Heather PawlowskiVice President of General MerchandisingWegmans
The Reading Center at Wegmans Food Markets2005 Retail ConferenceMarch 1, 2005Phoenix, AZ
Good Morning.
I’d like to thank the MPA and IPDA for giving me the opportunity to talk with you today about Wegmans, its commitment to Reading, and how we strive to make connections with our customers.
Wegmans is a regional, family-owned, food retailer headquartered in Rochester NY, operating 68 stores throughout NY, PA, NJ, and VA. Our target customers are people who are looking for great food, incredible service, and a one-of-a-kind shopping experience. Our goal is to help customers make great meals easy so they can live healthier, better lives. We choose our store locations based on areas of the country where we know the target customers exist who appreciate that kind of shopping experience. From there, we look for property that is large enough to support our 130,000 square foot floor plan and offers appropriate access to the store. Obviously, the development costs play a significant role as well.
That unique, one-of-a-kind shopping experience Wegmans strives to provide is actually made up of many individual components that customers experience either within a given trip or across a number of trips.
For Wegmans, Reading Center fits within our Street of Shops, which includes Nature’s Marketplace natural food shop, Card Shop, Seasonal Merchandise, our ComplimentsKitchen and tabletop shop housewares area, and now even Wine Shops in select markets.
This Street of Shops is a break between the hustle bustle of the perishable side of the store, and the remaining stock up side of the store.
Grocery shopping for many families is about nurturing and taking care of family. The Street of Shops is a place where customers slow down a little and take time to connect, either with themselves or with others. This can include reading packages in the natural foods area to see their ingredient contents, picking out greeting cards for loved ones, running across a fun seasonal item that you just have to have, or for Reading, a small treat for me, a chance to dream a little, learn a little. As Wendy Liebman from WSL Strategic Retail would say, these are the “stolen moments” that we all crave within our hectic lives.
Truly, Reading, with its high transaction rate, supports our model of high volume per store. It helps to fuel the economic engine that enables us to provide our customers with that one of a kind shopping experience. Our customers are in our store every week. We need to keep them constantly engaged through our merchandise and our merchandising to represent freshness and the seasonality of our business. Reading provides us an opportunity to keep our customers engaged each time they come into our store.
Our Featured Magazine end caps are plan-o-grammed monthly, and are a tool to draw customers into the mainline section. They are a great vehicle for new launches and holiday programs to help increase sales and awareness.
One of the ways we have been successful in engaging our customers through Reading is with promotions. Shown here are many of the suppliers who have helped us execute these promotions. They represent a number of different product and customer segments including children’s and adults, food and health magazines, and cookbooks.
The Mary Higgins Clark book signings that we have done several times now always draw fantastic crowds. Recently, our event with cooking show host and author Sara Moulton drew over 1,000 participants. At our Bridal event last year, Jane Grantham, the editor of Bride’s Magazine, came to Rochester to help host this event, which over 200 brides-to-be attended. This included a Wedding planning seminar, along with information from Wegmans Tastings restaurant, catering, floral, bakery and Complements housewares and gift shop.
We worked together with several vendors, including Oxo kitchen tools and Cuisinart appliances to put together a unique program for our customers. Here again was another opportunity to engage our employees as customers and connect with our leadership through a Self Magazine Day at Wegmans. This was an employee event at the Wegmans Sports Club that was sponsored by Self Magazine. Over 300 employees and family members attended the event, which included free health screenings, healthy eating tips by our registered dieticians, exercise advise from our fitness center staff, and product samplings, take-away information and gift bags from various departments throughout our store.
How could our store management and corporate leadership not be supportive of Reading once they see this tremendous customer response -- the energy these events produce and how well we are able to connect with our customers?
We feel that for any department or category in our store to be successful, we have to find its connection to our corporate goals. It is easy to see the ways that Reading connects with helping make great meals easy so our customers can lead healthier and better lives. We demonstrate that through our cross merchandising throughout our fresh food areas of our store. Food magazines and cookbooks outperform in our stores, so making that connection has proven results. From there, it builds credibility for the rest of the reading category.
In fact, Wegmans is so supportive of magazines’ ability to connect with people that we are now publishing our own magazine called “Menu”. We have just celebrated our 5-year anniversary of this magazine, which we are publishing quarterly and mailing to our top shoppers. It is also on display and available for purchase at many locations throughout our stores.
Another significant factor is when we can tie these reading promotions in with our corporate events such as LPGA, which is tied with the Wegmans Rochester LPGA tournament held each summer to raise money for two Rotary children’s summer camps. An event like LPGA has tremendous staying power with our customers and our leadership.
