Smart & Final: West 2014 Retailer of the Year

West OF THE YEAR • 2014

Smart & Final Thrives in Its Unique Niche

by Lorrie Griffith/editor

Being unique in the food retailing industry is not that easy.

Most ideas have been tried and embraced or they’ve fallen by the wayside as shoppers, the times, or both, changed.

Smart & Final, founded 143 years ago in Los Angeles, started out selling what local shoppers were looking to buy, and that principle has guided the company throughout the years.

What Smart & Final does today, unlike its competition, is offer a warehouse-store-type experience but without a membership fee. Businesses and consumers alike shop at the company’s Smart & Final, Smart & Final Extra! and Cash&Carry Smart Foodservice stores. And no matter which store they visit, they find good deals on the high-quality food and supplies they’re looking for.

Ownership of the company has changed a number of times over the years since it was founded in 1871 by partners Herman Hellman, Jacob Haas and Bernard Cohn—today it is owned by private equity firm Ares Management—but it has not lost sight of its main business—serving customers.

Its success is showing these days in a number of ways, including its growth trajectory and a staff that’s bolstered by many long-term employees.

Dave Hirz

A new world Dave Hirz has been at the helm of Smart & Final for nearly four years now. Because he had spent nearly four decades in the traditional grocery business before joining Smart & Final (with Boys Markets and Kroger), there was a pretty sizable learning curve involved in his new role.

“The Smart & Final formula is really unique in the industry,” Hirz says. “I’ve been in the industry all my life, over 40 years, and when I came here, there was a lot for me to learn because that whole business customer side of the business— including clubs and organizations—was brand new to me.

“It’s a unique mix of business customers and household customers,” he continues.

The business customers range from small restaurants to business offices to clubs and organizations. The latter are buying supplies for all kinds of events, such as chili cookoffs, county fairs, soccer games, Little League baseball games and football games.

“When you go to a snack shack for a kids youth team, you’ll see our private label all over the place,” Hirz says. “It’s a lot of things that conventional stores don’t sell. It’s not just the big #10 nacho cheese; it’s hundreds of items—10-lb. boxes of patties or 40-lb. boxes of chicken.”

He says having both businesses and consumers as customers “is part of the formula that makes it all work.

“Our business customer, on average, is much more loyal than a household customer. Their average sale per customer is more than double what our household customer buys, so it makes our stores very productive.”

Growth ramping up in 2014

Hirz has rich industry background

As of January 2014, Smart & Final operated a total of 253 stores: 188 Smart & Finals and 52 Cash&Carry locations in the U.S. and an additional 13 Smart & Final stores in Mexico through a joint venture.

The Smart & Final group includes both the core Smart & Final locations and the Smart & Final Extra! stores, the company’s newest format that was launched about six years ago.

There are 119 Smart & Finals and 69 Extra! stores, the latter of which five new locations opened in 2013. In 2014, a total of 15 new Extra! stores are planned. Two are relocations of existing stores. On average they are 28,000 s.f., and they are all in the state of California, Hirz said.

“That is the growth vehicle for the company going forward,” he says, while adding that the core stores also are critical to the company’s ongoing success.

He says the core stores feature “an assortment that is really conducive to small businesses, clubs and organizations—just a great variety of unique items that you can’t get elsewhere in a single shop; you have to shop at a Costco and a conventional store both to get the offering that we have in our store.

“When we make the store an Extra! store, we keep all of the same itemization we have in that core store but we add about 4,000 household items to the mix. So to change from a Smart & Final store to a Smart & Final Extra! store, you need a bigger box; you need to go from about 18,000 s.f. to about 25,000 s.f.”

Because it is household items that are added, the Extra! store typically attracts more household customers.

Seven core stores were converted to Extras last year, and an additional 14 are being converted this year.

“In some cases they are already big enough; in other cases we have to expand them slightly. But when we do that, the volume increase is really all household volume,” he says.

The good thing is that the store typically retains the business, club and organization volume it had before—a win-win for the store.

Some new locations are new construction; others are second-use facilities, Hirz says.

In 2014, several of the stores will be converted conventional stores.

In those instances, Smart & Final will use 28,000 s.f. of the 50,000-s.f. building that it needs for its prototype and sublease the remaining space that it doesn’t need.

Spaces that formerly housed Borders or Staples typically are in the correct size range to begin with, around 25,000 s.f.

While it may seem counterintuitive, Hirz says Smart & Final actually likes to open stores near another warehouse competitor, Costco.

