The Rite Stuff

As it rockets into its seventh decade as one of the most respected retail banners in the nation, the extended ShopRite family earns the nod as PG's 2011 Retailer of the Year.

Progressive Grocer to Houston: We have a winner. Indeed, PG is pleased to bestow its annual Retailer of the Year award — the benchmark by which the industry's most successful food retailers are measured — to the extended ShopRite family, whose trailblazing retail members, pioneering corporate visionaries, dedicated and skillful support teams, and thousands of outstanding store associates on the front lines, most assuredly have The Rite Stuff.

Serving more than 5 million customers weekly in one of the nation's most challenging, densely populated and competitive geographic corridors, the once small and struggling eight-member grocery cooperative has evolved to become 48 members strong as the largest retailer-owned co-op in the United States and one of the most formidable contenders in the ruthless retail arena.

As one of the single most fascinating and impressive success stories in the past five decades, Wakefern Food Corp.'s 230 member-owned and corporate stores have steadily chiseled out and aggressively retained one of the strongest market share penetration levels of any retailer within or outside of its core metro New York/New Jersey/ Philadelphia turf. What's more, ShopRite's fleet of functional and efficient supermarkets enjoys among the highest dollar volume of food and drug superstore sales in the United States.

As it rockets into its seventh decade as one of the most respected retail banners in the nation, with stores dotted across New Jersey, New York, Pennsylvania, Connecticut, Delaware and most recently, Maryland, the co-op has soared to new heights in recent years in terms of sales, number of stores and membership. In the past year alone, the Keasbey, N.J.-based co-op opened 14 new ShopRites and added three new members, which is hardly an easy feat in a flush economic cycle, let alone during a tumultuous climate such as the present.

True Grit

At the heart of ShopRite's success — beyond the grit and determination of its tenacious, talented and dedicated multigenerational members — is the pragmatic, forthright and highly respected Dean Janeway, president and COO of the co-op's wholesale, merchandising and distribution arm, Wakefern Food Corp., who will retire at the end of this year after more than four decades with the regional supermarket powerhouse.

Joe Colalillo, CEO and chairman of Wakefern's 22-member board of directors, says there's simply no denying the influence Janeway's seasoned expertise, caring heart and buccaneering vision has had on catapulting the company to the top of the retail leader board. “The focus on growth and the success that comes with it will be Dean's legacy — it's always been his trademark,” affirms Colalillo, who owns three ShopRites in Hunterdon County, N.J. “For as long as I've known him, Dean has always been focused on growth and moving the company forward. In fact, about three years ago, when we were putting together our annual budget, we realized there was minimal growth on the horizon. Dean really pushed the organization — members and Wakefern staff alike — to go out and find opportunities to grow the business.”

Unwavering Commitment

Although some members raised concerns about how Wakefern would service an increase in store count or additional members, “Dean never wavered from his cause,” notes Colalillo. “He told us to find opportunities first and figure out the rest later. And that's exactly what we did. In 2009, the Klein family joined our cooperative, bringing us seven new stores in Maryland, a new market for ShopRite; last year brought 11 new stores in Connecticut through the Shaw's acquisition; and in October of this year, our corporately owned company, ShopRite Supermarkets Inc., will be moving into the Albany area with a new store in Niskayuna, also a new market for us.”

After initially addressing the issue of growth three years ago when the co-op posted record sales of $10.6 billion, the numbers seem to pale in comparison with the most recent fiscal year, “when we reported sales of $11.8 billion. The numbers,” Colalillo aptly adds, “speak for themselves.”

The Road Less Traveled

Reflecting on his accomplished career and humble upbringing in Elizabeth, N.J., Janeway, distinctly unlike many of his supermarket industry executive brethren, had no family background in, or particular affinity for, food retailing. “When I was in my early 20s, my main goal was to find a decent job and earn some money to help my cab-driver father pay some bills, get on with my life and hopefully progress and do better going forward into the future.”

Janeway's intense work ethic and strong value system were deeply instilled at an early age by his parents, he says, noting that his father started his work day at 5 a.m. and returned home nightly at 6 p.m. “He never complained, but we never owned a house, and that was another one of my main goals — to own a house and pay off the mortgage at some point in the future.” Looking back, he muses, “It all worked out pretty good.”

