texas, Nov. 11-13), we’re expecting a record attendance of vendor partners. I think, obviously, AWG’s volume attracts those vendors. But additionally, I think AWG is a very progressive company, I think they’re very open in sharing some of the things that have created success for them, and I believe we can learn from them. But I think they can learn from the rest of the members, and we can all become better.”

The RAC has been more heavily involved in setting objectives for ROFDA members to aim for, and that also has been an important development in 2016, according to Berube.

He said, “I appreciate the associate members and their support of ROFDA. Without them, it would be difficult to accomplish what we’ve accomplished.”

Another improvement on the supplier side came when Topco earlier this year took over the business of Western Family, which had been the private label procurement partner for several of ROFDA’s member companies.

Berube’s company, AFS, as well as Unified Grocers, URM Stores, Piggly Wiggly Alabama, Olean Wholesale Grocers Co-op and Affiliated Foods Amarillo had all been members of Western Family and procured products separately.

With Topco’s new arrangement with Western Family, “nearly all the members of ROFDA now are procuring private label products through Topco,” he said.

With that change, “the CEOs work together to set the tone for store brand purchases through Topco for the Shurfine group and the Western Family group,” aggregating their purchasing power to keep prices low for ROFDA member retailers.

Berube wants to see aggregation efforts grow during his second term as chairman.

“What I’d like to see is for us to figure a way where we can aggregate our efforts more, both in purchasing of all products and in avoidance of the duplication of services each one of us is providing to our members. That duplication just adds cost to our members.

So I would hope we could work more closely on those two things.”

Relationships strengthened What would Berube tell a prospective member of ROFDA? “I think ROFDA enhances relationships. I believe it provides an avenue for sharing of best practices, sharing successes of each of the houses that can be then adopted by others,” he said. “It provides opportunities for us to work together when working with suppliers on non-resale type items and services.

“But I think sharing best practices that can be utilized in each warehouse is one Neal Berube of the biggest strengths,” Berube continued. “I think the ultimate goal is sharing best practices to help the independent retailer become stronger in each of their markets. Really, that’s our main purpose at ROFDA— to find better ways to service our independent retailers, to help them be viable and sustainable.”

He added, “I appreciate the members of ROFDA’s willingness to work together to help independent retailers be viable and sustainable. I think we have a good working group, and I am appreciative of the support of all the members of ROFDA.” At AFS, helping independent retailers be viable and sustainable comes in several ways.

“One is that we provide an avenue to aggregate our members’ needs and then we vet out the various options, make recommendations and then we help implement,” Berube said. “We understand the need for our retailers to have data, to understand their customers’ needs, and I think we’re kind of a hub in the spoke, where we can bring our retailers together to be able to be efficient and effective in the utilization of technologies that are out there.

“Additionally, through that aggregation, our members have a better economic opportunity as each of them comes together than they can do on their own. I think that’s our role. Our role is to provide options, vet them out, make recommendations and then help them execute.”

For the first time in a number of years, more AFS member stores are becoming more active in building and remodeling stores as well as implementing new technologies.

They are “stepping out and remodeling their stores, building new stores and adopting click-and-collect options,” Berube said.

“I also would say that our stores are being more progressive in providing ‘clean’ food—natural, organic—and giving more options to our consumers. We’re being more progressive in that area than we historically have. Our retailers are very sensitive to meeting their guests’ needs. We’re reducing a number of our traditional SKUs that the consumers are no longer seeking and replacing those with more progressive natural and organic products so our members will have the opportunity to compete price-wise in the store because of us bringing them through the warehouse vs. having to buy all of them through a third party,” he said. “Not all of them come through our warehouse; we utilize both KeHE and UNFI (for slower-moving items). But we do have a selection of higher-moving specialty items that will be coming through our warehouse.”

ROFDA Board 2016 Ray Sprinkle President & CEO, URM Stores Inc.

Christopher Miller President, Associated Grocers of Florida Inc.

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Bob LinG

President & CEO, Unified Grocers Inc.

Neal Berube President & CEO, Associated Food Stores Inc.

DAVID SMITH President & CEO, Associated Wholesale Grocers Inc.

Randy Arceneaux President & CEO, Affiliated Foods Inc.

Ken Nemeth President & CEO, Central Grocers Inc.

Randy Simon President & CEO, CERTCO Inc.

Emile Breaux President & CEO, Associated Grocers Inc., Baton Rouge

David Bullard President & CEO, Piggly Wiggly Alabama Dist. Co. Inc.

Stan Alexander President & CEO, Associated Grocers of the South Inc.

Bob Ketchner President & CEO, Olean Wholesale Grocery Co-op Inc.

Mike VIOLETTE President & CEO, Associated Grocers of New England Inc.

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THE ROFDA

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Interview with Francis Cameron, ROFDA President and CEO What are some of the significant milestones for ROFDA in the last year?

2016 has been another eventful and significant year for ROFDA. One notable milestone was a change in leadership.

Neal Berube, president and CEO of Associated Food Stores, was elected as our new chairman.

Anyone who knows Neal knows that he has a passion for independent grocers and is a proven “man of action.” Neal has always emphasized the importance of aggregation, collaboration and differentiation as part of our cooperative structure.

Neal and I sat down soon after his appointment and discussed the future. We developed a plan of action consistent with our Executive Committee and Board of Directors. In short order, we are seeing the positive impact of his leadership.

Francis Cameron We’ve realized changes in our membership and the addition of two new board members. Upon Michael Bourgoine’s retirement from Associated Grocers of New England in July, Michael Violette became president and CEO and soon after was elected to our board. We were also pleased to announce the addition of Associated Wholesale Grocers (AWG) to our membership in late August.

David Smith, president and CEO of AWG, was appointed to the board as well. We said a bittersweet goodbye to a tireless leader and good friend, Martin Arter. Upon Affiliated Foods Midwest’s merger with AWG, Marty officially resigned from our board.

He brought great insight and vision to our group, and we are pleased to know that Marty will continue to contribute to the success of our independent grocers through his new role with AWG. It’s not taken long for David Smith and his team at AWG to contribute as a valued member of ROFDA. Members, associates and suppliers have been enthusiastic about this addition. We recognize the value AWG brings to the whole and are delighted that they are a part of our family. Scott Welman, senior vice president at AWG, was appointed as our ROFDA Champion. In the coming months, we anticipate greater opportunity for all as we become more acquainted with one another.

I would be remiss if I didn’t mention the coming together of Western Family and Topco. This milestone move will support the majority of our members in their ability to better leverage the aggregate of private label business. Topco has been a longtime associate of ROFDA and valued partner.

How is ROFDA reinforcing the theme, “Doing More Together”?

My hope is that people realize to be part of ROFDA comes with some requirements.

Largely, it comes with the requirement of getting directly involved. In fact, we depend on it. A cooperative structure is not always easy to navigate, but if one is looking for a place where his or her contributions really matter, ROFDA is the place for you.

Relationship building

Relationships still matter at ROFDA. In fact, we think it’s one of the keys to our success. If you have attended our conferences, you have witnessed it firsthand. We work hard to create an environment where people can truly connect on a personal and professional way. With the help with our associates, we continue to improve on our events. We are holding to no more than 80 companies in attendance. If an organization is lucky enough to receive an invitation, they don’t typically relinquish their position.

At our last event, we recognized seven associates that haven’t missed a conference in 25 years. That’s 50 consecutive conferences!

We inducted the following companies into ROFDA’s Hall of Fame: DeJarnett Sales Inc. Jarden Home Brands National Cooperative Bank Prairie Farms/Hiland Dairy Topco Associates LLC Wells’ Enterprises We express our sincere appreciation to our “Hall of Famers.” But also, we want all our associates and suppliers to know that we value our relationships with you and thank you for your support of our independent grocers.

Collaboration

A new ROFDA Advisory Council (RAC) began their two-year term this year. Led by RAC Chairman Mike Ridenour of The Kraft Heinz Co., this group has taken a direct approach in “Doing More Together.”

Other RAC members include Jon Ambrose, Rosie; Jesse Garcia, Post Consumer

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Brands; Michele Koci, First Data USA; Ric Larsen, DeJarnett Sales Inc.; Jim Lukens, Media Solutions Corp.; and Dennis Belcastro, Kimberly Clark Corp. They have found an effective way to activate our associates and suppliers through a share group they’ve organized and facilitated.

At our event in the spring, they asked associates and suppliers to come prepared with ideas for consideration that would provide benefit to the whole of ROFDA. The ideas could not be self-serving, and at the end of the presentations, five were voted to be best. Those top five ideas were presented during the general session for consideration by ROFDA’s members. All were accepted and are at varied degrees of execution. The RAC is a critical part of providing a means for our associates’ ideas to be heard, considered and potentially implemented.

They are doing an exceptional job.

Our trade association relaRAC Chairman Mike Ridenour (left) and tionships also are important.

One opportunity for collabo- ROFDA Chairman Neal Berube at ROFDA’s ration came in the form of Spring Conference in May 2016. an operations benchmarking survey conducted with the Food Marketing Institute. This ROFDA survey has been conducted by Keith Swiednicki for the last seven years. Through the coordination of Jay Campbell of Associated Grocers of Baton Rouge and Dagmar Farr of FMI, Keith Swiednicki International (KSI) expanded the survey beyond ROFDA members to FMI members. The results were presented at FMI Connect earlier this year with great success. We hope to find more opportunities to expand activity that provides mutual benefit to the members and the industry we serve.

Aggregation

Aggregation is an obvious topic and focus of a cooperative. At ROFDA, that topic is sometimes not clear. Often, one thinks solely about the opportunity of procurement, which is fair, but in our case, aggregation represents so much more. We think of it mostly as the means to buy better, sell more and reduce redundancy (cost savings). For ROFDA, information sharing is a key element of aggregation. Candidly, we have little success against procurement; our infrastructure just doesn’t support it.