“Costco today carries about 1,200 club-size items. We carry twice as many club sizes as Costco does. So a club-size shopper loves Costco; Costco is a great competitor—I have nothing but good things to say about them, they’re really good at what they do. But I’m smaller, I’m more convenient, I’m easy to get in and out, I don’t have a membership (fee) and I have twice as much variety of club size, and a lot of customers find that appealing,” he says.

“As the population ages, a smaller format resonates with customers, whether it’s a smaller Sprouts or any smaller format store vs. going into a 150,000-200,000-s.f. building and spending half a day walking around the store shopping.”

While Smart & Final has not opened new Cash&Carry Smart Foodservice stores in several years, this year will change that. Two are expected to open in 2014, one in Oregon and one in Washington, which puts that concept on a “growth trajectory,” too.

This concept, which will have 54 locations when the new ones open, covers Oregon, Washington, Idaho, Northern California and Nevada (Reno). please see page 38

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Dave Hirz will celebrate his fourth anniversary at Smart & Final in April. He joined the company in April 2010 as president and COO. In December 2011, he became CEO, succeeding George Golleher, chairman and CEO, who had led the company since May 2007 in conjunction with the company’s acquisition by Apollo Management L.P. Hirz’s resumé includes: • 1999-2010—Kroger Co.: president of Food 4 Less supermarkets for eight years and Ralphs Grocery Co. for three years.

• 1997-99—Group VP of operations for Food 4 Less.

• 1994-97—VP of operations for Food 4 Less.

• 1991-94—Director of operations for Food 4 Less and Alpha Beta.

• 1985-91—Leadership roles with The Boys Markets, including district manager and director of store operations and administration.

• Bachelor’s degree in finance from California State University, Fullerton; serves on the Dean’s Advisory Board for the university’s business school.

• Graduate of the Food Industry Management (FIM) Program at Cornell University and the Food Industry Executive Program at the University of Southern California.

Hirz and his wife Julie, who will celebrate their 25th anniversary in June, have one son and two daughters. Two tall daughters.

The oldest, Makenzie, recently graduated from New York University and “thankfully,” her dad says, moved back to California.

Makenzie played basketball at NYU, and her sister, Taylor, plays college basketball as well but a little closer to home, attending University of CaliforniaSan Diego. She’s a sophomore.

Outside work and family, Hirz enjoys reading and bicycling. He usually goes on several 100-mile bike rides (“century rides”) each year. He typically rides with friends from the grocery industry, some who have retired, some that are still working, such as Kevin Davis from Bristol Farms, John White from Chicken of the Sea and Bob Kelly of Hidden Villa Ranch.

In addition, he is active in the Food Industry Circle of Hope for City of Hope, raising support for City of Hope’s fight against cancer and other diseases, as well as Olive Crest, which operates homes and provides various services for at-risk children. “Julie and I, about eight years ago, got involved with Olive Crest and we do things both through the company and personally with Olive Crest; it’s a great organization,” he says.

Hirz also has been an active supporter of Boy Scouts of America and is a past chairman of the board of the BSA Orange County Council.

He and Julie also are deacons in their church, Irvine Presbyterian Church, where they were married nearly 25 years ago.

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OF THE YEAR • 2014

March 2014

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Executive Bios

Over a 35-year career with Smart & Final, Tony Bernardini has worked as a store associate, store manager, district manager, director of Mexico operations, regional VP of store operations and VP of real estate. He currently serves as group VP-real estate.

Scott Drew, Smart & Final’s SVP of store operations, is a seasoned executive with more than 35 years of broad retail management experience. He began his career in the grocery industry in 1977 as a courtesy clerk and held various positions such as department manager, store manager, district manager and VP on his way to his current role. Drew is married with three children. His hobbies include spending time outdoors with his family, golf and sports.

He and his wife Kelly reside in Orange County, Calif.

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THE SHELBY REPORT OF THE WEST

“It’s just a great format,” Hirz says.

About 90 percent of the business at these locations is small businesses, and much of that is small restaurants, he adds.

“Cash&Carry store managers know their top customers by name, where their restaurant is, what they buy, when they buy it,” he says.

Cash&Carry has its own division president, Marty Trtek, based in Portland, Ore. Trtek has his own team—a VP of operations, a VP of sales and marketing and a dedicated buying team. But other corporate support functions, such as human resources, payroll and legal are handled through Smart & Final’s headquarters offices in L.A. Trtek and his team “do a great job,” Hirz says. “They are extremely focused on serving their business customers, and they have the experience and expertise to succeed in that mission. They understand what the business customer needs, and they work constantly to ensure they have the right products at the right price.”