After joining Wakefern in 1966 as a junior accountant in the frozen food division, Janeway progressed through numerous procurement and management positions, including VP of the frozen food and dairy-deli divisions. In 1987, he was promoted to group VP and, a few years later, was named an EVP before assuming the helm as its president and COO in 1995.

Earning his college degree from Rutgers over the course of seven years in night school on Wakefern's dime, the no-nonsense Janeway readily admits that the path he followed to achieve his goals was at times rugged and more than a bit demanding. “But it gave me a whole different perspective and a heightened level of appreciation for what life was all about, and how hard you have to work to get where you want to be. But I was very fortunate in my career at Wakefern to have bosses that pushed me and supported me, which enabled me to grow at a time when there were lots of opportunities for growth.”

Rite Time and Place

The timing of Janeway's arrival at Wakefern coincided with a pivotal juncture in the company's history, which was shortly after Pathmark, which has since been acquired by the struggling A&P, withdrew from the cooperative and resulted in the loss of about 50 percent of its volume. The setback inspired the remaining members to embark on a major expansion program, opening new stores and focusing more of their purchasing power on the increasingly vibrant co-op model. Within three years, the efforts produced significant growth and opportunities, he says, “so I always feel lucky to have been at the right place at the right time in my early years here.”

Janeway's preparation for luck, coupled with industry observers' praise for his commitment to excellence and high standards, has been integral in helping many of ShopRite's member-families become the successful and profitable retail operators that they are today. Highly competitive and laser focused, Janeway takes great pride in a central trait he enthusiastically shares with Wakefern's member-owners: “None of us like to lose. We all play to win every single day. Everybody has that drive.”

When asked about what sparked his relentless will to win, Janeway explains, “I've always been driven to succeed, to get ahead and make my own mark.” Glancing toward his lower desk drawer, Janeway still has the perfect attendance awards he earned dating back to 1967, which he says enabled him to receive two weeks' extra pay. “I never turned down an hour of overtime; I was just driven to get ahead and excel in as many ways as possible.”

Considering ShopRite's formidable market standing and member roster that boasts some of the finest independent retailers in the business today, there's no understating the influence Janeway has wielded on the company's clout and ascendancy that unfolded over the last 17 years on his leadership watch.

As for what he considers to be his greatest accomplishments, Janeway cites ShopRite's impressive growth trajectory in the last five years, “during a period when nobody else has achieved the level of same-store growth we've had from both new stores and new members. One of the things that I focused on most heavily throughout the years was growth because in this business, if you don't grow, you die,” a fact that he says is backed up by the resulting consequences that have since rendered many of ShopRite's longtime East Coast retail competitors either out of business or on the ropes.

“We are the last company in our marketplace that self-distributes. Every other retailer — you name it — all ship from outside of New Jersey. We're the only one that still ships union and that has not only survived, but is thriving while adding both new people and new stores to our roster.”

He is equally gratified by a companion significant accomplishment, which is “the 48 members we have today, more than half of which I was considerably involved with bringing into the organization and supporting them and helping them become successful. And what makes each of them as successful as they are is the fact that they live in their stores and their communities, and can differentiate and immediately respond to their customers' needs,” be it with products, services, store formats or local philanthropic support.

Transitioning to the Top

Janeway is also gratified by the key role he played in helping the co-op transition “from being a very price-driven organization to one that has since become very customer-focused. Everything we do is geared toward making our members successful. There was a time when Wakefern's sole role was to get product at the lowest price to the stores,” he relays. “But we recognized back in the late 1980s and early '90s that we couldn't compete on price alone; we had to have excellent perishable offerings, clean, friendly stores, good training programs and exceptional wholesale service levels,” among others.

“ShopRite's member-owners will find out what shoppers need and go the extra mile to make the customer feel valued.” — Joe Sheridan

During regular lunch meetings he and his soon-to-be successor, Joe Sheridan, and other members of the executive staff conduct with every new employee who joins the company in groups of roughly 15, Janeway says, “We talk about our values and processes that are rooted in our need to service our members. So while it's important to keep our costs down, if a store is out of stock with sugar when it's on sale on a Saturday before the holidays, and we have to get a trailer out there to get the product on their shelf, that's what we do.”