While we support program offerings that reward our aggregated volume, it has little to do with the activity of procurement. Much of our success is realized through our share groups, our surveys/benchmarking, our conferences and our portal. All are tools that support the important element of information sharing. Through this activity, we find opportunities for best practices. Further, it reveals opportunities for shared services that reduce redundant activity and costs. Aggregation will continue to be a focus for ROFDA. Our role is that of facilitator. We will seek and find the best means for our members to realize greater value and benefit.

How do you see the future of ROFDA, its members and the independent grocers you serve?

One thing is certain—everything we do will be consistent with our purpose and mission.

ROFDA’s Purpose:

“A cooperative formed to facilitate and enhance the success of Independent Retail Grocers.”

ROFDA’s Mission:

“Cooperatively united to utilize and leverage all available resources, industry best practices, and business relationships to provide added value to our Independent Retail Grocers.”

We are firmly rooted in the success and viability of our independents. We believe that successful independents are at the core of strong communities. As such, we need to continue to challenge and push ourselves outside current levels of comfort. We are experiencing significant change in our industry, largely driven by information and access. Our ability to embrace new technologies will be critical. At the end of the day, our independents are well positioned to provide local products and personalized service to a well-informed and demanding consumer.

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Smith: ROFDA’s Mission ‘Aligns Perfectly’ with AWG’s Goals AWG addition brings ROFDA’s represented retail sales to $60B Associated Wholesale Grocers (AWG) President and CEO David Smith says his orgaSmith notes that, as an active ROFDA member, AWG “will work hand-in-hand with nization was “flattered by the invitation” to join Retailer Owned Food Distributors & the other members to identify practical ways we can become more efficient, more Associates (ROFDA) this year and is excited about joining the cooperative. effective, and bring additional value to our retailer/owners. Each ROFDA member “We admire the member-owned coopcompany will maintain their unique business strategies, member relationships and the eratives that comprise this fine group and way we go to market, but we will no doubt find many common areas in which we can look forward to working closely with them align to achieve synergy in this increasingly toward common objectives,” Smith says. more competitive business. We must strive for “The ROFDA mission aligns perfectly with better, faster, cheaper in all that we do. I have the responsibility we have to our collective no doubt that we will learn many valuable membership: ‘Cooperatively united to utilize lessons from ROFDA’s members and associates and leverage all available resources, industry and will do all we can to contribute through best practices active particiand business pation.” relationships Scott “AWG is excited about joining ROFDA. It to provide Welman, SVP is a great organization, with fine leadership added at AWG, will and honorable members, and one that we have value to our assume the had aspirations of joining for many years. We are Independent role of ROFDA looking forward to expanding and strengthening Retail champion for our relationship with other like-minded Grocers.’”

AWG, and cooperative members, and we hope to be able The addihe is anxious to make a worthwhile contribution to an already tion of AWG to get started David Smith increases the in this added strong and vibrant organization.”

Scott Welman aggregated total of ROFDA to represent more than $24 role.

—David Smith, president and CEO, AWG billion in wholesale revenue with more than 9,000 “Since joining ROFDA, the enthusiasm that I have independent retail grocers and more than $60 billion seen from Francis Cameron and the other ROFDA in retail sales. The announcement earlier this year followed AWG’s announcement that champions for ROFDA and what it can do now and in the future has been tremenit would purchase Affiliated Foods Midwest, which is a member of ROFDA. dous,” he says. “I, along with our entire management team at AWG, share that enthu“We could not be more excited about Associated Wholesale Grocers joining ROFDA. siasm and look forward to not only participating in ROFDA’s future growth but also While AWG’s size is impressive, it is their expertise, perspective and attitude under the contributing as best we can to increase the success of all ROFDA members.” leadership of President and CEO David Smith that will bring value to our group. We Smith will join ROFDA’s board of directors for the first time at the group’s fall share the same commitment to bringing more strength to the independents we serve. conference in San Antonio. Smith also will address conference attendees during As such, we are totally aligned in our purpose and mission,” says ROFDA President the general session. and CEO Francis Cameron.

New Board Member Spotlight

Mike Violette, President and CEO, Associated Grocers of New England

Mike Violette Mike Violette succeeded Mike Bourgoine at the helm of Associated Grocers of New England in Pembroke, New Hampshire, earlier this year. Violette was named president in April and then added the CEO title when Bourgoine officially retired in early July.

Bourgoine said of Violette: “I have had the pleasure of working with Mike for the past 15 years and believe he will be very successful in guiding the company as we move towards the future and all the challenges it will present. I’d like to congratulate Mike on

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this well-deserved promotion.”

Bourgoine added, “He is tenacious, passionate and always willing to tackle any challenge while still finding the time to volunteer to help those less fortunate or to lend a hand to someone in need.”

Violette joined AG New England in 1998 and has a rich background in the industry in both retail and wholesale operations. AG’s size has allowed him to learn about all aspects of its business, which prepared him to lead, as did Bourgoine. Violette acknowledges that Bourgoine’s shoes are big ones to fill. But with a solid staff behind him—and Bourgoine continuing to give input as a member of the AG board—things are rolling along.

Incidentally, the two Mikes knew each other prior to Violette coming to work at AG. Earlier in his career, Bourgoine was part of a group that owned stores, and his group bought Violette’s dad’s store when he decided to retire. The two then worked together at Wetterau Foods for a time.

Violette and his wife Heidi, who live in Amherst, New Hampshire, have two adult children. Micaela is a high school counselor, and Tyler is in the food brokerage business, with Advantage Sales & Marketing.

Violette enjoys golfing and saltwater fishing as well as spending time at his family’s place on Martha’s Vineyard. “I love to spend time out there. It’s nice, and what’s even nicer is we have some customers out there…so I get the best of both worlds.”

Following are excerpts from The Shelby Report’s conversation with Violette, the newest member of ROFDA’s board.

Please see page 8

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Violette from page 6 Tell me about your background in the grocery business.

My father operated an IGA store, Violette’s IGA, in Milford, New Hampshire. I worked with him until 1990 (when he retired). From there I went to work for Wetterau Foods, which eventually became Supervalu. I was with Wetterau and Supervalu from 1990-96, and then I was with Shaw’s Supermarkets from ’96 to ’98. I’ve been with AG since the fall of 1998.

How did your different positions at AG and other companies prepare you for this role you took over in July?

My first job when I came to AG was VP of sales and business development, primarily overseeing the sales counselors and developing new business. I pretty much stayed in that role but picked up additional responsibilities throughout my career. In the year 2000 I became senior vice president as opposed to just vice president, and in doing so, at a small company like this, it lets you get involved in many different aspects of the business as opposed to working for a Wetterau or a Supervalu. Here, you’re exposed to much more of the business, which is what I really enjoy.

Mike Bourgoine was very good at exposing me to different areas of the business.

He also was very, very helpful and influential and was a great mentor to me. He’s the kind of guy who is more than willing to share what he knows with you and help make you better. I certainly learned a lot of different parts of the business from Mike that I wouldn’t have learned. He has a wealth of industry knowledge and is extremely well respected.

He taught me a lot of the disciplines of the business, too—what’s important and prioritizing that. The expression you hear today is “getting caught in the weeds,” and, even in your life, you can get caught in the weeds and miss what’s really going on and what’s important.

(The earlier part of my career) also has been very helpful, particularly the retail part because I spent so much time working with independent retailers. With Supervalu and Wetterau, I was working with independents all along. And being an independent myself early on, I understand what’s really important to them…When you’re an independent retailer, you have to wear a lot of different hats, you have to rely on a lot of different people and you typically don’t have the resources behind you that a chain store has.

What does AG of New England offer independents to help them compete?

We have a number of programs developed specifically for independent retailers, whether it’s advertising programs, everyday low price programs or other retail programs that are pretty much turnkey that they can just participate in, or they can modify them as well in certain instances where it makes sense to do that.

I think one of the biggest things we offer is our retail counselors, who are out there in the field calling on the stores and working with the stores with merchandising, operating conditions. Being a co-op, we’ve really stuck to having a lot of people out on the street to work with independents, where a lot of independents today are hard-pressed to get people to help them, whether it’s to do a reset or remerchandise. That can be much more of a challenge.

Your counselors do a lot of that actual work, not just the planning?

They actually go in and roll up their sleeves and get it done. They’re used for a lot more than that, but they actually are the ones that develop a plan and go right in and do it. In the chain stores, a lot of times it’s simpler because you have a planogram and you can just throw that up, where with independents, virtually every store is different and needs to be merchandised differently and specifically.

The other advantage (our retail counselors) bring is that they spend a lot of time in other independent stores, so they have a real indication of what works well and what doesn’t. We’re in New England, which is not a huge area, but the way business is done in Massachusetts or down the Cape and how it’s done in the northern parts of Maine, it’s quite a bit of a different customer, so they understand the differences. They all live in different parts, but they get together and work on many different projects.

How many retail counselors do you have?

Over 20. They live in different geographies, and some of them have different specialties. We have meat specialists, bakery/deli, produce, etc.

What kind of business trajectory is AG New England on right now?

We’re continuing to grow. We had a big growth spurt in 2011 when AG of Maine went out of business. We picked up a number of accounts, and we had a good growth spurt going right up through that. It had kind of stabilized, but we’re continuing to grow. Even for our size, it’s great.

We’ve got people building new stores. Mike Comeau has opened something like four new stores over the last five years. He just opened one and has another store in the works in Massachusetts (his stores, all in Vermont currently, are Richmond Market & Beverage, Richmond; Village Market of Waterbury, Waterbury; Johnson’s Sterling Market, Johnson; Shelburne Grocery, Shelburne; and Jericho Market, Jericho).

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We’ve had members building probably two to four stores a year most recently, which has been good.

It’s a very competitive marketplace, so it’s really hard to grow leaps and bounds like we were in the earlier days. You’re losing some to attrition, too—people selling their stores to competitors.

