Weis Markets, the Sunbury, PA-based regional supermarket chain which has enjoyed a strong three year growth run, told more than 400 direct sales reps, food brokers and distributors that, despite challenges created by the economy, overstoring in its key market areas and changing shoppers’ patterns, it continues to be optimistic about its future growth.
Speaking at the company’s third annual strategic alignment summit which was held this year at the Marriott Hotel near BWI Airport, four Weis executives addressed a packed house. Led by chief executive Dave Hepfinger, the company’s speakers summarized progress made during the past 12 months while outlining new initiatives for 2013.
Hepfinger broke his speech into three segments: How Weis’ Customers Live and Shop; How the Company Advertises and Markets Itself to Its Customers; and How It Manages and Grows its Business.
The 54 year old former Price Chopper executive noted that, despite slightly improving unemployment numbers (7.8 percent) in September, the number of Americans still out of work or underemployed remains at nearly 21 million. And in Weis’ trading area (PA, MD, WV, NJ and Broome County, NY) the median unemployment rate remained higher than the national average. Hepfinger also noted that the number of Weis shoppers who utilize SNAP (Supplemental Nutrition Assistance Program) has increased from 2.7 percent of total sales in 2008 to 6.7 percent of total sales currently.
While noting the decline of median household income over the past 20 years, Hepfinger compared three popular consumer items along with the price of unleaded gasoline in 1996 with the cost of those items today. The difference increased 115 percent. He then discussed what he called the “Market Dynamic” that has occurred over the past four years. Included in that dynamic were stressed customers, an over-stored market, moderate to stagnant population growth, reduced overall consumption and low consumer confidence. Despite the hurdles, Hepfinger believed that the company would succeed if it could execute in five critical areas. Those factors were: establish a sales driven culture; continuously upgrade the organization’s talent pool; become more relevant to consumers; create meaningful differentiation and significantly improve decision support and measurement.
As proof that the plan is succeeding, the veteran grocery industry executive referred to Weis’ recent financial results. Not only have the past three years been highly successful when measuring earnings, overall revenue and same store sales increases, but, in fiscal 2012 thus far, Weis’ net income has increased 10 percent to $43.2 million. Its operating income is up 9.7 percent, overall sales have gained 0.2 percent to $1.3 billion and comp store sales have increase 0.7 percent. (Weis’ fiscal year ends December 31, 2012).
Moreover, the company has committed a record $125 million to capital investment this year, which, in addition to upgrading IT and other infrastructure improvements, includes two new stores, one expansion, 18 major remodels, seven minor remodels and three new gas stations.
Since 2008, Weis has acquired 17 stores and in the 12 month period from June 2012 through May 2013 will have opened six stores formerly occupied by other retailers (Conshohocken, PA; Doylestown, PA and Norristown, PA – from Genuardi’s/Safeway; and Woodlawn, MD; Towson, MD and Hillsborough, NJ – from A&P).
Executive VP Kurt Schertle urged the vendors to bring new ideas to Weis’ attention geared to driving sales. “We are a sales driven company. We have improved our category management, upgraded our talent pool and enhanced our In-Store Execution Program. We are poised and ready to sell more product, but need the help of our vendor partners to bring us ideas to make that happen,” said Schertle. The former Supervalu executive said much of the company’s focus over the past year has been on improving customer service. While noting that training at store level has been an important factor in that improvement, Schertle stated that some behind the scenes changes have also aided Weis. Included in those changes are Weis’ new relationship with SAS (a division of Daymon Associates) which provided improved analytics and measurement tools and upgraded efficiencies at its distribution centers, which elevated the level of supply chain and provided Weis with better in-stock positions.
Schertle also updated the audience on its pharmacy (lost sales due to new generic drugs entering the marketplace) and dairy (continuing decline of fluid milk sales) challenges. In the realm of seeking new sales opportunities from its vendors, Schertle noted several “simple” new sales programs that have created new portals and increased revenues for the regional chain. He referenced a $4 million sales gain from promoting “As Seen on TV” products and a “big win” from the aggressive marketing of single-serve coffee first with Keurig and currently with Tassimo.
In closing, Schertle focused on a slide that stated “The Big Ask.” Contained on that slide were the following requests: provide simple ideas for sales; offer improved category insights and market data; expect the best from each other; and bigger isn’t always better.
VP-marketing Brian Holt provided the audience with an overview of Weis’ partnerships with its vendors and some new digital marketing efforts. He stated that Weis has achieved sales gains by working with its vendors on frozen food and dairy month promotions and added that in the past year a renewed effort to highlight Black Hawk gift card opportunities resulted in a 25 percent year-on-year dollar gain in 2012. Holt also demonstrated the power of the company’s newly introduced Gold Card loyalty program. In rolling out its premiere card during this year’s 100th anniversary, Weis generated significant sales increases overall and was able to incentivize its best customers with its strongest promotions and offerings as it seeks to gain even more purchases from its most loyal consumers while also increasing overall per transaction revenue. Holt declared that the learnings of this year’s Gold Card rollout will lead to even better results in 2013. He also gave the audience a glimpse at some of Weis’ charitable and community efforts, including the company’s continuing relationship with “Fight Hunger,” “Paws for Pets” and its new affiliation with the Wounded Warrior Project.
The final part of Holt’s presentation was devoted to Weis’ digital and social marketing efforts which have been greatly enhanced over the past year. The retailer is active on Facebook, Twitter and YouTube, all of which have increased Weis’ visibility and connectivity to its customers while offering unique promotions only available on those platforms. Weis now also offers a mobile application and is developing plans for prescription refills, load-to-card coupons and a bar code scanning mobile app program.
Concluding the five hour program was Dan Koch, VP-fresh. He unveiled eight objectives for this year, which included: improve quality and freshness perception; increase sales penetration; localize Weis’ approach where possible; specialize merchandizing to cater to dietary needs; increase and improve training programs; upgrade talent; establish an advisory council of department heads; and continue to listen and learn. Koch asserted that Weis also has prioritized overall service, quality and value in its fresh departments and is focused on floral and seasonal/holiday, two areas that continue to show significant improvement. Other “fresh” areas that Koch believes will yield increased sales include greater focus on brand awareness promotions and creating more events within its stores. One example was the company’s bakery “strawberry dipping” event which featured Weis’ associates dipping strawberries in chocolate for Valentine’s Day. “From a program that hadn’t existed before, we generated $402,000 in new sales,” Koch acknowledged. Also given renewed priority over the past year has been Weis’ deli/food service programs, its beef program, (which was recently upgraded from “Select” to “Premium Choice Angus”) and the company’s cut fruit and vegetable program.
In closing, Koch implored the vendors in attendance to bring their selling ideas and concepts to the fresh department, to improve execution training, to better understand Weis’ product mix and SKU rationalization, to offer tactical merchandising suggestions and to “challenge the status quo.”