Another area that Janeway takes great pride in is the implementation of a professional management and succession planning platform that has been developed in recent years across some 26 support divisions that serve the extensive ShopRite store network, each of which has a color-coded organizational chart that shows where each person stands currently, along with a future development plan, which not only helps the company assess strengths and weaknesses across the organization but which also paves the way for future advancement opportunities.

Janeway says the same applies for his own succession plan that is about to unfold come January 2012, when he passes the reins to Wakefern's longtime EVP Sheridan, a 35-year company vet whose reputation in the trade, he says, is second to none. Joe's a mover and shaker and a driver of change,” declares Janeway. “He is positive and upbeat and will do a fantastic job leading the company and working with our entire talented team of executives throughout the organization, every one of which I'm deeply proud of because they are the very best at what they do.”

Attracting and retaining top talent is another of critical goal of the company's master plan, he adds, which involves partnering with educational institutions in its home state for a revamped internship program to better ensure a future pool of full-time candidates, which is reinforced for future managers through a year-long “Leaders in Training” program offered to select individuals and which further underscores the company's leadership-supported culture.

Speaking of the important role its people play across all levels of the organizations, Janeway readily credits Wakefern's former longtime chairman, the late Tom Infusino, who passed away in early 2011, for providing him with the best advice he ever received, shortly after taking the helm as president and COO. As they were departing from an informal associate lunch, Janeway vividly recalls being immediately struck by the significance of a comment made by the man for whom he had immeasurable respect and admiration.

“On our way out the door, Tom stopped me in the lobby and said, ‘You’ve got a lot of good people here; the number one thing you've got to make sure happens is that they always have a job,” which Janeway says not only pertains to Wakefern's 1,400 corporate headquarters support and roughly 1,000 warehouse teams, but also to ShopRite's 50,000 store associates. “I took his words very seriously, and have always remained cognizant of the fact that the decisions that we make help provide an income for thousands of families.”

Janeway is equally effusive when speaking about Joe Colalillo, who was elected chairman and CEO in 2005 and who has played a lead role in taking the co-op to the next level, particularly in the realm of its committee structure decision-making process, which Colalillo describes as being the company's core strength. “All new items and services are presented to the appropriate committee for approval. I believe we continue to be successful because of this process — vendor to buyer, buyer to committee — which combines members who work in the trenches, listening and reacting to customers, with Wakefern's professional staff who have relationships with the vendors who supply our product. When you put these two together,” he adds, “it makes all the difference in terms of making decisions to meet our customers' needs. That's our strength.”

“ShopRite's committee structure decision-making process, which combines members who work in the trenches, listening and reacting to customers, with Wakefern's professional staff, makes all the difference in terms of making decisions to meet our customers' needs. That's our strength.” — Joe Colalillo, Chairman and CEO

At committee, “there is an exchange of ideas and best practices that allows us to operate our own businesses better — it's that member-staff interaction that makes it happen.” The meetings, continues Colalillo, “also allow us to engage our next-generation members so that they understand the strength of the cooperative, giving them the ability to look beyond the four walls of their own retail businesses.”

Extensive outreach with the communities ShopRite's stores serve is yet another notable element of the company's central mission. In addition to its staunch dedication to fighting hunger in the communities it serves through its ShopRite Partners in Caring program, the co-op has donated more than $22 million to 1,500 worthy charities and food banks since the program began in 1999. As a title sponsor of the ShopRite LPGA Classic, ShopRite has raised more than $22 million for local schools, hospitals and community groups. “In the 20-plus years of our involvement,” reports Janeway, “nobody on the LPGA tour has given back as much as we have; nobody can even come close.”

ShopRite's chartable support also touches a variety of other worthy causes, from local Little League teams, to firefighter and police associations, to the Special Olympics and the Susan G. Komen for the Cure, and countless others. “When New Jersey Governor Chris Christie visited our office, one of the things Joe [Colalillo] and I talked at length with him about was our staunch belief that we are one of the few companies left in the retail supermarket business with a social conscience. Here again,” he adds, “our record speaks for itself.”

