WEIS Markets: Stay Nimble, Stay Local, Stay Relevant
Photos Courtesy of Weis Markets
Founded in 1912, Weis Markets operates 166 stores in Pennsylvania, Maryland, New York, New Jersey and West Virginia. In April, the Sunbury, Penn., retailer announced plans to invest $101 million this year in a growth program that would expand its 1.1-million-square foot distribution facility in Milton, Pa., among other efforts.
Retail Leader sat down with Kurt Schertle, chief operating officer, for an exclusive discussion about the unique recipe that makes Weis Markets both different and successful.
"The focus of the organization is to be the most relevant conventional retailer we can be," says Schertle. "We don't pretend to be Whole Foods on one side or Aldi on the other. We understand the role that we play; we serve communities from Binghampton, N.Y., to Baltimore, Md., and we are a locally focused retailer in all of our markets."
Staying relevant is critical to Weis Markets' position in the marketplace, and every team member is involved in the process. That means not only staying ahead of emerging trends, but also keeping eyes and ears open in the communities the retailer serves to capture the local flavor and feel of each market.
"It is our goal to be on-trend, and more on-trend than our competitors, because we can move quickly," says Schertle. "We are perceived to be the most relevant in the markets we serve, not just by being local and offering the products the consumer wants, but also by being faster to be on-trend than other folks, whether that's gluten-free products or natural and organic foods. We should be able to move faster than our less nimble, larger competitors, be they national supermarket retailers or mass chains like Target, Walmart and the like."
Weis Markets is able to stay quick on its feet via a two-pronged approach that involves maintaining local relationships with both regional and national manufacturers in the region and growing a vertically integrated supply chain that can react at a moment's notice.
"Getting the most out of supply chain is a passion for us as well. We have been a very successful, locally focused retailer for more than 100 years," says Schertle. "That being said, we have not been great at supply chain historically. But we put our focus on it the last couple of years, and it's safe to say we've taken millions of dollars of carrying costs out of our supply chain."
Schertle says there is more work to be done, but notes that while supply chain optimization efforts continue, Weis also has recently implemented computer-generated ordering (CGO) to simplify that process at the store level. "So all the while we're taking inventory out of our distribution center, we are also streamlining the ordering process at store level and taking inventory out of our stores," he says.
The focus on supply chain and CGO has meant more in-stocks and better service for the shopper. And fresher product means longer product life for the consumer. "Let's start with sales, because you have to start and end every conversation with sales," Schertle says. "We think that because of what we're doing with our ordering process, we will maximize sales. Candidly, we think that our consumers will continue to get what we like to call fresher product, more frequently. That is taking place now."
Weis Markets' vertically integrated supply chain is a key differentiation strategy for the organization, and Schertle says remaining self-supplied is core to what makes the retailer successful. "We own our trailers; we own our trucks. We control our destiny, and we like that," he says.
FOCUSING ON LOCAL
Leveraging long-time, close relationships with local suppliers is another critical part of Weis Markets' business strategy. Not only do these suppliers help Weis stay on top of critical trends, they also lend authenticity to private brand and co-branded product offerings.
A prime example is the retailer's relationship with The Tasty Baking Co., Philadelphia, maker of regional favorite Tastykakes sweet cakes. Not only has Weis contracted with Tasty Baking to make its Weis Quality sweet cakes, but it has partnered with the bakery to develop a line of Tastykake-flavored ice cream. That ice cream, incidentally, and about 60 other flavors are made in Weis Markets' ice cream plant, which sits next to its milk processing plant in Sunbury.
"We're very proud of our milk and our ice cream, but we carry all of the brands. We carry Breyers; we carry Turkey Hill. But even with all of those brands, 40 percent of our ice cream business is in private label," Schertle says.
"We think it differentiates us, whether it's Walmart, or Wegmans or Giant Eagle or Ahold. I don't see Ahold cultivating a local relationship with Hanover Foods in Hanover, Penn., for frozen vegetables. But they make Weis Quality frozen vegetables."
"As we like to say, 'We were local before local was cool,'" he says with a laugh.
THE EVER-CHANGING CONSUMER
In its more than 100-year history, Weis Markets has seen a virtual revolution in the way food retail has evolved. What started out as Weis Pure Foods in 1912, founded by brothers Harry and Sigmund Weis, now reaches far beyond Pennsylvania and employs about 17,600 associates in its stores, distribution center, store support center and manufacturing facilities.
Consumers have changed right along with Weis, and today's shopper is better educated and informed than ever. "Folks almost find it embarrassing to be uninformed about food now. Ten years ago it was not that way," Schertle says. "In many ways, it's incumbent upon us to help [the consumer] with that education."
Whether it's through in-store signage, merchandising, direct mail or e-mail, Weis makes communication and education a priority. This is especially effective when targeting an emerging demographic–young families faced with new experiences and responsibilities who want more options when shopping.
"In the past, we were in a lot of older, smaller communities with an older, less acculturated customer base. As we're grown, we're now heavy in the more cosmopolitan markets like Maryland, like the Delaware Valley of Philadelphia, like New Jersey. We are definitely expanding our demographics to the more cosmopolitan clientele," Schertle explains.
"You can only bring Amish potato salad and bologna to New Jersey so many times before they tell you that you're not relevant," he says, joking.
Staying relevant with fickle young consumers is no easy task, but Weis Markets is armed with valuable data from its club card program that helps the retailer get to know its customers, particularly its best customers, better.
"We're doing a better job now than ever of mining our club card data to target-market. We get better every year at how we go to market with our club card holders, who use that card for a lot more than just a mark-down tool," says Schertle.
Weis Markets' best customers, as evaluated based on spend, shopping behavior and other factors, are invited to join the retailer's gold card program. This is the retailer's most tailored program, and members have access to special personalized offers along with the distinction of being greeted by name at checkout.
These personal touches are an investment in loyalty. Weis gold card holders make up about 15 percent of its customer base, but are responsible for about 52 percent of sales, Schertle says.
INVESTING IN THE FUTURE
Weis Markets' recently announced investment is intended to position the retailer for strong future growth. The retailer's strong desire to remain self-supplied is coupled with a commitment to ensure that the organization's infrastructure can support this growth.
"We have a major capital expenditure to expand our distribution center. We are investing in remaining a self-supplied independent company and making sure that we have the capacity for acquisitions, for organic growth, for remodels and new stores," says Schertle.
– Kurt Schertle,
Weis Markets will invest the funds earmarked for growth judiciously, Schertle says, carefully weighing the costs and advantages of store resets versus remodels. "I can invest $2 million in a store and make it look beautiful," says Schertle. But if a retailer's K-cup section in a newly remodeled store is four feet while his competitor has 12 feet of space, or the retailer with the remodeled store has a warehouse-based sushi program and his competitor is doing it in-house, then he says, "I have a big, beautiful building but what good does it do me?"
Though strategy is where Schertle spends a lot of his time, Weis Markets also is focused on the blocking and tackling, says Schertle–staying up on trends, partnering with CPG companies and staying independent.
"We feel it's a big part of being nimble. Being a strong, family-controlled, debt-free company, we're not forced into things that some other folks are because of those burdens they have that we simply don't have," he says. "We are always looking for opportunities to acquire. We tend to be a buyer, not a seller. We're in growth mode, and we're very focused on remodels and acquisitions."
Jennifer Acevedo is the editor-in-chief of Retail Leader.