Bringing the department to life is no easy task, and requires an investment in Category Management resources. Achieving success in any category requires the merchandising group to possess a passion for product, an understanding of the consumer needs, as well as the drivers of profitability for a given category. Particularly important to those drivers in Reading are the supply chain costs and logistics associated with getting the right reading material in the right store at the right time in the right quantity. It also requires helping our supplier partners understand our business needs so we can work together to build programs that work for us. We appreciate the investment that our suppliers make in working with us to achieve great results because it truly requires a significant partnering effort.
We do best when all parts of the supply chain are involved. In Reading’s case that includes the publishers, national distributors, wholesalers and even advertisers and vendor partners from the other areas within Wegmans to make these events a success. We also appreciate the efforts of trade organizations such as MPA who provide a forum for learning and enable us to build these collaborative partnerships.
How could we not feel a strong connection to an industry that supports and publishes “The 100 Best Companies to Work For” list in FORTUNE magazine, which has helped give Wegmans the motivation to work towards and now achieve the number one position on that list?
Along with that celebration comes the added achievement of selling over 10,000 copies to our customers for over $50,000 in revenue. In addition, the Wegmans family provided each of our 32,000 employees a free copy of FORTUNE magazine.
If “Sales” is the first measure of success, then each point of sale location within the store has its place in driving overall category growth. This includes the mainline, the front-end register locations, cross-merchandising positions, as well the promotional events. Even with 130,000 square feet to work with, we are still constantly challenged for space within the store as we add more and more to our offering—
Wine Shops, expanded Natural and International Foods, Prepared foods, Old World Cheese shops, and even competing against ourselves in General Merchandise as we expand and redefine our seasonal and housewares offerings. Each department is trying to grow its sales and reduce its costs. And we face that competition both on our front-end registers and in our mainline sections.
No department has entitlement —they are constantly measured against one another, and against the opportunity cost of other business concepts. Reading has to stay with or ahead of its in-store competitors in order to survive. And, we have to differentiate ourselves from our local market competition in order to support our goals.
We need help from our suppliers and industry associations to measure the productivity and profitability of Reading to help our leadership understand how Reading measures up—having that buy in is key. We also need to keep it top of mind with our store personnel since we know their support is critical to a department’s success. That means we have to continue to provide stores not only with great promotions, but also with incredible service from our supplier partners to keep our departments well-stocked and ready for business.
While we are always challenged to drive sales, we have to stay ever mindful of the costs to operate this business in order to measure up against the internal competition from the other departments within the stores. These pictures aren’t pretty, but it’s important. The efforts that have been made in conjunction with our supplier partners have brought forth centralized magazine/book check-in, as well as perfect pic systems that several of our wholesalers use. We no longer check-in at the backdoor, the product has already been audited with our received at the wholesalers agency and is ready to merchandise at store level. This enables us to get the product on sale quicker, and take labor out of the store.
We have a lot more work to do.
As a company, Wegmans is placing significant resources towards the adoption of global data synchronization, which you would know of as UCCNet. Jerry Lynch, Wegmans Group Manager for Reading Center, has been actively working with IPDA to address the technology and formatting issues that are specific to the publishing industry. Unless this industry addresses and tackles these issues, it will find itself at an operating cost disadvantage versus other businesses within the store. Without building the foundational data transmission that Global Data Synchronization enables, it is impossible to reap the full benefits of other e-Commerce initiatives such as Electronic Product Code (ePC) and RFID (Radio Frequency Identification Devices), the technology that enables ePC.
Reading is an industry where a 50% sell-through is considered good. Nowhere within our stores would that kind of throw away be considered acceptable. When we bring that number down we’ll not only help the profitability for all members of the supply chain, we’ll change the image of the category from wasteful to efficient.
We have to continuously strive for other process improvements as well. Concepts such as Pay on Scan, which can seem daunting, should be pursued in earnest. If the hurdles they present can be cleared we have the potential to power Reading Center ahead of other categories competing for space. We have to streamline the logistics to gain store (and category management) support so we can stay focused on driving sales. The more difficult it is to manage the operations side of a category, the more time it takes away from growing the business.
We know that Reading’s ability to connect with our customers is far greater than the percentage of sales that it holds within our total store volume. That is important and we want to continue to capitalize on that connection. We also have to look at the many measures of a category’s success---its sales, the household penetration, the connection to corporate positioning and fit with our target customer, and also the percent of total company profitability and contribution per square foot. We have to stay vigilant to each of these measures. If we are successful, the future is bright.
Again, I’d like to thank the MPA and IPDA for inviting me here today, and I appreciate being given the opportunity to share with you a bit about Wegmans, our commitment to our Reading Center, and our approach to making connections with our customers. This is a business that we are proud to participate in, and we are supportive of its contribution to our goal of creating a one-of-a-kind shopping experience for our customers. It is a challenging business that requires constant commitment in order to keep it fresh and drive sales, as well as to manage the supply chain efficiencies required to make it profitable. I trust that you all have found significant value in participating in this week’s conference and that it has helped you strengthen your business partnerships. I know Wegmans always finds that to be the case.
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