Taking Stock

When asked to describe the requisite characteristics of a prospective ShopRite member, Janeway says, “We've long prided ourselves on being different than most organizations in that we look at prospective members' operational backgrounds — not their financial backgrounds. If you show me somebody who can run a store, who can relate to people, who has the drive to succeed, there will be a place for them. We will do the financing and will help support them until they are successful. And I would venture to say if you went out to talk of it to any of the roughly 30 members that we've brought in since 1990, they would tell you that we have supported them above and beyond their initial expectations, and that's what differentiates us from every other coop and every other wholesaler in the country. We support our members in a lot of different ways until they are successful, with the approval of all the other members, all of whom know that they are only as successful as the weakest link. It's a formula that has worked very well for us.”

When soliciting a new member, Janeway says the deciding factor comes down to their response to but one question: “Are you in it for the long haul?” The answer, he explains, is revealed in the would-be member's succession

plan that identifies next-generation family members. “It's a decision that every independent operator out there today has to be armed and ready to make.”

Prior to coming aboard, a new Wakefern member is required to sign a stockholders' agreement, which Janeway says is not only deliberately firm, but which is also what he ultimately describes as the glue “that has held us together.” In a nutshell, if a member chooses to sell their business, they have the right to sell it to anybody they want, provided it's a qualified successor. However, if they choose to sell to a non-qualified successor, they are required to make a withdrawal payment of 10 years' worth of profit projections to present-day value, back to Wakefern.

“And in the history of our stockholders' agreement, nobody has sold outside of the co-op; it just doesn't make sense to do it,” he says, noting that all Wakefern members “personally sign for all of their debts, so their lifeblood is on the line every single day.”

However, he adds, Wakefern corporate executives have got their back. “When we visit our members and their families in their stores, it's so gratifying to witness the role they play in their communities in so many countless ways; that's the difference between us and everybody else; our members live in their communities and know their stores' customers inside and out.”

To that end, Janeway says, Wakefern dedicates extensive time and resources to assimilating the next generation of retail leaders. “If you look at most family businesses,they don't make it past the second generation; in some cases, we are into the fourth generation of member-owners, and have somewhere in the neighborhood of around 125 next-generation family members,” which he says is yet one more of the co-op's most compelling attributes.

Colalillo concurs. “We have a whole calendar of events for our next-generation members,” he says. “This includes training and development with the likes of Unilever and Cornell on subjects such as human resources, community outreach or shrink. They also sit on many of our committees, exposing them to other members, top executives at Wakefern and the decision-making process as it happens. Not only does this help them to build and enhance their businesses, but it also gives them insight” into how Wakefern operates.

“It's really about getting them engaged,” Colalillo continues. “Any one of our committees exposes our young members to all ranges of leadership within the cooperative. And through the committee process, they become leaders too, because they are helping to make decisions that shape the future of the cooperative.”

Some members also send their “next gens” to other member organizations for as long as six months, to learn how their colleagues run their own businesses. “When I entered my family business 28 years ago, I spent six months with RoNetco Supermarkets Inc. and it was one of the best learning experiences of my career,” Colalillo recalls. (RoNetco, led by the Romano family, owns and operates seven stores in northwest New Jersey.)

But a burning question still begs to be asked: How tricky is the process of building consensus among different members whose stores are located in vastly different marketing territories?

"It comes down to the respect of the individual and his or her views, transparency and inclusivity,” notes Colalillo. “At Wakefern, everyone's involved. Going back to the importance of our committee process, decision-making in the co-op affects everyone so everyone has the right and ability to have their voice heard."

The co-op has obviously evolved geographically over the years, he adds, “and we now enjoy a substantial share of various markets. And each of these markets brings with it different needs, different challenges and different demands. Instead of allowing those distinctions to define us, we embrace them and continue to build our organization around those differences.” Here again, though, Colalillo says, “Our structure of committees allows us to consider each market's needs. We have representation from just about every market in each committee."

ShopRite members are also implementing video conferencing to include those members in outlying areas, “without compromising that face-to-face relationship building that is so important to us as an organization. In this way,” he adds, “we are also able to engage not just the members but their store managers and department managers to get that dialogue which is vital to addressing our customers' needs.

“I think the most important point is that, as we talk about respect, we try to bring all of our members together whenever possible to build and develop personal relationships. From our member getaways which take place every two years, to all-member forums which occur several times per year, it is so important for us, as colleagues and friends, to spend time with each other and to learn from each other. We're a big company, but we operate it no differently than any of our individual stores. Even now, at 48 members, more than 50,000 associates, and $11.6 billion in retail sales, Wakefern is a family business.”

