The amazing Stew Leonard’s
The first thing Stew Leonard Jr. wants you to know is that the grocery store his father launched, in 1969, is unlike any other in the world. Stew Leonard’s was, in fact, started as a 17,000-square-foot retail dairy designed to look like a farmer’s market. It only carried eight items. Yet it has evolved into much more since. “Dairy store” or “supermarket” don’t come close to describing what this place is all about. And it’s also wildly successful, with sales of about $300 million annually across four stores.
Walk inside any one of the three Stew Leonard’s stores in Connecticut, or the one in Yonkers, N.Y., and the thing that immediately hits you is the single, circuitous aisle shoppers are led along. It meanders through more than 100,000 square feet of engaging merchandising space. Near the entrance to the original store in Norwalk, Conn., for instance, customers get their appetite whetted with the smell of baking cinnamon buns and fresh ground coffee. Around the corner there’s a bakery and dairy, where staff actually used to fill cartons of milk but couldn’t keep up with the demand.
Continuing on, shoppers come to the fresh meat and deli departments and a fish counter that includes only the freshest offerings. An expanded produce section precedes the limited dry grocery area–although there are other grocery, snack and beverage items interspersed in that one aisle, along with bulk candy, pizza, sushi and more. The last stop before the checkouts is the prepared food department. It has a chicken and rib counter, hot and cold buffets, several kettles of store-made soup and a case of ready-to-heat meals.
Throughout the store, shoppers are treated to enthusiastic staff. Some, in costumes like Wow the Cow and Cynthia Chick, hand out samples. Robotic animals sing old-fashioned tunes. So do the Farm Fresh Five, a band of milk and orange juice cartons playing musical instruments. Leonard describes his stores as supermarkets with the centre store removed. “I say it’s kind of like Costco blended with Whole Foods. We make a lot of our stuff fresh. We roast our own coffee and make our own fresh mozzarella cheese,” explains Leonard, who took over from his father, Stew Sr., as president and CEO, in 1991. “
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“Each product in the store carries a kind of imprimatur. If Stew carries this item, the implication is, then it must be good”
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Leonard happily dispels many standard operating procedures of grocery stores. Most supermarkets are designed for efficiency. But Stew Leonard’s tends to be inefficient, as the layout is constantly changing. Leonard gives the example of where to put the lobster tank in a fifth store he is planning. It would be most efficient to have it in the fish department, but placing the lobsters in the aisle is more entertaining and could drive sales. Would the sales lift overcome the extra labour needed? Leonard isn’t sure, but he’s willing to take the risk.
While most supermarkets offer more than 35,000 items, Stew Leonard’s sells only 2,000, each selected for freshness, quality and value. Shoppers won’t find Aspirin or pet food, but they will find lobster rolls, which were introduced at the suggestion of an employee a few years ago and are now a bestseller. But when the lobster rolls were added another item was removed to maintain the low SKU count. “One of the things that makes Stew Leonard’s unique and, in fact, gives it a true differential advantage is not just that it has an extremely limited grocery selection, but that each producing the store carries a kind of imprimatur. If Stew carries this item, the implication is, then it must be good. Or, at the very least, good value,” says Kevin Coupe, a writer who has covered the grocery industry for more than 25 years and lives near the first Stew Leonard’s store in Connecticut.
Coupe, who runs a retail industry website, MorningNewsBeat.com, estimates he’s spent nearly $200,000 at Stew Leonard’s, visiting the store 48 weeks a year for 27 years. “By putting a limit on the number of SKUs that it carries, and by being aggressive about trying new things, Stew Leonard’s creates the same kind of treasure hunt experience as Costco, and it does so with a singular sort of panache. I say this not just as someone who has written about Stew Leonard’s over the years, but as a shopper.”
The “add an item, cut an item” rule is one of several Stew Leonard’s lives by. The two most famous rules, literally carved in stone at the entrance to each of its stores, are No. 1: “The customer is always right”; and No. 2: “If the customer is ever wrong, reread Rule 1.” The other rules, while not presented in such a concrete fashion, are critical to the operation of a chain of stores that are noted by the Guinness World Records for having the highest sales per square foot in grocery. (The company’s first store was recognized in 1992 for sales of $3,470 per square foot.)
The first additional rule is passion, which is demonstrated daily from the top down. Teams of merchandisers are constantly meeting with vendors to determine the best ways to sell more. On a recent Wednesday, the conference room in the company’s Norwalk headquarters was occupied by floral department managers meeting with a flower grower from Columbia, trying to come up with something new that would entice the shopper. When Leonard suggested they try to replicate the look of a New York City bodega, which often feature walls of flowers, both the grower and the merchandisers were quickly adding specifics to a plan. “People come to Stew Leonard’s and they take pictures and read about it, but you can’t copy that,” says Leonard, referring to these exchanges. “It’s about ideas, innovation and trying new things.”
A second supplementary rule is that only people can make the shopping experience better. Leonard is proud that his company is listed as one of Fortune magazine’s Top 100 places to work–something it has done for the past 10 years. But he’s even more proud when he sees a team member smiling with a shopper. Family values, both for the shoppers and in the company, is another rule. The parking lots at a Stew Leonard’s store are typically full of SUVs, which means families. “We don’t spend too much time studying competitors. The best thing to do is to walk through your store and listen to your customers,” asserts Leonard.
For the company, family values means the children of founder Stew Sr. are all involved with the stores. In addition to Stew Jr., son Tom operates a store called Tom Leonard’s, based on the same fresh concept, in Virginia. Stew Sr.’s daughter Beth founded the famous Bethy’s Bakery and heads up the gift centre; and daughter Jill is executive vice-president of culture and communication. The third generation is now getting into the business, too. Leonard explains the process family go through to get a job: “We have an internship program where they all start working on the floor, and then when they go to college they can come up to the office and work as an assistant learning PR, finance, HR and buying. “When they finish college they can’t work back here for three years, unless they get a masters, then they only need two years of experience,” says Stew Jr., adding one of his nieces just started with an advertising firm and will return with valuable experience.
One final rule: if a shopper is unhappy with a product for any reason, the store will refund their money. “My whole mission is, how do I get really fresh stuff from the market to you, and get it on your table and you eat it and say, ‘Yum yum yum, I’m going back to Stew’s,’ ” explains Leonard, who is partial to zuppa de pesce, though not over pasta–he’s watching his weight. Even in the current economic environment, Stew Leonard’s is doing well. The company has never laid off anybody and is planning a fifth store.
Leonard worries about inflation and the impact it will have. He operates in the most competitive market in the U.S., facing formidable operators like Stop & Shop and Shoprite. To continue winning the heart of the customer, Stew Leonard’s is keeping one step ahead of the competitors by focusing on local suppliers. In the end, however, Leonard says his operation starts and stops with the shopper. “The worst phone call I can get is someone calling up and saying, ‘You just ruined my dinner.’ We don’t get many of them, but if you deal with 100,000 people a week, it’s always a worry.”