Pledging to maintain its strategy of driving sales first, Weis Markets COO Kurt Schertle told more than 300 vendors that the Sunbury, PA based regional chain will continue to invest in its stores and seek further supply chain efficiencies. Schertle made his remarks at a vendor meeting at Susquehanna University prior to Weis’ annual charity golf outing on July 14.
Schertle acknowledged that Weis’ comp store sales gains have come at the expense of potentially higher earnings, but the company has also posted additional increases in overall sales and customer counts.
“When we began the program in 2013, we were faced with declining sales, declining market share, poor price perception and a transition of CEOs (Jonathan Weis replaced David Hepfinger),” Schertle noted. “Our priorities became sales first, increase market share, improve price perception, improve overall efficiency and customer experience, embrace on-trend categories and leverage our loyalty marketing database. In the past two years, we have also achieved growth in average order size, market share and center store unit sales and the trend line in those areas continues to move forward.”
In reviewing the past year, the youthful executive said that Weis is aggressively looking for acquisitions and noted that recent market activity (Ahold/Delhaize merger, A&P’s tenuous situation, AWI’s bankruptcy) should provide opportunities for the closely-held publicly-trade chain to add more stores to its current 164 unit base.
Like many other retailers, Weis has slowed its new store pipeline, but is deploying cap-ex monies toward remodeling existing stores. Schertle said that in addition to remodelings, his company is aggressively utilizing resets as a tool to create in-store excitement by focusing on departments or categories where growth has been positive or new opportunities are apparent. Those would include adding sushi departments, growing its beer café business (Weis currently has cafes in 32 Pennsylvania stores and will continue to open more) and using its adjacent gas stations as an incentive to attract more in-store sales (Weis currently operates 29 Gas n’ Go units).
Schertle also briefed the audience on its supply chain efficiencies. Weis is currently expanding and upgrading its primary distribution center in Milton, PA which will ultimately add 105,000 additional square feet of refrigerated space and 75,000 square feet of freezer space. Because of increased productivity, Weis’ stores have been able to save $22.5 million from gains made at the Milton facility, which last year shipped 15 million cases.
Up next was Weis’ newest senior executive, Richard Gunn, senior VP of merchandising and marketing. Gunn, who joined Weis three months ago from K-VA-T (Food City), said priorities in his areas of oversight included leveraging market scale and speed to market, quickly identifying and exploiting new market opportunities, continuing investments in resets and remodels, maintain competitive pricing and enhance the retailer’s loyalty marketing program.
Gunn said that Weis would continue to aggressively merchandise its “Lowest Price Guarantee (LPG)” program, which along with the merchant’s EDPL plan, has helped drive sales and increased customer spend. While overall market share has increased at Weis, Gunn hopes to improve market share by category and by item, too,
He touted the growth of Weis’ meat department, proclaiming that “quality and service still matter and we’ve still got butchers in all our stores.” He noted that during the July 4th week, Weis sold 214,000 gourmet burgers that were made in-store.
In deli and foodservice, Gunn said he sees big opportunities with sushi departments (currently in 74 stores) and specialty cheeses (“a catalyst to increase customer spending”). He declared that in the past two years, Weis’ organic produce sales have doubled, “local” produce has shown consistent growth and the company’s in-store “fresh-cut” fruit and vegetable program is paying big dividends. Gunn also revealed that Weis will continue to add natural and organic items to its catalogue.
On the marketing side, the native Virginian said that Weis is currently reviewing its “ad break” day (its ad currently runs from Sunday to Saturday) and will soon be adding mobile coupon scanning to its array of digital services. Additionally, Weis is considering adding a “Fantastic Fridays” promotion which would involve all stores in an effort to drive traffic, sales and profits.
David Gose then addressed the group, reinforcing a message he gave at last year’s vendor meeting, which was held in Baltimore. He noted the importance of the “four Ss” – sales, service, standards and selection – which are essential ingredients in making the customer’s shopping experience a positive one. Gose noted the “improving relationship with our associates,” stressing Weis’ new $9 per hour staring minimum wage.
He updated the audience on the retailer’s new assistant manager structure (ASM), which is geared to accelerate the learning curve of the ASMs by having them rotate in all areas of the store (thus enhancing their opportunities to become store managers). He spoke of making the job of all associates more fun which means increasing individual associate empowerment and implementing service contests in the stores.
The former Wal-Mart executive, who joined Weis 14 months ago, told the vendors that associate satisfaction scores have improved significantly in the last nine months and associate excellence at store level is being individually recognized and rewarded.
He then recapped some “blocking and tackling” issues that he is proud of. Gose spoke glowingly of how Weis’ new computer generated ordering system (CGO) has improved in-stock conditions while also helping maintain product freshness, thereby reducing shrink. He praised the improved relationship between store operations and merchandising, which has improved communications and efficiencies between corporate headquarters and the individual stores. When discussing “standards,” Gose said that the implementation of inventory metrics has aided plan-o-gram integrity. Weis is also utilizing case cut end and fast wall displays to enhance productivity and is currently evaluating checkout carousels to increase transactional speed.
Because of previously noted supply chain gains, Weis’ backrooms have also improved. Backroom inventory has been cut significantly, creating a $600,000 backroom labor reduction year to date. Gose disclosed that even with store operations it is vital that the store associates keep their focus on driving sales.
“We need to be nimble, quick and agile,” he proclaimed. “Our eye continues to be squarely on the customer and all of our actions will continue to support that focus.”
Brian Holt, VP of marketing, reviewed Weis “Gold Card” program, which is targeted toward the retailer’s biggest spenders. Incremental sales year-to-date have been strong with the average redemption rate of “Gold Card” offerings at more than 10 percent, a significant increase over more traditional direct mail or coupon offers. Like many traditional supermarket operators, Holt said Weis will be expanding and enhancing its digital market effort, especially in the area of social media, which the company primarily uses for customer awareness and promotional opportunities. Beyond its current connection with Facebook, Twitter and YouTube, Weis is planning on increased utilization of Pinterest and Instagram in the near future.
Holt was also excited about Weis’ “click and collect” online shopping program which is now available at 29 stores (that will increase to 34 units by year’s end). The reason for his excitement was easy to relate to when he noted that the average basket size for an online order was more than four times that of a traditional shopping trip.
The final speaker of the day was Kevin Broe, Weis’ VP of center store sales and merchandising, who proclaimed that center store is still alive and kicking and urged the vendors to lend their insight on helping Weis make the necessary adjustments to remain informed and current.
The former A&P executive rhetorically asked the suppliers and brokers who attended: “Has Weis delivered on its promise of creating a sales driven culture, of maintaining its low price guarantees, of creating meaningful differentiation (new projects, beer cafes, Gas n’ Go fuel, on-trend categories) and of improved category business planning to grow sales?”
Broe referred to Weis’ in-store execution accomplishments, noting the large number of assortment changes, the improved speed to shelf and the acceleration of its remodeling and reset plans as being vital to the chain’s turnaround in center stores.
When Schertle stepped up to the podium again to close the meeting, he told the large audience, “Continue to work with us; we’re still learning. We have a tremendous opportunity ahead of us and we now have the team in place to meet our goals. We’re very excited.”