Adds Janeway: “We're also unique in that it's one member/one vote, whether you have 25 stores or two stores."

Man of Honor

As he prepares to transition to retirement, Janeway views the future as “an opportunity to do something else with my life, depending on what comes along. And while I know I'll miss the pace of a new challenge and new opportunity that presents itself every day, after growing up in an organization where I know many of the people by first names, I will really miss interacting with our people.

One of the things we're most proud of is that a full 25 percent of our employees have been here for more than 25 years; not many organizations can say that, which tells me we've developed a culture over the years that people are comfortable with and that has engendered a strong loyalty.

"It's been a true honor to be a part of a company that has the privilege to serve 48 family businesses that have daily interactions with their local customers;

that's the culture that I grew up in here — getting things done with the help of countless dedicated, talented people. I've had a very successful run,” Janeway sums, “and when I walk out the door this year after 45 years, I will have very few regrets.”

For additional exclusive online coverage, visit progressivegrocer.com.

• Charity Begins at Home

While some ShopRite operators have won well-publicized accolades for populating food deserts, like Jeff Brown, who has opened stores in low-income Philadelphia neighborhoods, Joe Sheridan, EVP of Keasbey, N.J.-based Wakefern Food Corp., the retailer-owned cooperative whose members run stores under the ShopRite banner, contends that all of the chain’s grocers, regardless of location, have a part to play in helping those less fortunate access fresh, healthy food.

“Every town has food banks and unemployed people,” he notes. “All members are reaching out in their own way,” including food drives and product donations. “The industry has been there all along.”

The problem is that too many operators have been hiding their light under a bushel. “This is a story that doesn’t get told,” he admits. “As an industry, we do a good job” of aiding the underserved, but “we do a poor job of marketing it.”

• Solidifying the Bond

Whether it's social media, ShopRite From Home or digital coupons, ShopRite is building connections and imparting loyalty among younger, more digital-savvy shoppers in a variety of ways to engage them and bolster accessibility as follows:

ShopRite.com

ShopRite.com is a destination where customers can find the latest promotions, health-and-wellness items and news about community efforts, as well as tools that make their lives easier (see below for examples).

ShopRite's weekly circular is the No. 1 reason that customers visit its website. The online shopping list tool and online coupons are also very heavily viewed pages. All three of these features are available to mobile customers, as well. By providing online tools for our shoppers, it allows them to plan their in-store shopping, which builds loyalty if they are making a list of sale items at their local ShopRite.

The percentage of shoppers using the ShopRite website and mobile apps is on the rise. This is the space where customers are and where they look for information on how to shop and where to shop. ShopRite is simply bringing its loyal customers the information they need to shop smarter, and bringing it to them in a manner to which we, as a society, have become accustomed to doing business — online.

ShopRite From Home

ShopRite From Home was first introduced to ShopRite customers in 2002. This time-saving service is available in 63 stores, servicing 84 ShopRites across New York, New Jersey, Connecticut, Pennsylvania, Delaware and Maryland. ShopRite From Home allows customers to place online orders from their home computer or mobile device and to have their groceries delivered to their homes where available. Customers can also have their online orders shopped for them and held at the store for pickup. Customers may use coupons with ShopRite From Home, just as they would with any shopping trip. Savings from coupons used on home deliveries are applied to the customer's next order.

Providing online shopping to customers is a natural next step to all that ShopRite offers them in-store: value and low prices and unmatched customer service. By extending service to include online shopping and delivery, ShopRite has found a way to make customers' lives easier, and to engage them in a space where they spend a great deal of their day.

The number of customers using this service continues to grow. In fact, six new locations that offer online grocery shopping have already opened this year.

ShopRite From Home enables busy and growing families to continue take advantage of ShopRite's famous low prices and tremendous value — this service saves customers time with the added convenience of shopping from home. There are about 30,000 items online in any given ShopRite From Home store.

Social media

Social Media is also a great way to reach customers, creating a dialogue with them to get them engaged with the ShopRite and PriceRite brands. Through platforms such as Facebook and Twitter, Wakefern is not only able to communicate with customers about the products and services offered, but they are able to tell the company directly what they like, as well. It is also a great platform for customers to talk to each other, whether it's reviews about products they like, sharing of recipes or simply a heads-up about a promotion.

