Another year of strong sales and earnings and a commitment to continued growth highlighted Weis Markets’ annual vendor meeting which was held on October 10 at the Hershey (PA) Lodge. More than 700 suppliers, brokers and distributors attended the morning-long conference, a record.
Kicking off the meeting was Jonathan Weis, chairman, CEO and president of the 197-store regional chain.
The third-generation leader spoke about the company’s flexibility and nimbleness as a key advantage in helping Weis continue to adapt to changing market conditions. He addressed the company’s completion of several thousand tactical projects which have improved efficiency and overall customer experience, especially in its fresh departments, where sales and quality have improved.
Weis also said that the company’s balance sheet remains strong (comp store sales increased 2.8 percent and 12.2 percent on a two-year stacked basis) and the company is on track to exceed its operating income budget in 2023 compared to last year, which set a company record.
On the merchandising side, Weis noted that the Sunbury, PA-based merchant takes a balanced approach to its assortment of goods: “It’s not an either-or proposition for us, so when it comes to brand name and private label products, we believe in a level playing field.”
In assessing the regional chain’s mindset in a highly competitive marketplace, Weis asserted:
“At a time when some of our competitors are struggling or exiting the market, we continue to focus on long-term growth and improvement. We are building new stores and also remain in the market for acquisitions that make sense for our company, and we remain a buyer, not a seller.”
With that, he thanked the vendors for their support and introduced the next speaker, Kurt Schertle, chief operating officer.
The 15-year company veteran, who began his career at Metro Food Markets in Baltimore, talked about the impact of inflation on Weis and all retailers and how the market landscape has changed over the past three years. In 2020, retailers were impacted by COVID, which resulted in more eating from home. A year later, SNAP (food assistance) benefits increased and in 2022 the impact of rising prices (11 percent inflation rate) also helped many merchants post record sales and profits.
Those sales-driving factors have all but disappeared now and those former 10-30 percent growth rates are currently in the 1-3 percent range.
Schertle zeroed in on the impact of the losses from the reduction of SNAP benefits which were significantly boosted in August 2021. In March 2023, that emergency allocation funding ended, which created a major revenue void for all retailers including Weis.
The 52-year-old industry executive reviewed his company’s expanded relationship with C&S Wholesaler Grocers . Earlier this year, the Keene, NH wholesaler partnered with Weis to supply it with 3,000 fast-moving items from its distribution centers in Northeast, MD (grocery-97 stores) and Aberdeen, MD (frozen-76 stores).
Schertle noted that, while Weis’ primary distribution center in Milton, PA remains its “workhorse,” C&S’s ability to service nearly half of the regional chain’s fleet of stores has given it greater flexibility and the opportunity to add more stores in the southern part of its geography (Weis is scheduled to open five new stores over the next two years, all south of the Mason-Dixon line).
Summarizing, Schertle reinforced Weis’ strengths: stable ownership with a long-term outlook and a willingness to invest in growth; financially solid and disciplined investments; real estate ownership; self-reliant/self-distributing; market closeness to its stores and associates; and thoughtful and deliberate – not bleeding-edge.
“This in an ongoing, long-term strategy for growth and success,” he affirmed.
Bob Gleeson, senior VP-merchandising and marketing, was the next speaker at the well-attended meeting. The Maryland native focused on three key areas where Weis will place much of its focus: marketing, (specifically how Weis is reacting to the ways people receive and consume information); price and value; and fresh.
Providing an overview of each area, Gleeson noted that, via marketing and advertising, Weis is looking to simplify the shopping experience for its customers while also delivering quality content. That means shifting its advertising budget more y toward digital (vs. print) where it can better target customers with personalized offers based on their past purchase behaviors. Additionally, the retailer is able to use its data collection to target customers who don’t currently shop at Weis.
“More than ever,” the former Shoppers Food executive noted, “we can measure the effectiveness of our media spend and see who is purchasing based on the content that we have served to them. Ultimately, we want to deliver more value for less effort.”
Gleeson also highlighted Weis’ current ecommerce effort. “We think we are on the right track with a well thought out plan. We are excited about our app upgrade for online shopping directly with us, but we are also very bullish about our third-party partnerships.”