But we’ve really grown our convenience store business, too. It’s called Associated Convenience Grocers. It’s wholly owned by the company, but we run it as a separate group, and we have had some real nice growth with that over the years, too, which has helped.

The two businesses, the supermarket and the convenience, are very different types of businesses, but they complement each other very well. Being able to be a wholesaler that has both, it enables you to serve each class of trade a little bit better.

Today’s convenience store, there are so many hybrids now. They’re not just little convenience stores that you stop in and pick up some milk and bread. A lot of them are 4,000 to 6,000 s.f., and they offer a lot of prepared foods and things like that. It’s a natural for us (to serve them) with the bakeries and delis that we have in place in supermarkets; there are a lot of synergies we get out of having both programs.

We also have a corporate store group as well. We currently have six corporate stores—Harvest Market, Vista Foods and Sully’s Superettes. What’s good about that is we test a lot of programs before we send them out to our retailers. That gives us good feedback as to what our corporate stores are seeing. And some of the retailers have sent people up to train in the stores as well.

There’s one in Vermont, and the other five are in New Hampshire. They’re not too broadly spread out, but the one in Vermont is a couple of hours away from the rest.

We serve over 600 accounts (including convenience stores); 309 of those stores are members.

Are a lot of your members offering prepared foods?

A lot of them are moving into more (prepared foods). But our biggest growth area has been in specialty foods. As part of our addition at AG that we completed in January 2015, we put in a Dematic Multishuttle, which is an automated system, and what that has enabled us to do is do more single picks, which we would use with convenience store items. But we are able to do this with specialty foods as well—specialty, natural, organic. The retailer doesn’t need to buy full cases or a half case; they can actually buy items in single picks. It enables them to sell a greater variety without having a bunch of inventory. And we can do it very efficiently with the automation.

Going back to Violette’s IGA, who was your supplier back then?

It was Wetterau Foods.

I was there for 10 years full time. When you’re born to a store manager, you start in the business very early.

Did you ever feel like you didn’t want to be in the business?

When my father sold the store in November 1989, I could have stayed on, but I really wanted to do something different. So it was a good opportunity for me to do something different.

Let’s talk about ROFDA; have you been to some of the conferences already?

I think I’ve been to four of them so far. They’re just excellent, so valuable. What you can learn from the ROFDA group is great. Everybody shares a lot of information and insights, and a lot of conversations you can have one-on-one are invaluable. You get good, sound advice, and everybody is there working together. Nobody is there on their own agenda.

For me, in particular, over the last few months with those relationships, being a new CEO, you’ve got all that experience to fall back on, and those guys, they’ve all been a great help. They go out of their way to ask you, “How’s it going? Do you have any questions, anything we can help you with?” Just really sincere about it, too. There are people who say that, but with ROFDA, you pick up the phone and they’ll go out of their way to help.

We were talking about some software at the recent NGA Fall Conference, and somebody said, “Oh yeah, we developed that; have your guy give us a call and we’ll share that with you.” You’re not going to find that elsewhere. You don’t have to start from scratch, you don’t have to pay someone to do it…and there’s a lot of that that goes on, share ideas, share resources. The people all communicate very well together.

It’s a very unique thing. Having not been in the co-op world my entire career until I came here, it’s a great way to do business. I wish we would have belonged to a co-op when we first started. It’s a very good thing for an independent.

I know Francis loves to hear that the group is going in the direction that he always envisioned that it would.

He’s a great leader, very professional. The program is always good, you always learn something, and he’s very honest and will go out of his way to help you, too.

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Associated Grocers of New England member

Crosby’s Markets Has Grown Selectively, Smartly, to Form Seven-Store Group James G. “Jim” Crosby, founder and chairman of Crosby’s Markets Inc. in Salem, Massachusetts, aspired to be in the grocery business from childhood.

At 9 years old, he was employed as a farm worker to help his single mother support the household, and on his way to the farm in Danvers, Massachusetts, he would walk past a First National supermarket.

“For some reason or another, I always believed that I wanted to work in that type of business,” says Crosby, who says his mother was a “terrific role model and had a strong work ethic, so I consider myself very fortunate.”

When he was 16, he applied to Stop & Shop. He started as a bagger and then became a grocery clerk.

“I went on full-time when I graduated from high school, but quickly learned—or felt, at least—that I wasn’t going to advance unless I went to college,” he says.

He applied and was accepted to Northeastern University in Boston, which offered a cooperative education program where students work six months and go to school six months, completing their degree in five years.

“At that point, Star Market Co. had a cooperative program, so my co-op job was Star Market. The good part was I changed departments every work term; it would be meat one term, then deli or fish or produce or whatever. Because of that, I was able to become a store manager pretty close right after college, at a fairly early age,” Crosby said.

Star Market paid for Crosby to go to graduate school at Babson College in Wellesley— and “the major theme at Babson was entrepreneurship,” he said.

When Star Market decided to spin off some of its smaller stores, Crosby, who at that time had advanced to director of store operations overseeing 31 stores, took the opportunity to become an entrepreneur himself and buy one small store.

He and his wife of 53 years, Pat, had five children at the time, “so it was a little bit risky to borrow what we had to borrow and put into it.”

But it worked. That first store, in Concord, Massachusetts, opened 36 years ago, says Crosby, who now is semi-retired (working 25 hours a week as opposed to 50, or more, most weeks).

Because Crosby had overseen multiple stores at Star, he always envisioned having more than one store himself.

“As I became knowledgeable of different opportunities to grow the business, I would try to buy another store,” he said. “Occasionally I would go into a store and seek out the owner and say, ‘If you’re ever interested in selling, I’d love the privilege of talking to you.’ That kind of helped me put together a small chain of stores. Star Market at the time was also interested in being a wholesaler. They were part of Jewel Cos. out of Chicago that did a lot of supplying to smaller stores, so they were helpful in putting together a small chain of stores and growing to the point of where we are now—seven stores.”

Six of Crosby’s stores are in Essex County, Massachusetts; the other is in Middlesex County. All are north of Boston. Six operate under the Crosby’s Marketplace name and are located in Concord, Salem, Marblehead, Georgetown, Hamilton and Manchesterby-the-Sea; the seventh is a Henry’s Market in Beverly that Crosby’s acquired in early 2015.

Keeping customers ‘wowed’ Crosby has built his seven-store chain primarily by taking advantage of locations that were not performing for the previous owner and operating under a fairly simple philosophy: “We try to make shopping a pleasant experience and we try to satisfy our customers’ needs.”

The average store size is 15,000-20,000 s.f., and the stores operate in “relatively affluent” communities like Marblehead, Manchester-by-the-Sea and Concord.

Because of those demographics, the stores carry a larger selection of specialty foods and more natural and organic items, particularly in produce, according to Crosby. And the company is “not quite as held-to-the-floor with pricing as you might be in some of the other stores,” he added.

One of the keys to success for an independent, Crosby believes, is differentiation, citing the book by Jack Trout, “Differentiate or Die.”

Crosby’s Marketplace in Georgetown.

That’s what was behind the purchase of Henry’s, he says, explaining that the 75-yearold store was “extremely well known for prepared foods and bakery and catering.”

Thanks to that purchase, the company now has a central kitchen and bakery—staffed by chefs and professional cake decorators—from which it can supply its Crosby’s Marketplace stores with Henry’s signature prepared food and bakery items.

“We run those (items) out to our other stores so that we can take advantage of the reputation and the brand and establish a brand somewhat of our own,” Crosby said.

“We keep looking for ways to be different, to differentiate, because you’re not going to compete head-on with companies like Market Basket or Stop & Shop or whatever,” he adds. “I think the tough part about the food industry for us, at this point, is that there’s nobody who’s still in it that isn’t good…you have companies that are terrific, they run great stores.”

So Crosby’s search continues for other stores that could provide additional points of differentiation.

“The purchase of Henry’s was quite interesting because it gave us a particular edge, a particular area we could differentiate our business in, and I think there are some other smaller-type businesses that might fit in,” he says. “Maybe just not a standard supermarket but something that maybe specializes in unique meats or produce or whatever. We’d like to grow, but selectively, in areas that would help the whole company differentiate itself.

“We’re constantly trying to keep the stores modern and clean and fun for customers as they come in,” he says. “You try to create that ‘wow’ feeling when somebody comes in the store and impress your customers with your physical facilities as well as your service level.”

A family business that supports its communities

A look inside the Hamilton store. page_10-11.indd 10

Four of Crosby and his wife Patricia’s five children have been involved in the business, and three still are. Son David, who was president of the company, died of cancer in 2015, which Crosby calls “a terrible loss for us and our company.”

Son Chris became president. Daughter Terri works in the kitchens and bakery, and daughter Katie works in IT. The other sibling works for a professional services firm.

“I think in family business…the operative word is ‘family.’ I think perhaps the

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The Crosby family at the Hamilton store’s grand opening. most important aspect, to me, is that we get along. It’s not always easy, but you try to have people doing different jobs so they don’t bump into each other all the time,” Crosby said.

The “family” feeling extends into the communities around its stores, as Crosby’s supports people and charities.

The company hires developmentally delayed or challenged people through chapters of The Arc (formerly known as the Massachusetts Association for Retarded Citizens).

“We have, I think, 24 young folks that have either Down syndrome or have other types of problems,” Crosby says. “…You want to recognize that these kids need something to do, they need somewhere to go. So we really do try to do a lot in that particular area.”

Customers are typically complimentary of Crosby’s including them in its workforce and, for the most part, are patient as well.

“And that is appreciated,” he adds.

Crosby’s supports the Greater Boston Food Bank and some homeless shelters with food donations.

“As you know, a tremendous amount of food is wasted, and I feel much better giving it to food pantries than throwing it in a dumpster,” Crosby says.

The company also supports groups like Boys and Girls Clubs and Boy and Girl Scouts.

Crosby is complimentary of the entire grocery industry, independents and chains alike, for the “tremendous amount of philanthropy” that goes on.