Potluck Online Blogger Panel

Potluck is a community of writers on ShopRite.com who post recipes, reviews and cooking demonstrations using ShopRite private label products. ShopRite's Potluck panelists share a passion for food and are eager to share their opinions on ShopRite private label products with their online communities. The panelists are located in each of ShopRite's trading areas: New York, New Jersey, Pennsylvania, Maryland, Connecticut and Delaware.

“Potluck is a first for ShopRite and we are extremely excited to have this group share their perspectives on new products, food, cooking and shopping with our customers,” says Karen Meleta, ShopRite spokesperson. “Our Potluck panelists are a fantastic group of individuals, each with their own voice and unique point of view. It's wonderful to see their enthusiasm for being part of our panel.”

Each month the Potluck panelists sample a selection of products from ShopRite's Kosher, Auténtico, Organic, Specialty Imported or Private Label collections so that they can create their own recipes or share something new with their readers.

The Potluck panelists are also invited to attend exclusive events, such as the ShopRite-sponsored Grand Tasting at the New York City Wine and Food Festival, the ShopRite LPGA Classic, new store openings, and community events hosted by ShopRite.

Mobile Apps

The number of ShopRite customers using its mobile apps is growing every day. ShopRite is currently the only grocery retailer on all three major mobile spaces: iPhone, Android and mobile web. Powered by MyWebGrocer, these ShopRite apps enable customers to access online specials and to create digital shopping lists right from their phones. Within the app, customers can easily look at digital circulars to see all the items on sale that week at their local store, and to select items to add to their online shopping lists. Grocery lists can be constructed from a desktop website as well, which syncs with the mobile apps and mobile website. Customers can also click on product-sponsored advertisements at the bottom of the app and add these items to their lists.

1946: Co-opting the Future

Following the end of World War II, the end of food rationing and the lifting of price controls marked the beginning of a troubling time for the independent grocer. During the war, customer loyalty to independent grocers was strong, but afterward, the bigger self-service supermarkets were offering a wider selection at lower prices, and frugal shoppers took notice.

In 1946, in an effort to assist these struggling grocers, a sales representative from Del Monte Foods introduced eight independent grocers from Newark, N.J., to the concept of cooperative buying. Collectively purchasing products in large quantities at a lower cost allowed these grocers to offer their customers the same goods at an unprecedented, competitive price. Pleased with the results, on Dec. 5, 1946, this cooperative relationship was formalized. Each of the seven grocers invested $1,000 and Wakefern Food Corp. was born.

1951: The Birth of ShopRite

For the first few years, the members of Wakefern advertised under their own names. But in 1951, they decided they could be more competitive, and spread the word about their great prices by advertising under one name: ShopRite. They saw an immediate jump in sales. All of the members then added the ShopRite name to their stores, and its success attracted many new members. Within a year there were over 50 members of the cooperative, and the growth in volume led to hiring more buyers, moving to larger warehouse space, expanding trucking operations, enlarging their stores and developing a private label brand.

1958: The Trading Stamps Decision

By the mid-1950s, trading stamps had become a consumer craze with thousands of devoted collectors. Many supermarkets were giving away stamps and ShopRite owners met to decide if they, too, should join the craze. The arguments were heated, but in the end they decided not offer stamps. However, they knew they would have to do something to fill the merchandising void. One member offered a radical suggestion: “Let's cut grocery prices by 10 percent.” ShopRite's “low-price leader” image took root.

On the Way to the Top

By the end of their first 10 years in business, there were more than 70 ShopRite members, with an annual sales volume of $100 million. After the trading stamps decision, ShopRite became a major player in the New Jersey market, and even began attracting independent grocers from surrounding states.

There were setbacks, of course. In the late 1960s, ShopRite lost nearly half of its wholesale volume when its largest member, Supermarkets General Corp., later renamed Pathmark, withdrew from the cooperative. The setback inspired the remaining members to embark on a major expansion program, opening new stores and focusing more of their purchasing power on the cooperative. Within three years, these efforts resulted in growth which replaced the lost volume.

During the 1970s, ShopRite members realized that the improvement of the cooperative structure would lay the foundation for even greater business development.

So they adopted the “one member, one vote” principle, which gave all members, regardless of their size and number of stores, the confidence that their representation in the cooperative was equal.