Giving customers what they expect While much is made of localized product mix in supermarkets, Smart & Final has had success by keeping 90 percent of its product mix stable across its store base.

That 90 percent includes the company’s huge selection of private label products, for which Smart & Final is well known.

The 10 percent variable items are typically in center store, Hirz says. “We’ll change the mix based on the demographics.”

The Smart & Final customer can’t be pigeonholed, and that’s a good thing. Hirz says sales are almost evenly split in four quadrants in terms of median household income—$25,000 and below; $25,000$50,000; $50,000 to $75,000; and $75,000 and above.

“If I look at all four quadrants, we actually have almost a quarter of our stores in each quadrant, and average volume per store is fairly consistent in each quadrant.

We do really well in the inner city and high Hispanic areas, and there are some great Hispanic competitors that we compete with. But we have stores in the inner city that perform really well and we have stores where median income is north of $90,000 annually where our stores do really well,” Hirz says.

Of course, it is extremely important that Smart & Final has the right product assortment to appeal to its diverse customer base. “Our category management team has done a tremendous job of assuring that we have the right assortment for business, households and community groups. They also have worked aggressively to ensure that we are priced properly to offer a compelling value proposition,” Hirz says.

Private label also is an important key to the business, as the company has about the highest level of penetration in the industry in terms of private label. How does Smart & Final have such success in that arena? A dedicated team with a sole focus on those products.

“We do all our own private label internally; we have a vice president of private label that has a team of folks that do a

great job going out and finding the right new items, doing cuttings on a weekly basis against both national brand and our competitors’ private labels to make sure our quality is as good or better,” Hirz says.

The company’s main private label is called First Street; it makes up about 75 percent of the private label sales.

“It resonates really well with business customers and household customers,” Hirz says, adding that businesses in particular have come to rely on the quality and value of the private brands Smart & Final offers them.

Another of its labels has been around for more than 100 years—Iris. This label is found on personal care items such as tissue, paper towels and health and beauty care. Not only was it the first private label for Smart & Final; it also was one of the first in the entire industry.

Smart & Final’s dedicated private brand team is led by Raymond Swain, VP of corporate procurement. Along with Gary Somes, VP of advertising, they and their teams develop plans for marketing the company’s private labels.

“They have contests on a regular basis, both consumer contests and associate contests, around private label to continue to promote the brand,” Hirz says. “I think they do a nice job of communicating the quality and value of our private brands.”

A great team is another big key In fact, Hirz has nothing but praise for all of his team members, top to bottom.

“I really am blessed,” he says. “We have a great management team. When I got here four years ago, I was really impressed with the caliber of management. We have senior managers in the organization that have been here over 30 years.”

Since the company started moving more into consumer sales with its Extra! stores, Smart & Final also has “added some folks that came out of retail background in the conventional side of the world,” he says.

“If you look at the management team today, it really is a great mix of longtenured, experienced Smart & Final folks that have a great history of managing that business customer side of the business, supplemented with a few new executives that have joined in the last five years that come out of a more retail background.”

But it all happens at the store, as Hirz realizes and appreciates.

“And at store level, I’m sure everybody says they have great people, but for us, that’s not just a cliché. We have great people, we really do,” he says. “One of the biggest differences I saw when I first got here is how well our store managers know their business customers.

“We have, in every store, a set of core business customers that all of our store managers know—they know who they are, where their store is, where their business is, what they buy.”

An added level of sensitivity was needed when Smart & Final began to move toward offering more household goods in the Extra! stores and drawing more consumer business. The stores needed to make sure they didn’t stop giving businesses the level of service they needed.

“As we have evolved into a more house-

hold space, the team has done a great job, particularly at store level, of figuring out that household customer, how to cater to that household customer, without losing a business customer,” Hirz says. “You still want to make the business customer feel special.

“The business customer wants to come in, they still want their smaller store, they want to get in and out—time is money for them and they really don’t want to go get in line behind some household customer with a $100 order that’s a little slower to process. And our store associates do a great job of now, over the last several years, catering to a more household-centric customer base without losing sight of that business customer. Our business customer is a huge focus for us. Our business customer has actually grown, on a same-store basis, at a higher rate than household customers over the last three years now. And it’s really because our store-level associates are just going out of their way to take care of the business customer.”

Sometimes that means the business customer sends in an order and a store employee pulls the order and has it ready for that customer when he or she comes in.

