John Resnick: Give us an overview of Wegmans Food Markets as it exists today.
Danny Wegman: We have 71 stores now, John. And we do a little over $4 billion a year in annual business. But in the food industry we are a relatively small company. For a customer, what would be different about Wegmans is that, first of all, the stores are very large. And we do two or three times the volume of a traditional food store.
You might say, well, I don't want to walk around a big store, but it is presented as a group of small stores. Really, it is a mini-village…. It is the high volume that we do in that store that enables us to have this village approach and do it economically…. We are a very large store with a lot of people and a lot of -customers.
One of the models that I always had was just the idea of a market, a public market. In a public market you have people who are proud of what they are selling, and they have unique relationships with their customers. And they are quite independent in what they do. That is really what we try and do at Wegmans.
JR: Tell us about the family structure within the business right now.
DW: Well, right now I have a daughter, Colleen, who is president of our company. And she is 36 and has two little children—two boys, two and four. They keep her pretty busy, but the business keeps her pretty busy, too. So I think she is a great role model on how to get a lot done with a busy schedule and still keep everything in balance. She does a great job. I have another daughter, Nicole, and she is working on some store programs for us now. She also has one-and-a-half children; she is going to have her second one in a month or two…. I've got three grandsons and another on the way.
But here are two young ladies who, again, they've got children. They've got responsible positions in a company and they are able to keep it all balanced. And I think that is one of the very important things to us, as a company, to be able to make sure that people can keep everything balanced. It is very important to us. We think it is one of the most important things in working for a company—that you are able to take care of your family as well as do your job. It is something that my dad always believed in, and we believe in it to this day and we work very hard on it.
JR: Danny, your average store … it is [about] 132,000 square feet. What is a typical size of a supermarket in America?
DW: It is probably below 50,000 [square feet].
JR: If you could say one thing that Wegmans does today that differentiates [itself] from all competitors … what is that one thing that sets you apart from the pack?
DW: I think it is service. I don't think there is any question about it. Our people care about our customers, and it shows….. We think it is the most important attribute that a person could ever have. We can teach people how to handle cheese or produce or baked bread or something like that, but you can't teach people to care.
JR: Danny, we have painted a picture of Wegmans Food Markets as it exists today. The size—$4.1 billion in total sales. You have got 36,000 associates and employees….
But let's find out where all this began. Take us back, Danny, to 1915-1916 with John and Walter and the pushcart.
DW: My uncle John—my great-uncle John—was a produce huckster and my grandfather was kind of a grocery person … and they got together and opened their first store in 1916. It was a pretty little store. It had groceries and produce and meat on the bottom and a place to live up on top. It was the way stores were back then. And that is basically all that I know. And there were five stores, I think, by—oh, it probably took them until 1930 or so.
And then my grandfather passed away and not much happened until my dad came back from World War II. And he came back in 1947 and my uncle ends up passing away and my dad bought the company from my uncle's estate back in 1950. And so really that is when the company began its modern era, I would say…. In 1950 there were only five stores.
JR: Your father, Robert Wegman, really made a difference, did he not?
DW: Yes, he did. He really believed that the most important thing in life was to help other people and that if you did that the rest of your life would all work out. It was a very simple philosophy….
The very first thing that my dad did back in 1950 when he took over the company was raise salaries. He found that our people were trying to go and work at some other business if they had a chance, whether it was Kodak at the time in the Rochester [N.Y.] area or something else. This isn't right. We have to have a place where they can bring up their family and be successful and so we've got to have wages that help that and provide for that. And then he felt the same way about the benefits and the health care. That it was very important that people were protected so that they could take care of their families….
We really feel that a profit is the result of a business, not the reason for a business. That is how we look at it. And we are fortunate. We love what we do. We love people and we love food….
JR: When you look at your father, Robert, for the years he was there … [did he spend] 60 years at Wegmans? Is that correct?
DW: At least. He was 87 when he died. He started working when he was 18, so what is the math? Seventy years, I guess.
JR: I know that he had introduced a number of firsts to the supermarket industry. Tell us about those.
DW: Well, he did a lot of things that have been around, for most of us, for so long because he was there for so long. He introduced self-service, certainly in western New York. And we are all so used to that now…. And in fact, even supermarkets didn't really exist before—there were all little shops. You would get your meat in one shop and your groceries in another shop and bakery in another shop. So if you really go back, he put it all together, if you will….
He was one of the first people to go into scanning. And that was way back in the '70s…. There weren't even pharmacies in stores long ago. And that was something that we did back in the '70s, too, with my dad. The main thing is that he really believed in treating people right. I think that was the No. 1 contribution that he made to our company and perhaps even to the industry.
JR: Whenever you would introduce something new that hadn't been done before, were there a lot of naysayers in the industry around him that said, hey Bob, that thing [won't] work, why would you do it? Did you ever run into naysayers, being so creative and new with ideas?
DW: Yes, but you have to believe in what you are doing and you have to believe that it is correct, and then you stick with it. And that was one of the things he believed in and one of the things that he taught me.