“It amazes me the amount of philanthropy in our industry,” Crosby says. “I guess it sort of naturally flows around the areas we deal in which are people and products.”

of the said. going ever,” nt, is at are

until about 12 years ago when Crosby’s became a retail member/owner of Associated Grocers of New England, based in Pembroke, New Hampshire.

“AG is the first time we’ve worked with a co-op (where) the members are stockholders and own the company. So you share in the success of your wholesaler,” he notes, getting money back in the form of patronage (or dividends).

While a great benefit, it also comes with responsibility, Crosby says.

“Whatever supplier we’ve had, we’ve always had to be successful, but now you carry even more responsibility that Craft beers are popular at Henry’s. you have to be successful because it comes back to you,” he says.

“AG has put together a tremendous team of people,” he says, adding that the co-op is very reliable.

“If you’re looking for a delivery, they’re on-time percentage is phenomenal. Their out-of-stocks are very low. It’s very efficient, the company and the way it’s run. I think almost everybody in top management has worked in retail, so they’ve been on both sides of the fence. They can appreciate some of the problems you have if your grocery load is late or there’s all kind of out-of-stocks or you’re missing sale items, that type of thing,” Crosby says. “I think the empathy is very, very strong with them, and it really has become a true partnership. I don’t think there’s much they could do that they don’t do to help you be successful. They really do bend over backward.”

Ready-to-heat and ready-to-eat meats are available at Henry’s.

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A wide array of takeout food choices are available at Henry’s Market.

A beneficial partnership with AG of New England Crosby’s has had a number of suppliers during its 36-year history, sometimes shifting as wholesalers consolidated.

Star Markets, Sweet Life and Supervalu had supplied the stores through the years,

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Inside the Concord store.

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Piggly Wiggly Alabama Distributing Co. member

Duren’s Piggly Wiggly Is a Tourist Town Grocery Store with a Hometown Feel

George and Hilda Duren

My name is George W. Duren. I operate Duren’s Piggly Wiggly, a 48,000-s.f., upscale supermarket in Port St. Joe, Florida, located on the Northwest coast. We are a family-owned supermarket business that serves patrons from St. George Island to Mexico Beach, Florida, and even into Panama City. Although our supermarket operation started with humble beginnings, it has grown with our community to become one of the most celebrated supermarkets on the Gulf Coast.

A 20-year board member of Piggly Wiggly Alabama Distributing Co. and a successful grocery store operator today, George Duren began his “supermarket story” not under the best circumstances in 1976, when his father suffered a heart attack and needed help operating his convenience store in Port St. Joe, Florida. Duren returned to his hometown to run his father’s store while the elder Duren recovered. That year, about the same time that Duren’s father began to resume operation of his business, a nearby A&P supermarket chose to vacate its 6,000-s.f. facility, and the owner of the building offered to rent both the space and the store equipment to Duren.

“This turned out to be the opportunity that my wife and I needed to embark on our own business career,” Duren says.

An area grocery supplier offered to fill the store with product and allow Duren to pay the company back over time. In such a highly competitive, low-margin industry, starting off with no equity and 100 percent debt proved to be a challenge, but it’s that challenge that “has molded me into having the passion that I have in making my supermarket into being all that it can be today,” Duren says. “I had grown up in my father’s small grocery, cutting meat, managing the produce and, of course, stocking shelves and serving customers. However, I learned about competition through firsthand experience. You might say I had just enough experience to begin learning the business when I opened my own store.”

Five years later, Duren was able to purchase the store from his landlord, and soon expanded it by 10,000 s.f., more than doubling his space. That investment paid off, Duren says, and he began to expand rapidly. In 2000, 24 years after he first opened his grocery store, Duren purchased eight acres of land on what is “arguably the highesttraffic intersection in our city” and began building a more modern, 32,000-s.f. store.

Only three years later, he added a strip shopping center, anchored by his store that included, among other shops, McDonald’s, Verizon, a local newspaper, an apparel store and a beauty salon.

This year, at 72 years old, Duren again has invested in his Piggly Wiggly, expanding the store by 16,000 s.f. and introducing a new décor package. It has an updated

Welcome to Port St. Joe “The background of Port St. Joe is quite interesting,” says Duren.

“It was a paper mill town from 1938 to the year 1999, when the decision was made by the owners to cease operations and remove the paper mill from the local landscape. Along with the paper mill leaving, other components of our local industry chose to leave as well, including two chemical plants, a telephone operator headquarters, a railroad yard (and) others. However, with this industry removing itself from our landscape, Port St. Joe has become a beautiful tourist area and retirement village with great recreational fishing.

Our local citizens have never bought into the habit of reserving their friendly nature, and it is not uncommon for complete strangers in our community to be greeted most everywhere they go.”

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exterior in addition to new interior walls, new signage, a deli and bakery department that has more than doubled in size, a new floral department, “a grand produce department with just a whole new look,” an expanded meat department and an array of specialty items, including international, gluten-free and non-GMO products.

The store also now features a “Holiday on the Coast” department where the old deli and bakery used to be. In the winter months, this section will feature products for campers and “RVers,” as well as toys during the holiday season. In the summer, it will house products for beachgoers and vacationers. This not only centralizes the seasonal items, but also removes what local shoppers might consider clutter from the rest of the store, Duren says.

Success begins with tenacity Duren started with a 6,000-s.f. building and now operates not only a 48,000-s.f. upscale grocery store but also, with the help of his wife Hilda and adult children Lee and Anna, two Walter Green apparel stores and a Bluewater Outrigger store offering “everything for your outdoor adventure.”

No question, Duren has found success as a grocer and a businessman. And key to that success is tenacity, he says.

“I am of the opinion that if failure is considered an option, then it will likely at some point be the most convenient option and sooner or later taken. I never thought that I could afford to fail, and therefore kept pressing on regardless of the competition that I endure, especially in my early years of operation, as well as when the interest rate on my substantial debts rose to 21 percent in the 1980s.”

Duren also believes in learning from the best. He has found strong mentors in a number of grocery chains, including Lakeland, Florida-based Publix.

“The simple quality of operation of Publix and their mantra, ‘Where shopping is a pleasure,’ is just hard to beat. And they succeed at that,” Duren says. “Many people will tell you they shop for price, but they’ll shop at Publix for the pleasure. And regardless of what they would want to say or think, they enjoy that experience. So we’ve emulated that.”

Above all, though, it’s Duren’s focus on customer satisfaction that has helped his business continue to grow and thrive over the years.

“Although we are very competitively priced, we have chosen to never sacrifice the quality of our operation,” he says.

One of the best ways to run a quality store is to offer top-notch customer service, and that means training store employees, he adds.

“We initially give new employees an orientation so that we clearly communicate to them what we think our opportunities are to serve our customers and to retain our customers. We have such sayings as, what appears to be a small item to an associate usually appears to be a large item of concern to the customer. We discourage employees from doing even small things like saying ‘no problem.’ Instead of saying ‘no problem,’ say ‘it’s a pleasure’ or ‘my pleasure’—just little things like that. And all of our associates never point to where anything is, they always take the customer there.”

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Connecting with the community Beyond the walls of his store, Duren strives to serve his community through involvement and good works. He has been involved with or been a member of various organizations, including Kiwanis Club, education committees, Boy Scouts of America, the board of trustees of Gulf Coast Community College (now Gulf Coast State College), and his local First United Methodist Church. He has been one of the masterminds behind holiday parades, a scallop festival that has become an annual tradition and Fourth of July festivities. He even organized a food drive at Thanksgiving for the 650 paper mill workers who lost their jobs when the plant closed in the late ’90s.

But arguably the greatest contribution Duren has made to the Port St. Joe community is the annual Forgotten Coast Warrior Weekend. Now in its ninth year, the event brings 20 Wounded Warriors into the community and hosts them each in their own beachfront condo for four nights. Over the course of their stay, the Warriors are treated to a Heroes Parade through town; a Grand Patriotic Banquet attended by approximately 300 people, guest speakers and entertainment; and off-shore fishing trip on boats captained by local fishermen; horseback riding; beach games; and bonfires on the shore each evening.

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“That is a celebrated event amongst Wounded Warriors,” says Duren. “And one of the primary reasons is because we restrict news people and photographs of them. We do not let it turn into a spectacle. We do not put them on display. It’s all about them and their comfort and their pleasure.”

The event has a lasting impact on the Warriors, many of whom “have never even met anybody else in their same predicament,” Duren adds. “They went from the battlefield to the hospital to rehab to home…So they don’t have a strong supporting network of other wounded warriors, and so they create that.”

Duren, a Vietnam veteran, founded the event, initially supporting it through his Piggly Wiggly and Bluewater I have never worried Outrigger stores, but today it truly is about how much I was a community effort. Local businesses contributing to my community and persons contribute money and/ because as we all know, the only volunteer hours. While Duren guarthing that you keep in this world is antees the event’s debts and has made what you have given away.” up the difference between its $50,000plus budget and funds raised, he says donations have covered it completely for the past few years.

Staying relevant in a changing industry While doing good for the community is always in style, the same can’t be said for trends in the grocery industry. The biggest shift Duren has experienced over the years is in the way his business connects with its customers.

“We find now that our greatest opportunity for being in touch with our customers is through social media. Yes, we still offer our weekly newspaper advertisement, but our most effective advertisement is Facebook and other social media conduits,” Duren says. “And with such media conduits as Yelp and others, we are aware that we are only as good as we were serving our last customer.”

Going forward, Duren hopes to keep up with the online trend by offering online shopping and grocery pickup and, eventually, delivery. And one day, he hopes that the store might offer offsite catering. For now though, Duren is focusing on improving the in-store shopping experience offered by his Piggly Wiggly. In addition to the recent remodel, Duren was waiting on the arrival of a new self-serve salad, olive and soup island at the time of this publication.

“We are committed to growing with the industry and doing our best to stay on the cutting edge of what an upscale supermarket has to offer,” says Duren. “But we will always be in close touch with striving to serve the needs of our customers.”