Noting that Weis remains primarily a brick-and-mortar retailer, Gleeson stressed that omnichannel customers are extremely valuable. “I would say we’re committed to cautious growth in this area. Rather that opening fulfillment centers only to close them a year later, we’re focused on expanding our business with ‘Weis 2 Go’ as well as third-party relationships. Over the past year, we’ve expanded our relationship with Instacart and Amazon, while DoorDash is available in most of our stores and Uber Eats is coming soon.”
Gleeson then addressed pricing, crediting the vendors for embracing Weis’ “trade rate” platform which it unveiled three years ago.
“Our goal is to be the low-price leader in every market where we compete in the grocery channel. This will put us in the best position (to compete) with the limited assortment channel (Aldi, Lidl) and vs. mass merchants (Walmart, Target). We will continue to invest in lower prices year-over-year to drive units and share growth. We are working hard to get credit for that investment,” he asserted.
On Weis’ value proposition, Gleeson touted the retailer’s LLP program (Low, Low Price) as the foundation of its value philosophy.
“In addition to LLP, we can drive traffic with feature activity around three-day sales and utilizing TPR’s to highlight things like inflation busters and other short-term selling events,” the five-year Weis executive said. “From a feature standpoint, we like to focus more of our effort around LLP.”
Other traffic-driving programs include Weis’ free turkey and ham program around the holidays, fuel discounts and promotional events targeting back to school as well as summer grilling.
Gleeson also noted that the growing use of technology has created the opportunity to implement deeper price points.
He then highlighted the importance of Weis’ fresh business, saying that “quality, variety and value remain the cornerstones to growing that business segment.” A key to the continued success of its fresh programs is the capital investments that Weis has made to upgrade its stores and offerings.
Moreover, Gleeson reminded the vendors in attendance to “Keep bringing us new programs to keep driving us forward.” Weis is also investing in technology to further enhance its perishables business which will lead more sales growth and the ability to invest in price and promotions.
Gleeson offered several observations that will impact Weis’ business going forward.
“We recognize the impact that inflation has had on growing top line,” he stated. “But we need to focus on unit sales growth to be successful. Increasing the use of data in our decision making is so important and we certainly look to you as well to help us with data-driven decision making.”
Gleeson said that understanding the changing consumer environment to make good decisions and to be more efficient overall was very important, and that continued close collaboration with its vendors will mutually benefit both parties.
After a 15-minute break, Mike Gross, Weis’ VP-center store sales and merchandising, addressed the large crowd.
The former Shoppers Food veteran talked about the importance of utilizing Weis’ Joint Business Plan (JBP) to “focus, empower and win” both Weis and its suppliers.
Among the specific strategic initiatives Gross and his team are prioritizing is its focus on its EDLP/LLP pricing, utilizing longer displays, monthly and weekly ad supporting the retailer’s price message, and utilizing marketing to enhance merchandising opportunities.
Gross believes that Weis’ utilization of its trade rate philosophy has enhanced the company’s business by simplification.
“Adopting a trade rate formula empowers our team to make key decisions and execute our plan more effectively. As a result, we sell more cases, create more innovative solutions and simplify the business for all parties. That’s what winning looks like,” Gross noted.
The 30-year grocery veteran added that total simplification means fewer deal entries, fewer display changes and fewer tag changes. In turn, Weis’ focus on driving sales and planning displays have improved.
Gross also praised the company’s In-Store Execution (ISE) team for improving speed-to-shelf on new items, noting that the team has executed 48,000 resets year-to-date which have incorporated 4,700 new items.
In her presentation, Maria Rizzo, who joined Weis in 2006 and was recently promoted to VP-advertising and marketing, focused on four talking points – customers; data and loyalty marketing; advertising and media; and ecommerce.
Rizzo described Weis’ two million customers as falling into three buckets: core, opportunity, and fringe, noting that Weis’ goal is to be both focused and relevant to its customers in an evolving marketplace. She described the retailer’s core customers as its most valuable, comprising more than half of loyalty card-driven sales. The goal is to retain these customers and “grow them whenever possible.”