“From entry-level service clerks to store managers, our store teams are second to none. Everyone is focused on what is best for the customer and providing a great shopping experience,” Hirz says. “And the teamwork you find at Smart & Final is unlike anything I have seen elsewhere. Our associates are constantly pitching in to help each other get the job done and resolve issues when they come up. You won’t hear ‘it’s not my job’ at Smart & Final. All of our associates are engaged and committed to our company and our mission.

“Those outstanding store teams are further supported by an amazing district management team that has worked hard to grow the company. Our district managers and merchandisers make sure that all stores are looking their best and maintaining the highest possible standards at all times.”

Hirz says the Retailer of the Year honor is “great for the team.”

“Day in and day out they’re out in the trenches competing with some of the strongest competitors in the country. And the team continues to drive industry-leading same store sales, and at the same time, live our core values of Teamwork, Respect, Integrity, Growth and Accountability. I am honored to accept this award on behalf of our almost 8,000 associates.”

At the corporate level, knowing how critical each layer of staff is to the success of the whole, Smart & Final has a unique (a word that keeps coming up) bonus program for team members.

“Everybody in this building is on the same bonus program,” Hirz says.

“Whether it’s my senior VPs, someone taking care of customer service calls or our great team of administrative assistants.

They’re all on the same bonus program, and it’s based on company performance.

We meet with every one of them every quarter and let them know how we’re doing.

“As a result, our corporate team feels engaged and accountable for Smart & Final’s ongoing success.

Everyone understands how their function contributes to the achievement of our key please see page 45

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OF THE YEAR • 2014

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OF THE YEAR • 2014

March 2014

A Southern California history lesson

Smart & Final Has Offered Top-Notch Products and Services for 143 Years Haas, is now open to private tours as a San Francisco Historical Home.

On a parallel basis, the Santa Ana Grocery Co., which was founded in 1912 and mainly supplied feed and grain to local farmers, was sold in 1914 to J.S. “Jim” Smart, a banker from Saginaw, Mich. Jim was then joined by partner H.D. “Hildane” Final, and the company name changed to Smart & Final

Hellman, Haas Grocery Co. was housed in a two-story brick building on Los Angeles Street.

Smart & Final is unique in that it combines today’s state-of-the-art technologies and management practices with the historical perspective of one of the West’s pioneer companies.

The year was 1871, and Los Angeles was a small, dusty, ranching town. Streets were unpaved, buildings were modestly wood or adobe, and the enclave’s 6,000 residents— many of Mexican and Indian descent— probably were outnumbered by the sheep and cattle. Los Angeles mainly produced hides, wool and tallow. Indeed, Los Angeles couldn’t begin to compare with its northern neighbor, bustling, cosmopolitan San Francisco.

But Los Angeles’ rural ambiance didn’t deter partners Herman Hellman, Jacob Haas and Bernard Cohn from launching a new grocery business. Housed in a two-story brick building on Los Angeles Street, Hellman, Haas Grocery Co. sold necessities of the day, including flour, brown sugar, salt, patent medicines, rope, sheepherding supplies, chewing tobacco and gunpowder.

Packaged goods were unknown; Hellman, Haas’ food staples arrived in bulk and typically were sold by weight. There were prunes in huge casks, barrels of currants from Greece and rice for the town’s burgeoning Chinese population. So vital was the store that Hellman, Haas was one of seven names in the first Los Angeles phone directory.

Indeed, the entrepreneurs behind Hellman, Haas were a distinguished group.

• Herman Hellman later succeeded his brother, Isias, as head of the then-esteemed Farmers and Merchants Bank, which also was founded in 1871. Isias was among the group of community leaders who donated the land upon which the University of Southern California was built.

• Abraham Haas, Jacob Haas’ younger brother who had joined Hellman, Haas in 1873, launched the first flour milling and cold storage businesses in Los Angeles, along with several electricity and gas companies—the forerunners of current Southern California power

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companies.

• Bernard Cohn later entered politics and briefly served as mayor of Los Angeles.

By the turn of the century, Hellman, Haas had changed hands. The sole owners became Abraham Haas and Jacob Baruch, who bought out Herman Hellman. The company name was changed to Haas, Baruch & Co. in 1889. Meanwhile, Haas, Baruch introduced its private label, “Iris,” on canned tomatoes and launched a tradition of artistically designed labels to emphasize the cans’ highquality contents. By 1895, the grocer’s sales reached $2 million—a huge sum at the time.