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Associated Grocers of the South member

Marino’s Market Is an American Success Story Call it a success story, or an American story, or an American success story. Only an independent grocer could have sprung from nothing and achieved so much success because of its commitment to the communities it serves.

Marino’s Market operates in the inner city of Birmingham, Alabama, with two stores serving the Ensley and Central Park neighborhoods. They are not far from the city of Fairfield, where Marino’s Market got its start back in 1925. The small market remained there in Fairfield until 1953. It was one of many mom-and-pop stores that served local steel workers. Over the decades, steelmaking became more efficient and fewer workers were needed, and as they left, so did the small community stores. But Marino’s stood its ground.

Steel figures prominently in the Marino’s story. Sicilian immigrant Tony Marino came to America with nothing. He passed through Ellis Island then went to Chicago, where he was told to go try to find work in Birmingham.

“It was the turn of the century,” said his grandson, Anthony Marino, who is now president of the family business. “They told him, ‘They’re going to start steel mills there, like Pittsburgh, and you might be able to go down there and get a job.’”

But Tony Marino, who couldn’t read or write and spoke only broken English, did not get a job.

“They really did us a favor when they didn’t hire him,” Marino said.

Penniless, he was taken in off the street by Anthony Marino’s great-grandmother, Michaela Bruno. Those familiar with Alabama’s grocery history recognize the Bruno name, which was attached to a once-thriving grocery chain that operated more than 200 stores across the South. The late Angelo Bruno was Anthony Marino’s godfather.

Tony, with his wife, Mary, and the family raised enough money to open his first store in Fairfield in 1925. Anthony Marino remembers being with his dad, Joe, grandfather, Tony, and two aunts and an uncle at the small store when he was 5 years old.

In the 1950s, Interstate 59 bulldozed its way through Fairfield. Tony Marino bought a building that had a common wall between what had been Hill’s and A&P Food Stores in Birmingham’s Ensley neighborhood in 1953, and Joe Marino took over the family business as it moved to the new location. Anthony Marino was just 6 years old then.

“I grew up in that store. That’s where I learned the grocery business. That was a fairytale store,” he said. “The sales floor was 3,900 s.f., and it would do so much business that on a holiday, like the Fourth of July or Labor Day, we would have to put somebody at the door, lock it and let just a few people in as a few people went out.

That’s how it was. The record was 21 times we locked the door. It was just a small little place, but they would stand outside. It really was a fairytale store. We did all the business we could handle.”

In December 1979, Anthony Marino bought the store from his dad. He formed Marino’s Inc., and on Jan. 1, 1980, the business got its official start. Four months later, Bruno’s bought 10 A&P stores, and that gave Anthony Marino the opportunity to grow his business.

“Mr. Angelo sold me two of them,” Marino said.

In 1984, Winn-Dixie left the area, and Marino’s took the opportunity to move into a building it vacated just four blocks down at Avenue E and 25th Street in the Ensley neighborhood. Marino’s has since removed the interior wall from the former WinnDixie (that had been built by and previously operated as Hill’s Food Stores) and the former A&P in Ensley to form one large store.

In 1986, the Winn-Dixie building in Five Points West across Central Park on Bessemer Road became available, and Marino took that one as well. The area had five supermarkets when U.S. Steel was healthy and people were working. Only the Ensley and Central Park stores remain in operation today, but they are still there. And that says a lot about Marino.

“Everybody else decided they were going to leave,” Marino said. “Well, I’m going to make a statement. I’m going to put the most modern store in here. I’m not leaving.”

Over the last three years, the Ensley location has been completely remodeled. LED lights are now in the ceiling, in every case and in the parking lot, which itself was replaced. It has every energy-saving feature available. New restrooms are “hotel-like” with tile and touchless fixtures. Marino’s added a 145-ft. vestibule out front and four sets of automatic doors.

“It’s the latest and best of everything that could be bought is really what it is,” Marino said. “This is the cool part. In a distressed area, I took an old building—Hill’s Foods

Store built this one in 1953—and we’ve been in it 63 years—and when everybody left because they couldn’t make a profit, I spent $3.5 million on an inner-city store. Who would do that?

They didn’t know how to merchandise to the people because the neighborhood changed. I had an advantage. The first store in Fairfield in 1925 was in an African-American/Italian neighborhood, so we knew how to market to that clientele.”

Marino knew that he would either Anthony and A.J. with look like the dumbest guy alive or the a portrait of Joe Marino. man who made the right call.

“Let me just tell you this. I made the right call,” he said. “Last year, we had record sales and the largest profit year in our 91-year history. It works. Now we’re going to take this same footprint to our Central Park store over on Bessemer Road. We’re looking at getting even better results because there’s more traffic over there.”

A purpose-driven life

In 2014, Birmingham was one of 16 U.S. cities selected to receive a Smarter Cities Challenge grant from IBM. Over a three-week period, a team of five IBM experts worked to deliver recommendations on a key challenge identified by Birmingham Mayor William A. Bell Sr. That challenge was food insecurity. IBM recognized Marino’s Market Ensley as the most modern inner-city neighborhood supermarket with a reputation for the best meats, healthier foods, competitive pricing and old-style customer service its team had visited in the U.S. As they did their research, they called Anthony Marino to City Hall to pick his brain.

They wanted to know why supermarkets were leaving the city. Marino told them about the community stores on every corner he remembered from his childhood. He explained that what followed were four types of food retailers: big boxes like Walmart and Target; supermarkets like Winn-Dixie and Bruno’s; independents like Marino’s Market and Piggly Wiggly; and convenience stores. He told them how the big boxes and supermarkets went after the same customer, how Bruno’s and Winn-Dixie sold out, how Kroger came and went when he was young and how the independents stayed.

“They’re not catering to the customers like I’ve got, or Piggly Wiggly’s got. My friends Naseem and Basim Ajlouny and the Virciglio family own the franchise Piggly Wigglys here in Birmingham,” Marino said. “What we’re catering to is communities, neighborhoods, and with us being here 91 years, we know we’ve got loyal customers. When people were laid off at U.S. Steel, my father fed them. The reason we’re successful is because we’ve got community involvement. My father did that, and I’ve taken it to the next level.”

The next level includes an annual event called “Party With a Purpose.” It began in 2006 when a councilman, District 8 Rep. Steven W. Hoyt (one of Marino’s councilmen) called for a candlelight vigil in response to violence in the area. Marino is the chairman of Party With a Purpose, which is held in Ensley Park and draws 3,0005,000 people. It now is one of the largest events in the city, and everything is free.

There’s fried chicken, hamburgers, hot dogs and more. There’s a block party, rides for kids, giveaways, music and dancing, a blood drive, health screenings and a job fair.

A mobile unit from the Alabama Career Center is on site complete with computers on board so people can put together resumés and apply for jobs online. There’s a tent for seniors. The NAACP is there helping people register to vote.

“It grows out of the ground, it’s just so big,” Marino said. “It’s really just crazy. It’s like a circus. I mean really, really big.”

In 2011, Neighborhoods USA, a national nonprofit organization that helps build and strengthen neighborhood organizations and each year recognizes outstanding community efforts, singled out Party With a Purpose with first-place honors.

“What I tell everybody is, ‘the United States is a big place and there’s lots of neighborhoods,’ so I’m proud of that,” Marino said.

But it wasn’t quite enough. Three years ago, Marino went to Hoyt and told him he wanted to help graduating seniors at local high schools take the next step in their education. The Education With a Purpose Scholarship was born. Marino is scholarship chair.

Seniors in all eight Birmingham high schools can apply and are required to write a 200-word essay on the topic, “How can I make a positive difference in my community?”

Marino’s Market a Longtime Member of AG of the South Marino’s Market has been with Associated Grocers of the South since 1963, making it one of the oldest members.

“And I’m proud to be here,” said Anthony Marino, president. “Years ago, when A&P had 2,200 stores, all of us little independent guys—my dad and uncles and grandfather before me—couldn’t be competitive because they couldn’t buy that way. Ninety-eight guys signed on the line to build the first Associated Grocers.”

Back then, it was called Associated Grocers of Alabama. The name changed because it services stores all over the Southeast.

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Marino sat on the board for a number of years. He was president of the board until he felt he should step aside and “give these other guys an opportunity.”

Marino’s service to AG of the South also included terms as VP, the meat and perishables departments chairman and serving on the advertising committee, among other roles.

“You’ve got to have competitive pricing, and you’ve got to be able to get the variety.

That’s what we’ve done with Associated Grocers,” Marino said. “When you keep your stores competitive, they stay in the game. If they’re not competitive, they get eaten up.”

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“They can be a straight-4.0 or straight-A student, but that doesn’t get them a scholarship with me. That’s academic,” Marino said. “They’ve got to do community service.

It’s what the Marino family has been doing for years.”

The first year, five finalists were chosen and each was asked to go to City Hall and bring at least one parent. They would go through three rooms at City Hall: one where they gathered, one where they enjoyed refreshments and the third where the applicants would sit with three educators, each of whom would ask three questions. That year, two students won scholarships.

“We’ve got a problem with our school system here, but we’ve got some kids that are really smart, and those are the ones that showed up,” Marino said. “I was able to raise enough money to give two monetary scholarships and laptops.”

It was an “over-gratifying” experience for Marino, who knew that the next day he would get to work to raise more money, “because I’ve got more kids that should be getting scholarships.”

The next year, four scholarships were awarded.

Party With a Purpose marked its 10th anniversary this year. Councilman Hoyt asked Marino to do something “big” for it.

“He said just do the best you can, but it would be nice,” Marino said, with the implication that the goal was 10 scholarships.

Instead, 12 students received scholarships, computers and even food vouchers.

Marino went to every school as they had Awards Day with a “big check” traditionally used for donations.

“We would name that child, bring them on stage and present that check to them,” Marino said.