As for Weis’ opportunity customers, that group comprises a larger base than its core shopper but generates less than half the sales of the core customer. Rizzo stated the objective with these shoppers is to “migrate these customers into our core segment by driving trips and purchases in more categories.”
Fringe customers generate about 25 percent of the sales versus Weis’ core customers. Rizzo said that the focus for that segment is to incentivize them to shop at Weis more frequently and to “migrate these customers into higher-tiered segments.”
In addressing loyalty, Rizzo noted the importance of data utilization in order to make relevant decisions while communicating with Weis’ shoppers.
“Currently, our marketing team and AI partners continue to work and redefine our existing loyalty programs,” she proclaimed. “Our 2024 road map will be to continue this work and build strategies based on measured learnings to add fresh and new opportunities. Today, we have robust rewards programs in place, where we see anywhere from 20,000 to 100,000 customers participating.”
Disseminating its message is of vital importance to any retailer. At Weis, print media remains an important outlet, informing three million customers about special pricing and promotions. Additionally, print is used to reach more than 800,000 households with direct mail pieces to promote remodels, beer and wine openings. Gas N Go openings and in marketing areas with competitive pressures.
Also being utilized to support out-of-home advertising are 46 boards throughout Weis’ seven-state region. Additionally, regularly scheduled TV and radio media is bought and scheduled for 24 areas creating 150 impressions annually.
On the digital front, Weis has increased its budget and now gets approximately 100,000 digital circular views each week. Rizzo highlighted other digital channels that are growing at Weis: the company’s new mobile app now has more than 400,000 users; its e-coupon program attracts more than 700,000 users; and its weekly email blasts reach more than 800,000 customers. Those programs accompany Weis’ Evergreen digital effort of media on the web and through multiple social platforms.
Rizzo forecast that the chain’s overall cap-ex increase for digital this year’s ecommerce revenue to be 14 percent greater than in 2022.
“Like many others in the industry, we know that our omnichannel shoppers are valuable. They have a 70 percent higher basket and make 60 percent more trips than in-store only shoppers. It is our goal to continue focusing on ecommerce through our own ‘Weis 2 Go’ platform as well as utilizing third-party ecommerce partners to reach more customers. This will prove beneficial for both Weis and our CPG partners for continued incremental sales and unit growth through digital channels.” Rizzo explained.
Along with Instacart, Shipt (owned by Target), DoorDash and Uber Eats, Weis has a third-party relationship with Amazon, a relatively new ecommerce partner. In recent months Weis engaged with the world’s largest ecommerce retailer to offer online groceries through the Amazon platform, making it the only Northeaster grocery chain utilizing the Seattle, WA-based services.
According to Rizzo, the Amazon model differs from the relationship with its other third-party vendors because Amazon delivers orders generated from multiple Weis stores in a given trading area. There are currently five Weis regions covering 22 stores that use Amazon as a delivery option – one in Central PA, two in Maryland and two in the Delaware Valley. Rizzo said that later this year 12 additional locations in Pennsylvania, Maryland, New Jersey and Virginia will be added to service multiple Weis’ supermarkets in those regions.
Rizzo also addressed Weis’ role in the community. “It is important that we be meaningful partners with our communities. To date, we’ve donated over $2.5 million in support of hunger, cancer, veteran, education and pet causes. I’d like to extend our thanks to our CPG vendors who’ve worked alongside us on our mission to give back to the communities we serve.”
David Gose, Weis’ senior VP-operations told the full-house that the execution of the company’s LLP remains a top priority and that consistency of store operations is what his team seeks to achieve.
At that point, Jonathan Weis, Schertle and Gleeson returned to the stage to honor Weis’ top vendors (for 2023) with its awards which covered three categories – excellence in execution; digital excellence; and best in class.
There were six excellence in execution winners – SAS Retail Services, Herr Foods, Nestle USA’s baking and beverage division, Karpinski Trucking & Produce, Dietz & Watson, and logistics firm Store Opening Solutions.
Kraft-Heinz was honored for digital excellence. General Mills was the second digital excellence winner and the Minneapolis-based manufacturer and JFE Snow Fox Sushi were both given best in class awards, Weis’ top vendor honor.