By 1900, Haas Baruch was the burgeoning city’s preeminent wholesale grocer. Over the

next two decades, a chain of events—including construction of the L.A. Aqueduct, the discovery of oil in Long Beach and the opening of the Panama Canal—pushed the local population to nearly 1 million.

Abraham Haas left Southern California at this time and moved to San Francisco to found Haas Wholesale Grocers, which became the leading wholesaler in the Bay Area.

His son, Walter, who worked with his father in the food business, left to join a struggling clothing manufacturer, Levi Strauss.

Under his direction, the company flourished, and Walter served as president for three decades, bringing Levi Strauss to international fame. The Haas mansion in San Francisco, the original home of Abraham

Jim Smart and Hildane Final Wholesale Grocers. The business relocated near the docks in San Pedro and immediately prospered. By 1919, sales surged to $10 million.

The grocery industry was changing. As retail grocers gained strength, many were negotiating discounts directly with manufacturers, avoiding wholesalers altogether. Competition turned brutal: Of the city’s 16 wholesale grocers in 1920, only seven were left a decade later. Smart & Final survived by offering bet-

The first Smart & Final bannered store, in L.A.

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OF THE YEAR • 2014

An early photo of the Smart & Final warehouse. ter service and by pioneering the “cash-and-carry” concept in Los Angeles.

Previously, grocery stores—even at wholesale—re-

quired a clerk to collect goods for the customer. Smart & Final rightly figured the chain could reduce overhead by introducing self-ser-

vice but still retain high-quality selection and service. Its novel cashand-carry debuted in Long Beach in 1923.

Another innovation was locating stores near customers’ businesses, recognizing the importance of their time and sparing them the trek to a

remote warehouse. In 1953, Smart & Final merged with Haas, Baruch, with Smart & Final the please see page 42

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OF THE YEAR • 2014

from page 41

surviving company. The company shifted its headquarters to Haas, Baruch’s new warehouse in Vernon, Calif., which was quickly becoming the preferred distribution location for a number of wholesale and retail companies.

Shortly thereafter, the company was acquired by a leading supermarket chain, Thriftimart, and grew to 83 units by 1984. Later that year, Thriftimart stores were liquidated, and the company’s resources focused on an aggressive Smart & Final store modernization and expansion program.

Smart & Final Makes Digital Connections, Primarily Through Blogger Community Connecting with customers digitally is vital in today’s world. Not just younger shoppers but shoppers of all ages expect to be able to access information and other content related to the food retailer online and/or through their smartphone or other device.

Smart & Final connects with its shoppers through the usual means, including Facebook and Twitter. In fact, the company recently won an innovation award “for one of the promotions we did to support our First Street brand,” according to Randall Oliver, director of corporate communications for Smart & Final.

Smart & Final’s offices today.

Smart & Final later expanded into the Florida market and acquired broadline foodservice distribution businesses, but exited those businesses in 2003 in order to focus all company resources on its core store operations in the West.

Smart & Final was acquired by private equity firm Apollo Management in May 2007.

Later that year, the company entered a new niche of food retailing when it purchased 27 Southern California Henry’s Farmers Market stores and eight Texas Sun Harvest stores.

Smart & Final subsequently sold the Henry’s and Sun Harvest stores to Sprouts in early 2011.

Smart & Final was acquired by Ares Management, a private equity firm, in 2012.

Karen Perez, whose blog is called LoveLipGloss, blogged about Smart & Final’s new Northridge store.

“Growing up I remember always going to Smart & Final with my parents and now as an adult, I still do lots of grocery shopping there because I enjoy the great prices.

Yesterday I was at the official opening of the 188th store in the city of Northridge, California and let me tell you that this is the most beautiful location I’ve seen so far!

Smart & Final opened its store at 18555 Devonshire St. in Northridge, Calif., in November 2013.

So Smart & Final has a group of bloggers who are available to blog for the company each month, according to Oliver.

“Some of these people have a reach of over 100,000 people. The total reach for the community, although they’re not all active on us at any one time is several million. It’s been quite effective for us.”

In November, Karen Perez, whose blog is called LoveLipGloss, covered the opening of the new Smart & Final Extra! in Northridge, Calif.

But as is its habit, Smart & Final adds a unique twist to what it does digitally.

“We went into it with a very different approach than what most people do,” Oliver said.

“We partnered with a firm whose expertise was actually in assembling a community of existing bloggers—they might be mommy bloggers, daddy bloggers, people that are blogging about food—saving money is a big thing—and found people that the Smart & Final brand had some connection for.”

congratulations congratulations

Dave Hirz and Mike Mortensen, Smart & Final, with Lois Verleur, Olive Crest.