He also took all the winners and their parents to a city council meeting. He told the city council members what the students had done. Each was brought up to a microphone to be introduced and say what they would major in at the college they had chosen. (One student plans to be a nuclear engineer.)

But the council was impressed that “a guy in the grocery business” would have so much passion for the program and for the city.

“It’s real simple,” Marino said. “My dad said if you’re going to be in a community, you need to be part of it. If you can make a community better, you’re going to have better people, better people make better customers, better customers make better neighbors and the city becomes better.

That’s what it takes.”

Education With a Purpose now is referred to as “Anthony Marino’s Program.”

“I look around at these other kids and why I did this is because they need initiative to go to the next level when they get out of high school,” he said. “We’ve got to get them off the street, get them in school, get them in church.”

Marino has received so many awards for his volunteer work that his wife, Denise, jokes they need a room of their own.

“But, you know, when I was a young guy, the older people did what I’m doing,” Marino said. “Well, now those people are gone, so it’s time for us to step up and do this. We’re charged with making life better for a lot of people. I’ve been blessed in my grocery stores.”

Anthony and A.J. Marino renovation work and kept it in the office to be safe.

The portrait of Joe Marino wasn’t always at the store. When it was first finished, it was on a golden easel in his mother’s living room. Mary Marino called Anthony one day and told him she needed to move it because it was in the wrong place.

“She said, ‘Where was your dad always?’” Marino said. “When you walked in the store, the first person you’d see is him standing there, greeting everybody. She said, ‘That’s where it needs to go,’ and it is there to this day.”

Customers wanted reassurance that Mr. Joe’s picture would be back out front where they could see it. People would ask him, “Where’s Mr. Joe?” “They loved him,” Marino said. “He helped so many people.”

Tony Marino, who arrived with nothing all those decades ago from Sicily, passed down to his family not only the business but also 50 houses when he died. After all these years, the family still owns them.

“My grandfather came to this country looking for a better way of life, but he didn’t know he could own something over here in the United States,” Marino said. “What a success story. Taken in off the street and when you die you leave 50 houses plus the business. That’s something you can do in this country. You know, we’ve got a lot of problems, yes, but I’m trying to help correct some of them out here where I’m at.

Everybody just needs to try to ante up and do the best they can to try to respect people and let them know that you care for them.”

Generations of community service

Marino’s grandfather, Tony, was generation one; his father, Joe, generation two. Anthony Marino has a deep appreciation for their hard work. When a water main was put in, for example, his grandmother and father made lunches and sold them to the workers.

“Just anything it took to make the thing work,” Marino said.

He also has excitement for the future of the 91-year-old business and for the next generation. Anthony’s 30-year-old son, Anthony Jr. (A.J.), is the fourth generation coming up.

“I feel like we’re going to be in really good shape for the next round, and that’s really where we are,” Marino said. “A.J. is smart, smart as a whip. He’s a Marino in and out. He came to me and wanted to be in this business.”

That’s in spite of a job offer from a Fortune 500 company.

He said A.J. has the same type of magnetism that “Mr. Joe” had.

Joe Marino passed away when he was just 67 years old. Anthony Marino is now 69.

“Customers say the older I get, the more I look like him. I had somebody tell me the other day, ‘you know, you’re starting to walk like your daddy. You love everything like your daddy,’” Marino said.

“I’m going to tell you one of the other ways I’m like my dad. If my dad was home, he was not happy.”

Joe Marino had a number of health issues: seven bypasses, an aortic valve that was replaced, a kidney removed.

“But the thing about it is he’d come in the store and customers would say, ‘Mr. Joe, how are you feeling today?’ He’d say, ‘I feel good. How do you feel?’ I’m the same way,” Marino said. “When I come to the stores and I see these people, it makes me feel good.”

Marino is a hands-on grocer and a little unhappy when he has to work in the office. Not too long ago, he had his father’s portrait hanging in there; the family commissioned the artist who did the governor’s portrait. He was worried it would be damaged during the

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URM Stores member

McIntire’s Super 1 Foods Still Growing After 40+ Years Ron McIntire opened his first grocery store in Hayden, Idaho, in 1970, but he had been in the grocery game long before that. McIntire, who celebrates his 80th birthday this year, started working in a little country store in Oregon in grade school, “marking products with a crayon,” he said.

A year after graduating from high school in 1955, he started his first “real, big job” at a grocery store in Quincy, Washington, working as an assistant store manager. That store was bought, but McIntire stayed on as store manager for Akins Thrift until 1970, when he went into business for himself.

“I decided that as long as I can do it for someone else, I could probably do it for myself,” he said.

McIntire began working with food distributor URM Stores Inc.’s store development staff to help him get off the ground.

“We found an opportunity for a small store here in Hayden and in 1970 opened our first store and have been moving ever since,” he said.

Good food, strong community ties and a competitive co-op

McIntire now operates 14 Super 1 Foods grocery stores in Idaho and Montana. He credits a number of factors for his success. One is the freshness and quality of product.

“We emphasize the choice meats and the best produce we can buy and fresh bakery products. Everything we do is about trying to stay with the fresh line,” he said.

Another key factor has been his involvement in his communities. McIntire served for 18 years on Idaho’s Coeur d’Alene School District board, for seven years on the Kootenai Health Foundation board and on various Boy Scouts of America executive committees since 1973. He even served as the mayor for the city of Hayden for 16 years.

“There have been quite a few things, and it’s been fun,” McIntire said of his involvement.

And when it comes to Super 1 Foods, “We try to support all the athletic programs,” he added. “We’re involved in library programs here in the city. We try to get our employees, managers, everyone involved in the communities they’re in, and to be a part of them. We support the veterans programs. We’ve supported just about whatever comes along.”

And the communities McIntire works in have supported him right back, through both loyalty to his stores and through recognition for his good works. Earlier this year, Hayden City Park was renamed McIntire Family Park in honor of the grocer and his family.

Speaking of family, McIntire’s own has played a role in his success. He and his wife, Joanne, have seven children, and four of them work in the business. His son Randall (Randy) is primed to eventually take over the business. He serves as GM of the Michael, Ron and stores and as a partner and VP of the corporation. A number of McIntire’s grandchildren now are in the Randy McIntire

Certco member

Gooseberries Is a New Concept That Draws from the Past Dave Spiegelhoff remembers the “good old days” of the grocery business and says that if someone doesn’t get those ways down in a book somewhere, they will disappear without acknowledgement.

He’s been in the grocery business his whole life. He remembers hanging banana trees with jumping spiders in the backroom. He used to go across the street to get sawdust to soak up the blood on the meat department floor. Chicken came packed in ice, and at times the backrooms would be full of frozen turkeys. Chicken, beef and pork used to all be piled together on butcher blocks—and nobody ever got sick.

“In those days we used to skin a lot of deer, and we can’t do that a n y m o r e ,” Spiegelhoff said.

“My grandpa used to work with the farmers.

They would bring all the

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family business as well.

Last but not least, URM has helped McIntire stay competitive as an independent.

“If you stick with it, and if everyone that’s a member supports it (URM, a retailer-owned The newest Super 1 Foods store in Great Falls. co-op), the better the program gets for us.

We get buying opportunities, and that helps us compete with larger chains—and we’re surrounded with them, between Walmart, Safeway, Albertsons and Fred Meyer, which is big in this area. We feel like we’re working diligently to hold our own and do fairly well at it—at least we’re still progressing. But URM and the co-op is really a great program for us.”

Keeping up with four decades of trends

Being in the industry since the ’70s, McIntire has seen consumer trends come and go, and he’s always been able to weather the industry changes those preferences bring.

“The center store—I can remember when I began as a store manager buying railroad cars full of flour and sugar and pop...Those days are gone,” he said.

“Everything has the sugar in it now. People don’t bake as much as they used to. In the old days, we used to have canning supplies by the truckload. You don’t do that anymore.”

The big trend in his stores today is the shift toward organic and gourmet items. To McIntire, this hasn’t been as much of a challenge as it has been a Joanne and Ron McIntire chance for his stores to shine.

“Every store has canned beans and corn,” he at the grand opening of said, but great fresh departments can help a grocery the newest Super 1 Foods. store differentiate itself.

“Organics is a very big item with us, and it’s getting to be a larger part of our business all the time,” McIntire said, noting that about a fourth of his stores’ produce sales are in organics. “It’s a good thing because that’s what people want. And we just move along that line. As the times change, we change with it; if you don’t you get behind.”

While McIntire doesn’t see his stores shifting into some trends, such as grocery delivery, anytime soon, he believes flexibility is key, and URM is helping his store be adaptable. The co-op’s IT programs allow McIntire to have sales data at his fingertips.

“Those kind of things are going to be more and more important. (To know) what sells and what isn’t selling and how much makes quite a difference,” he said, pointing at Super 1 Foods’ coffee aisles. “We’ve gone from 48-foot coffee sections to mostly 12 feet of grind-your-own coffee now. And that’s what people want. So you just have to swing and do it, but having information at your fingertips is really an important thing.”

That philosophy has continued to work for McIntire. He opened his 19th Super 1 Foods store in Great Falls, Montana, in late August.

cattle and swinging beef, and we used to cut everything in the store. I think those days are going to be long gone, with the farmers and the cattle.”

The Spiegelhoff family has always been known for the meats it offers in its stores. Spiegelhoff remembers delivering sausage to local pizza places.

“We’re using the same sausage recipe that we did back in 1954, which is my uncle’s,” he said. “We’re up to 43 different sausages that we make today.”

He also remembers as a kid going around with his uncle to pick up produce and eggs. He’d candle the eggs and pack them in boxes. The ones not quite up to snuff were cracked and delivered to local bakeries.

Spiegelhoff’s father, Paul, is still alive, and at 92, comes to the store every day to have coffee and check in.

“He reminds us many times how we’ve gone back to, as he calls it, our ‘grocery roots,’” Spiegelhoff said.