JR: Was Bob a good mentor? And what did Bob pass on to you? What imprint did he have on the store and the associates that you still live with today?
DW: John, I think what my dad did so well is he just truly cared about his people. And that was so clear to anyone around him. He cared about the people working at Wegmans, and their individual lives were important to him. And he paid enormous attention to that. When he went into stores he knew people well, and if there was something that he thought that he could do to help these people, he would do it….
When I say that he cared about people, well, that goes throughout the whole company. And his role in showing the caring was to make sure that it was very clear to all of our people that caring is the way that we do things here. We care about each other. If you care about each other then you help that person be successful.
And so that is why we end up having the wonderful people at Wegmans. They care about each other and they care about our customers…. Either you love customers or you don't, and that caring just transcends.
JR: Danny, what are your earliest memories of Wegmans, going back as a child?
DW: John, really it goes way back to going around stores with my dad…. I don't know how old I was, five or six or something like that, and those are my earliest memories, and those would be my daughters' earliest memories. This is a time-demanding business and for years [we] worked six days a week, so if my dad was going to spend time with me, he brought me along with him. And if I was going to spend time with my daughters I brought them with me. So we have kind of grown up in the business. That is how I learned it and that is how I've taught my daughters, and I am sure that is how they will be teaching their sons.
JR: I know you are a Harvard grad. What was it like coming back from Harvard, and where did you start? Did you start at the executive level? Did your dad just put you in the top slots there?
DW: No, the very first job that I had was actually before I went to Harvard. It was working in produce. And then when I graduated from college—actually, when I was in college —I worked in the meat department to learn about meat. That is what I did every summer.
And then when I graduated from college, I had never spent much time in the grocery area. So I went and worked there…. The stores were much simpler then. We didn't have a bakery. We didn't have delicatessens and things. Now we've got all kinds of different things. We've got restaurants and pharmacies and seafood departments. We didn't have these when I was a young man. So I couldn't work in them….
In our business in particular, you have to know what the work is like. And frankly I love the work. And that is why I love the business. But if I hadn't done it, and if my daughters hadn't done the exact same thing and worked in every department in our store and understood it, we wouldn't be able, really, to contribute anything. You would just be pushing numbers around, and that is not what makes our business tick.
JR: And when it comes to Nicole and also Colleen, they each contributed something unique. And I believe it was Colleen that contributed something that really let you compete with the Whole Foods and the natural stores. Am I correct?
DW: Yes. Colleen went to the University of Colorado for college. And she graduated in January, and I said to her, why don't you stay out and ski for five months? Because you will be working for the rest of your life. And she said OK. And it turned out that she went and worked in a health food store six days a week and skied on one day. But when she came back five months later she opened a health food business for us. She had learned it. So you have to do the work; you have to love the work.
Nicole at one point started a patisserie, and she has done many different things for us. She ran one of our restaurants for two years and now she is working on continuous improvement. Again, it is just working in the business that is what is important.
JR: Do you have a specific strategy to compete against the big super centers like Wal-Mart?
DW: I think in any business you have to assess, what does your competitor do well and what do they not do well? And then, what do you do well and what don't you do well? … In perishable areas we are able to offer a lot more service than Wal-Mart at the moment. Our food volume per store is much higher than Wal-Mart's. It is almost three times their volume. As a result we are able to offer service at competitive price levels that they can't do. And that is one of our major strategies against them.
JR: A lot of people may think, because you have 130,000 square feet and all of these departments, they assume your prices must be higher. But it is really pretty much the opposite. You've figured out that unique formula, haven't you?
DW: Yes, one good thing about Harvard, John, was that I got a chance to write a lot of papers, and my dad would help me on the papers, and so it was way back then that we developed our thinking on high-volume stores. High-volume stores allow us to offer high degrees of service, but we're able to keep our prices down.
JR: Let's talk about giving back a little…. You've got this work-scholarship connection that you started in 1987…. Tell us about that and why that is so important to the -Wegmans.
DW: Back in 1987, John, we had a challenge of attracting and keeping minority students…. And we said, what can we do to change this? And so we started a program—we call it “work scholarship.” The wonderful thing about it is that we used to have 100% turnover, which meant, really, that on average these young people from the city of Rochester would only stay with us for one year…. And we said, ‘We have to change this.' And so we set out to do this and from 100% turnover back in 1987 now we are down to 16%….
We started out with 30 kids from the city of Rochester and now we have 2,000 kids in this program a year. It is working well, it is making a difference, and we are going to be using it in other cities as well…. But frankly, if it doesn't help your business it is hard to keep justifying it. Fortunately, by taking care of these folks they stay longer, and so it really pays for itself. Because they stay with us for four or five years instead of one year, and [that] reduces our training costs. So it is nice to do good things, but when it helps your bottom line it is wonderful.
John Resnick is the creator and host of the radio program “Legends of Success,” which is syndicated on more than 80 affiliates and 58 digital cable television systems (audio channels) nationwide (www.legendsofsuccess.com). He is also a business succession and estate planner with Resnick Associates, a second-generation firm with offices in Harrisburg, Pa., and Overland Park, Kan.