Olive Olive Crest Crest Congratulates Congratulates Smart & Final, 20 2014 14 R Retailer etailerr of the Y Year e ear Olive Crest mobiles, purchased by consumers, displayed at Smart & Final.

Smart Smart & Final Final has contributed significant financial, volunteer, volunteer o r, and inkind inkin suppor supportt through through a long-term long-ter ong-terrm partnership partnership with Olive Olivve Crest.

Crest. Since Since 2011, through through such initiatives initiativvees as cause-related cause-related marketing marketing and event evvent e sponsorship, sponsor Smart Smart & Final Final has raised o over veer $600,000 to fund critical O Olive livve Crest Crest programs programs for children children and families in crisis. W Wee thank Smart Smart & Final Final for its commitment to suppor supporting tingg at-risk yyouth outh o and families in our community. communityy.

800.550.CHILD | www.olivecrest.org Rosie Squieri, Smart & Final, presents a donation raised through 2013 mobile program.

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Olive Crest 2130 E. Fourth St., Suite 200 Santa Ana, CA 92705

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March 2014

“As soon as I walked in the store I noticed the beautiful fruits and vegetables. They looked so fresh and yummy that I had to put some in my cart for my daily juicing. One thing I’ve always noticed from Smart & Final is that they always carry fresh produce. I have never seen anything below great quality!

They even carry organic produce and what’s better is that their prices are always budget friendly and that’s hard to find nowadays.

“The employees at this location were so friendly. As soon as I walked in they welcomed me and my family.

The place was very busy especially since they had amazing prices being that it was the official opening day. I got a bit disappointed when I saw how huge the line was, but the employees were beyond amazing because the line moved way faster than I thought it would.

“As you can see Smart & Final carries anything your household can possibly use. Whether it’s a party planning or a simple dinner that you have to make, Smart and Final will definitely have what you need. You can always take advantage of great prices without the need of a membership. Not having to pay fees for memberships is a huge saving. My entire family shops at Smart & Final for the same reason, because they don’t want to have to pay to save money neither is buying in bulk required.

“The variety of juices made it hard for me to choose just one kind so I ended up getting a few. “…If you are in the Northridge area definitely visit the newest Smart & Final location. Hey! this might become your one stop grocery shop! For more details on what other locations might open up soon be sure to follow them on Twitter. Also, for even more savings you can print out coupons from their circular and check out their Facebook page. My brother, sisterin-law and I were definitely happy campers after all of our savings.

Even my one-month-old niece was happy with the formula she got for a great price! LOL.” theshelbyreport.com

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Fast Facts about Smart & Final • Founded in 1871 as a store selling the necessities of the day, such as flour, brown sugar, salt, patent medicines, rope, sheep-herding supplies, chewing tobacco and gunpowder.

• Headquartered in Los Angeles, Calif.

• Smart & Final is a small warehouse format that serves both businesses (including restaurants and their chefs) and households with its inventory of food and supplies. The motto: “Smart & Final, the Warehouse Grocery Store Where Big Savings Come in All Sizes.”

• There is no membership fee.

• Smart & Final Extra! stores range in size from 25,000-40,000 s.f. vs. a typical 17,000-s.f. traditional Smart & Final warehouse store. Extra! stores are able to carry more than 5,000 additional items in familyfriendly sizes.

• The assortment at Smart & Final Extra! includes an expanded selection of products in key categories like produce, fresh meat, frozen foods, dairy, deli and grocery basics like cereal, yogurt, bread and snacks. Extra! also includes sections for baby food and diapers and HBC products. These are in addition to a large selection of “club pack” sized products for stocking up and a broad assortment of foodservice, janitorial and other supplies for businesses and organizations.

• More than 250 stores under the Smart & Final, Smart & Final Extra! and Cash&Carry Smart Foodservice banners, operating in California, Oregon, Washington, Arizona, Nevada, Idaho and northern Mexico.

OF THE YEAR • 2014

Over a career at Smart & Final spanning nearly 35 years, Diana Godfrey has performed many buying roles, including director of buying systems, director of buying, VP of corporate procurement and VP of category management. She has served as group VP of sales and merchandising since March 2009. Godfrey enjoys golf and can drive the ball farther than most of her peers, but she doesn’t take the game too seriously and has been known to liven things up by bringing water balloons and rubber snakes to the course.

Godfrey is passionate about giving back to the community through her involvement with the City of Hope and Smart & Final Charitable and Education Foundations. She also enjoys traveling, spending time with family and friends and savoring fine wines.