Back when it opened in 2006, that put Gooseberries Fresh Food Market on a track opposite from where the rest of the industry was headed. On Thursday nights, the produce department would transform into a farmers market with real farmers.

There’s something else reminiscent of the good old days, too.

“It was all family back then, and it’s all family now,” Spiegelhoff said. “My sister’s in the business, my youngest son is in the business. My wife was a nurse, and now she runs our floral department.”

(At the time of this interview, his wife, Kathy, was home safe from a medical mission trip with Friends of the Children in Haiti, where Hurricane Matthew delayed her return trip by three days.)

Kathy and daughter Abby both have celiac disease,

so Gooseberries Fresh Food Market not only carries an extensive collection of gluten-free products, but also helps its customers who suffer from the illness.

“We do a center-of-the-plate demo every Saturday, and Abby writes recipes that we demo and she coverts all of them to gluten-free, so we really try to niche down to those needs,” Spiegelhoff said. “Children’s Hospital (of Wisconsin) sends people to do consults with my wife when they’re diagnosed with celiac disease because the diet can be just so overwhelming. She walks them through the store and gives them a mini consult.”

Another big part of Goosesberries’ business is catering, which the Spiegelhoff family has been offering since 1999. For weddings, the market is a one-stop shop.

“You can come here and get your floral consult, a consult for cake, our executive chef for catering and we also offer a mobile bar service,” Spiegelhoff said. “So you can knock it all off at once, if you choose to. And we don’t have a set menu; we have a guide. If you’re going to Jamaica for your honeymoon, well, then, we’ll try to do a Jamaican theme if that’s something you’re looking to do.”

Catering services extend to boats. Gooseberries is the main caterer for the Lake Geneva Cruise Line.

Gooseberries also donates food to local high schools’ home economics classes and delivers that as well. It also sponsors dinners for major golf outings at local high schools at no cost, which boosts their fundraisers.

All told, Gooseberries has given more than $130,000 to area high schools.

Each year in May, it has a Mother’s Day Cupcake event, and that has raised about $15,000 so far for breast Please see page 20

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ROFDA Associate member

Driving Growth in the Cereal Aisle: It’s All in the Mix

by Jesse Garcia SVP of Sales and Chief Customer Officer Post Consumer Brands Driving traffic to the center store cereal aisle requires new strategies at a time of changing trends in breakfast consumption, at-home Jesse Garcia eating preferences and shifting demographics. Now, more than ever, retailers need to be smart, scrappy and resourceful in order to deliver the right product at the right price to the right consumer. The key is determining the mix that’s most appropriate for each store.

Today, supermarkets must not only compete with other supermarkets in the local area, but also with a variety of other retailers that offer everyday food staples—from convenience stores and drug stores to building-andremodeling stores to mass merchants that have added entire grocery sections alongside aisles stocked with shoes, fashions, tools and toys. In short, many dry grocery basics, including cereal, can be found just about anywhere.

So what can supermarkets do to increase cereal sales?

First, consider the following trends that are impacting the category.

Headwinds are moderating in cereal

Despite the increased competition in recent years, dry grocery remains a driver of revenue and traffic, and cereal is a key factor. Today, dry grocery accounts for approximately 49 percent of the total $428 billion in grocery retail sales1, and of that, ready-to-eat cereal is No. 6 in terms of dollar share.2 In fact, research shows that when ready-to-eat cereals are in the grocery cart, the average basket size is $94.64 vs. $46.54 when they are not—an increase of 103 percent, according to Nielsen Home Panel Information.3

This is because when shoppers stock up on their weekly must-haves, cereal is a go-to-item that leads to additional purchases.

Breakfast food is a huge category representing more than $50 billion in sales, and cereal is the second-largest breakfast category behind fruit.4 In addition, cereal is one of the most economical breakfast options available to consumers.

Breakfast consumption trends

Within the cereal category, natural/organic cereals are among the fastest-growing segments of recent years.

However, it’s important to note that although natural/ organic and some of the healthier options may be growing as a percent year over year, they still remain very small compared to mainstream cereal, where taste is still king.

Taste is the No. 1 factor in consumer food choices, above price, convenience, healthfulness and sustainability, according to the International Food and Information Council.5 Only 12 percent of consumers are “willing to sacrifice a little bit of taste for a healthier meal in the morning.”6 In-home eating preferences also are moving beyond breakfast when it comes to cereal. Although generally considered a breakfast food, cereal is proving to be a great option any time of day. We think this has always been true, as cereal has been a readily accessible, convenient and tasty go-to option for meals and snacks.

It continues to serve that need. And how many of us can remember the days when our moms offered up cereal as the alternative to the “not-always-kid-friendly” family dinner that was served?

Shifting demographics for cereal buyers

In addition to being a popular, great-tasting breakfast or snacking choice, cereal sales are benefiting from changing demographic trends. For example, the Hispanic population, one of the largest growth demographics, over-indexes on cereal purchases. On average, Hispanic households spend more on cereal than non-Hispanic households.7 Millennials, another growing demographic, are in their childbearing years, and while many may be looking for health-focused natural and organic products, others will gravitate toward great-tasting options they know their little ones will eat. Shoppers from other rapidly growing demographics, such as Baby Boomers and retirees, may

From page 18 cancer research.

“A healthy community is good for any business, and certainly the food business,” Spiegelhoff said. “We really try to focus on getting involved, keeping our community as healthy and as profitable as possible, and in a community like Burlington, they really do seem to embrace that.”

Gooseberries has about a half-dozen elderly shoppers who don’t own computers and have no family close by to help them. They call in their orders each Wednesday, and their groceries are delivered to their homes.

Like those shoppers and many an old-school grocer, Spiegelhoff is a little bewildered by the speed at which technology is changing and strengthening its hold on everyday lives. That’s one area where the company’s wholesaler, Certco, comes in, along with online shopping technology provider Rosie. Gooseberries started offering the service about two years ago, and today shoppers can pick up their groceries or have them delivered. Getting online shopping started with its wholesaler, Certco, made the process easier, Spiegelhoff said.

“It’s different when you, as an independent retailer, are working with a wholesaler that you also are invested in,” Spiegelhoff said. “There’s definitely a higher level of connection on making both successful in a lot of ways.”

Getting it done was easier because everybody wanted it to work, he said.

“We learned early on that as you share ideas with other independent retailers, and, in this case, Certco—whether you’re putting in a new front-end system or you’re doing a new meat program—you can openly call Certco and the other retailers and say, ‘come on down, come and look at this. I can show you the good and the bad,’” he added. “I can share our wholesaler’s strength in this program, and maybe some things they need to focus on.

“Certco can work to make the program better so that the install for the next retailer is smoother. That’s better for the retailer. It’s better for the wholesaler. The ability to share programs, training and insight is invaluable. Everyone moves forward.

“Obviously, the more profitable Certco is, it’s better for us, and the more profitable the retailer is, it is better for Certco,” Spiegelhoff said. “With some of the other programs

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be living on smaller budgets and looking for low-cost options or time-honored brands they’ve spent their lives enjoying.

What retailers can do to drive sales

To capitalize on these trends, retailers must first know who their most important shoppers are and then tailor their offerings to meet their needs. The good news is that although many things are changing, in many ways they are also staying the same: in the neighborhood grocery store, one size does not fit all.

Smart retailers will seek to optimize their shelf sets to “fix the mix” for their consumers and their neighborhoods, and provide the right products at competitive and everyday promotional prices.

As the only major cereal company 100 percent vested in cereal, Post Consumer Brands is increasing investment in the category, including advertising and consumer promotions on our core best-selling brands. We’re also making changes to our merchandising and packaging to improve consumer appeal and shop-ability. With the broadest portfolio of cereals spanning all segments of the category, we’re uniquely positioned to help you create the mix that works for you.

1 Nielsen Scanner Information, 52 WE 10/1/16 vs. YA 2 Nielsen Scanner Information: 52 WE 10/1/16 3 Nielsen Household Panel Information 4 Nielsen Answers on Demand – XAOC, 52 Weeks ending 10/1/16 5 International Food and Information Council Foundation, 2016 Food and Health Survey 6 Dec. 2014 Morning Breakfast & Snack A&U 7 Consumer Expenditure Survey, 2007 & 2012, Latinum Analysis. Cereal includes ready-to-eat and cooked cereals.

A current member of ROFDA’s Advisory Council (RAC), Garcia joined Malt-O-Meal in 1997 as a regional sales manager. He was named national sales director in 2006 and chief customer officer in 2009. In 2012 he was named SVP-sales and chief customer officer. Before joining Post Consumer Brands, Garcia had held positions with Kellogg, Dr. Pepper/7Up, Anheuser-Busch and Coors Distributors.

Garcia’s affiliations include GMA, FMI, NGA, ROFDA and MGA. He also is an active supporter of Enactus, Network of Executive Women (NEW), United Way, Special Olympics and Second Harvest Heartland.

at other wholesalers, you don’t have the ability to do that. It’s, ‘Here it is. This is how it fits. You need to fit into our wholesale program, and we’ll help you the best we can. Good luck.’ We don’t get that with Certco at all.”

Gooseberries is a unique market by design, and it needed a name to match. The new venture drew experienced grocers, including Bob Schmaling, well known in Burlington as a Piggly Wiggly operator, and Gary Winkler, who was associated with Sentry and also well known. The Spiegelhoff family had been associated with Pick ’n Save. This new store needed a fresh identity. They looked west to a company in Arizona called DW Green for ideas, This year, Gooseberries and Gooseberries Fresh Food Market was born.

Market received the “Everybody walks away with a different feel,” Wisconsin Grocers Spiegelhoff said. “Is it a specialty market, a meat Association Community market, like a Trader Joe’s? It’s not like Piggly Wiggly.

Service Award.

Pictured It’s not like Pick ’n Save. It is not a typical grocery are Brandon Scholz, format.”

The “goose” in Gooseberries lent itself to a shopper Wisconsin Grocers rewards program the market offers. For every $150 Association, and Dave shoppers spend, they receive a $5 digital coupon, Spiegelhoff, Gooseberries dubbed GooseBucks. The program isn’t brand new.

Fresh Food Market.

Previously, the offer was a $5 paper coupon for every $75 spent. Spiegelhoff braced for feedback when the switch was made.

“I was scared to death because it’s a change, and what are these people going to think? But so far most of the younger people say, ‘This is awesome.’ They love it. The older ones, like my parents, well, it’s a bit of a struggle, but they get it.”

Spiegelhoff’s 30-year old son, Michael, certainly gets it. He has ideas that the elder Spiegelhoff just shakes his head at. There have been opportunities and there have been trials in that regard, he says, “but you don’t learn a lot from success.

“Technology, with kids these days, it’s all they know. It’s all they do, so staying ahead of that is going to be a major project,” he said. “Thank God I’ve got three young kids who keep Dad in the loop.”

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2016

From the RAC Chairman

Mike Ridenour, Head of Industry Relations & Sales Operations, The Kraft Heinz Co.

Operating Cost Control

Inventory Management

Merchandising Management

Perimeter Category

LEVERS

On behalf of our ROFDA Advisory Council (RAC), we are very excited about the increased levels of participation from our associates and member partners—all focused on driving collaboration for the cooperative.

The RAC’s purpose is to provide ROFDA leadership with input, information and feedback representing the interests of ROFDA’s associates and suppliers in support of ROFDA’s mission. Our purpose directly links to ROFDA’s mission to cooperatively unite to utilize and leverage all available resources, industry best practices and business relationships to provide added value to our independent retail grocers.

During the spring conference in Coeur d’ Alene, Idaho, earlier this year, the RAC changed the format of our associates’ meeting to a highly interactive session allowing for presentations for business development ideas. We structured our meeting around principles including aggregation, innovation, collaboration and realistic implementation.

From this meeting, we collectively aligned on our Current RAC members: top five business ideas that would benefit ROFDA and • Jon Ambrose, Rosie allowed each of the associate members the opportunity • Jesse Garcia, Post Consumer Brands to present those ideas during general session.

Mike Ridenour • Michele Koci, First Data We have made significant progress on our top five • Ric Larsen, DeJarnett Sales initiatives, which included conference planning, business growth incentives, technology committee expansion, quarterly promo• Jim Lukens, Media Solutions Corp. tional planning and development of a ROFDA cloud. During the summer and leading up to the fall conference, ROFDA members • Denny Belcastro, Kimberly Clark and associates have focused on these initiatives and made significant progress on several fronts. This focus of “doing more together” shows the strength of aggregation, allowing us to drive positive growth through services and procurement.

North America (Immediate Past We look forward to continued support from all of the associates and members as we close this calendar year and move Chairman) in to 2017.

The list of challenging demands on your time and resources can be long and daunting - obstacles in the path toward fulfilling your long term business dreams.

When it comes to non-perishables, Bunzl can manage your supply chain. All of it. We have the size, reach and expertise to design and implement a customized plan that will streamline the process and eliminate those distribution distractions from your daily workload.

Big Plans Call For Big Ideas. Think Big. Think Bunzl.

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Leverage E-Commerce to Win in Today’s On-Demand Economy

by Jon Ambrose Co-founder and COO Rosie We live in an on-demand world. Consumer shopping habits are changing at an unprecedented speed as people expect, and obtain, more value from their providers.

The winners in the on-demand world offer more than just goods or services at fair prices; they are creating relationships with their customers that empower them to shop on their own terms. This means personalized and highly relevant content, numerous different purchasing methods, and the ability for the customer to self-educate on what the provider offers so that they can choose for themselves how to purchase from that company.

The leaders of the on-demand world—companies like Amazon, Netflix, Pandora, Facebook and others—are beloved by their customers. Instead of pushing their products at customers, they offer a customizable experience in which the customer can push information to them: what their interests are, what they want to learn and how they want to shop. These companies respond with content across websites, mobile apps, social media platforms, televisions and, ultimately, boxes on their doorstep. By doing so, they earn the loyalty of their shoppers and can reinforce their leadership positions.

The importance of this new consumer psychology is not just for technology companies; it is for every business. For evidence, consider that in the last 15 years, 52 percent of the Fortune 500 companies have disappeared. They failed to recognize that succeeding today requires more than innovating new services; it requires a fundamentally new mindset—a mindset that engages customers on their terms, creates a relationship over time and delivers exactly the value the customer wants.

Why this matters for grocers

In 2015, about $10 billion of groceries were sold online. However, only 10 percent of these sales went to grocery stores. And only 6 percent was earned by online-only grocers like Fresh Direct and Peapod. The remaining 84 percent went to “Basket Bandits” (Brickmeetsclick.com), which are companies that either offer many product lines beyond groceries (Amazon, Walmart, etc.), or who focus on food but do not offer a full assortment of groceries (Blue Apron, Boxed, etc.).

These companies are outperforming the traditional grocery industry when it comes to selling food online because they have embraced the on-demand world. This is more than a new product line they offer; it is an entirely new mindset about how to serve communities with the foods they need and love. Grocers have always understood this.

The difference today is that the winning companies in online grocery recognize that consumers also want an additional value, something they cannot get from traditional grocery stores. This value can be in the form of saving time so they can stay at home more with their kids; reducing stress; and/or added convenience by shopping from anywhere and on any device. The customers who use online grocery shopping services are willing to pay more than they would for the food items alone because of the significant added value they receive.

For grocers, the on-demand world offers a massive opportunity. Online grocery sales are projected to grow by 18 percent CAGR (compound annual growth rate) and reach more than $100 billion in revenue by 2023, according to AT Kearney. So while Basket Bandits are reaping the majority of revenue today, there is substantial opportunity to outperform them going forward by adopting three best practices for grocery e-commerce.

Three requirements for grocery e-commerce success: Start with customers. Who are you not serving today, and why?

Execute. Utilize the best technology, and invest in your people.

Leverage your data. Increase profitability, and grow revenue.

We have tested these best practices at retailers across the U.S. and helped them achieve millions of dollars in new sales revenue via their e-commerce businesses. The first step is to think of e-commerce as just that, a business. One that is managed via a complete P&L and that has new customers, marketing, expenses and, ultimately, a new mindset.

For grocers to outcompete their national chain competitors, they need to first recognize that their new e-commerce business is about more than providing food to customers. It is about providing the type of value mentioned in the previous section. Because these values are both highly appealing to consumers and new to the grocer, they need to be communicated to the market. Doing so requires a comprehensive marketing plan that targets specific customers and heavily utilizes video, digital and social media

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channels. Below are best practices for marketing we’ve found effective across the U.S. • Use digital marketing to provide unique value propositions to the specific customers in your trade area that you want to engage. Examples include mobile display ads for Millennials, YouTube video testimonials for women in their 30s and Search Engine Marketing (SEM) for working professionals.

• Use different item pricing online than in-store. Your shoppers are receiving new values from your new business, and you have new costs to provide this value. It therefore makes sense to consider a new pricing strategy to ensure you are earning the full amount of revenue that the customer is willing to pay for the value they receive. We recommend that retailers utilize different item prices online compared to in-store. We pioneered the variable pricing e-commerce strategy for independent grocers in 2013, and our customers find it maximizes their profitability potential.

This same approach is used today by Wegmans, Peapod, Amazon, Blue Apron and other leading online grocers. Using Blue Apron as an example, items in a typical prepared meal are marked up 100 percent or more over the cost of the same item in a grocery store. Yet consumers are willing to pay this higher price because they are getting more value than simply the food. They are getting convenience, ease of use and a great online shopping experience. Grocers can offer these same values, and earn higher margins, with a successful e-commerce program. Retailers should look for an e-commerce provider that can set variable margins on their behalf to avoid maintaining duplicative item files. Retailers also should expect to retain any and all added margins from this higher online pricing and not be required to share it with their e-commerce provider.

• Offer Delivery. Rosie has processed tens of thousands of orders across the U.S., and roughly 60 percent of these are for delivery. Grocers need to think of delivery as a means to serve a new customer segment, and an opportunity to do so on the customer’s terms. Delivery has costs, and they can be paid for by the customer’s willingness to obtain the value of convenience, quality and speed. Grocers who do not offer delivery are limiting their growth potential and should seek an e-commerce provider that offers a complete delivery program to serve these new customers.

Once the customer is engaged, in-store execution is paramount and can be accomplished with outstanding order fulfillment tools. Grocers should seek an e-commerce provider that offers on-site training, documented processes and a proven track record of success. Retailers also should expect to bypass their checkout lane when picking orders by utilizing their e-commerce provider’s mobile checkout lane. This technology feature can save 33 percent of the total labor cost of the entire e-commerce business and is a requirement for any retailer that wants to profitably operate at high order volumes.

The final component of a great e-commerce business is to leverage the data. There is more information than can be described in this article, but the core principle is that the online shopping data can and should be used to benefit the retailer’s entire business, and not simply used to grow its online business. This means simple, actionable insights via automated dashboards to identify stock-outs by department, top items correlated to larger purchases and increased customer loyalty, and metrics to optimize staffing and labor costs.

In our view, every major town in America will have grocery e-commerce available by December 2017, and it is a race to win new market share before Basket Bandits grow their lead in this new industry. Winning this race requires investment—and a larger investment than simply paying for an online shopping website. Grocers need to invest by assigning their best people to run their e-commerce programs, by re-allocating a significant portion of their marketing budget to digital engagement and by focusing on new ways to serve their communities. By adopting these principles, grocers will be well equipped to win in the on-demand world.

A current member of ROFDA’s Advisory Council (RAC), Ambrose leads Rosie, an e-commerce and customer engagement company that works with retailers across the U.S. to grow their business by acquiring and retaining new customers. Jon is a member of the ROFDA Advisory Council and a frequent speaker at industry events and university classrooms across the country.

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