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OF THE YEAR • 2014

Sean Mahony has been group VP, store operations since early 2007. He began his career with Smart & Final as a store associate in 1993. In the years that followed, Mahony was promoted numerous times and managed five different stores before becoming a district manager in 2002. A self-proclaimed poor golfer, Mahony enjoys hitting (or missing) the greens, regardless. In addition, he spends his free time watching his three children’s sports and assistant coaching.

Mike Mortensen has served as SVP of sales and marketing since joining Smart & Final in August 2010. Mortensen has 36-plus years of industry experience, and started in the grocery industry as a teenager.

“We have a great, hard-working team that has really embraced change and continues to learn and grow,” he says.

When not at work, Mortensen likes to fish and hike in beautiful places and play golf whenever he can.

Will Miller has been VP, produce, floral and bulk foods since February 2011. Miller joined Smart & Final in the spring of 2009 as director of category management for produce. He has more than 30 years of industry experience.

“The expansion of the produce, floral and the bulk food departments has been well received by our customers. We take pride in providing great quality produce, floral and bulk food at a value to meet our customers’ needs,” says Miller.

He enjoys hiking, fishing and skiing in the Sierras with family and friends. Miller is a glutton for punishment and is preparing to hike Mount Whitney for the fourth time this year.

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initiatives and ultimately our mission. They also recognize that the primary responsibility of our corporate functions is to make it possible for our stores to succeed—it’s not the other way around.

“There are many unsung heroes at our corporate office who work tirelessly and quietly every day to keep everything functioning smoothly and to make sure our growth plan remains on track. Whether it’s our finance and accounting folks, real estate and construction, sales and merchandising, marketing, information technology, human resources or corporate level store operations support, we have outstanding associates who are well-trained, experienced, committed and very good at what they do!” Hirz says.

Staying in synch with stakeholders Smart & Final also is unique in its dealings with the vendor community.

It has set up an organization called Smart Alliance, and vendors are invited to different meetings of the Alliance based on the level of business they do with Smart & Final—platinum plus, platinum, gold or silver. At the highest-level meetings, attended by about 200 people, Hirz speaks directly and candidly to the vendors about Smart & Final’s business plans, including same-store sales results.

“I tell them how many stores we’re going to open, where they’re going to open, when they’re going to open. I don’t quite tell them how much money we made last year, but I give them an awful lot of information – information that ultimately allows them to help us build sales,” Hirz says.

Training the troops Smart University is Smart & Final’s training program that has been resuscitated in recent years.

After the company was taken private in 2007 by Apollo Management, some corporate priorities were shifted and “a lot of what the Smart U stood for was lost.” Hirz says.

But when Smart & Final was sold in 2012 to another private equity firm, Ares Management, and the company began to grow again, having a strong training program was vital.

“Over the last few years, particularly from an internal standpoint, Jeff Whynot, our senior vice president of human resources, and Barbara Van Dine, our director of training and development, have done a great job of bringing it back,” Hirz says.

“When you look at how we have grown from zero Extra! stores five years ago to 69 today, and the plan to have 98 by the end of this year, you really couldn’t do that unless you had a really good training and development program, and the work that Barb Van Dine does with Smart University and training and development is really, really critical to any growth plans we have.”

“

There are many unsung heroes at our corporate office who work tirelessly and quietly every day to keep everything functioning smoothly and to make sure our growth plan remains on track...we have outstanding associates who are well-trained, experienced, committed and very good at what they do!”

—Dave Hirz theshelbyreport.com

Sue Mullins is group VP of human resources for stores and supply chain. With more than 35 years of retail experience—mostly at Smart & Final— Mullins has held senior leadership positions in strategic planning, buying, merchandising and store operations prior to her current assignment.

She notes that one of her most enjoyable responsibilities is identifying and developing associates for the numerous growth opportunities that exist at Smart & Final.

Mullins enjoys hiking and spending time outdoors.

She and her husband are active in their children’s school, sports and Scouting activities.

OF THE YEAR • 2014

West OF THE YEAR • 2014

Michael Paul has been group VP, store operations since early 2007. He began his career at Smart & Final more than 25 years ago as a part-time store associate while attending college.

Paul obtained his bachelor’s degree from California State University-Fullerton and moved from store operations into the loss prevention department.

Following several years in LP, he moved back into operations as a district manager. Paul was then promoted into the buying department as the director of category management for dry grocery, where he worked prior to his third return to store operations as a group VP. Outside of work, Paul enjoys camping and fishing with his family and an occasional round of golf.

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March 2014

Jaime Prager has been director of category management, non-foods since January 2011. Prager, who joined Smart & Final as a senior category manager in 2009, has more than 30 years of experience in the grocery business. When not at work, he enjoys cycling and spending time with his family.

Matt Reeve has been VP, grocery & frozen food since February 2011.

He joined Smart & Final in 2004 as the category manager for dairy, deli and fresh meat and was promoted to director of category management for all perishable and frozen categories in July 2006. Reeve has more than 20 years of experience in the grocery industry. When not at work, he likes spending time with his wife and two young children. Reeve also enjoys outdoor activities such as camping, boating and waterskiing.

Richard Romero has been VP, merchandising since February 2011.

Romero joined Smart & Final as director of value merchandising in the fall of 2007 and a year later was selected to lead a new category management merchandising team as director of merchandising.

Romero has 34 years of grocery industry experience.

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2014 March

Raymond Swain is VP of corporate procurement. In this role, his primary responsibilities include food safety and quality assurance, as well as private label sourcing, branding, sales and marketing.

Swain has worked for 44 years in the grocery industry, the last 18 at Smart & Final. He has a bachelor’s degree in history and an EMBA from the Peter Drucker School of Management.

“Growing our private label program that connects so well with our customers and produces great financial results for the company is truly a labor of love,” Swain says.

Outside of work, Swain perseveres at golf. He and his wife enjoy travel and working with special needs children.

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OF THE YEAR • 2014

Gary Somes has been VP, advertising since October 2006. He joined Smart & Final in 2000 as director of marketing/media. Somes has more than 40 years of retail management and marketing experience.

“Smart & Final’s key differentiation is our unique mix of households and business and community organizations.

Marketing to these distinct groups is challenging, but also very rewarding,” Somes says.

Somes is a passionate USC Trojan football fan and has attended nearly every USC home game for the past 38 seasons.

Marty Trtek has served as president of Cash&Carry since September 2008. He joined Cash&Carry in 1972 as a sales associate and subsequently served as a store manager, district manager, director of store operations and VP of operations.

“Cash&Carry Smart Foodservice sells food products to restaurants with a complete line of grocery, frozen, produce and fresh meats.

We pride ourselves on great customer service and a wide selection of everything the restaurants would need, available 7 days a week,” Trtek says.

When not at work, Trtek is active in everything outdoors, including golfing, skiing and hiking. He enjoys spending time with family and spoiling the grandkids.

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OF THE YEAR • 2014

March 2014

Dave Hirz on the Smart & Final advantage:

“

Our product offering at Smart & Final Extra! is unlike any other retailer—we combine the high quality fresh produce of a farmer’s market, the low prices of a discount grocer and the large club size products of a traditional club store. In addition, we have everything that small businesses, clubs and organizations need on a daily basis—all with no club card or membership fees.

“What really differentiates Smart & Final and allows us to do things that our conventional competitors cannot is our solid base of business customers. No one else has that.

“We carry more club sizes than anyone, even the bigbox club stores. We also have paper, packaging and other items specifically used by the business customer.

Our average ticket is significantly higher than our competitors due to those customers, and that allows us to be more efficient in operating and staffing our stores.

Those sales to businesses and organizations are key to Smart & Final’s ongoing success.”

Jeff Whynot has been SVP of human resources since January 2000. He previously held executive positions in human resources with Dames & Moore Group, an engineering consulting firm, and Knott’s Berry Farm. In his spare time, Whynot likes to travel, ride bikes and run.

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THE SHELBY REPORT OF THE WEST

Daryl Zgodzay joined Smart & Final in early 2010 as director of meat, dairy, deli and bakery and has been VP, meat, deli, service deli & bakery since February 2011.

In total, he has more than 30 years of experience in the grocery industry.

“We are in the process of expanding our fresh meat assortment to give our customers more choices and varieties of fresh beef, pork and poultry from which to choose, and we have also added fresh fish, lamb and veal in our Extra! stores,” notes Zgodzay.

When he is not working on expanding meat/deli/and bakery sales, Zgodzay actively works in the guest ministry at his church, where every Fourth of July they play host to 50,000 people who come to watch their annual Fireworks Spectacular.

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OF THE YEAR • 2014

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2014 RETAILER OF THE YEAR

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Congratulations!

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2014 14 W West est R Retailer of the Y Year! e

Advantage Sales & Marketing along with our clients congratulates

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