After more than 35 years in business, Tree of Life is known as a leader in natural, organic and specialty food distribution. Unfortunately, the company hit a rough patch a few years ago, and needed a fresh vision. With a new president, a new senior team, significant IT investments, and a bold new strategy, 2009 looks to be a good year.
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After 25 years in the greater New York City area, The Food Emporium-New York has undergone a number of reinventions, but none so dramatic as the transition Hans Heer, SVP & general manager since 2006, has undertaken. This once typical neighborhood supermarket is quickly becoming a luxury outlet for high-end and specialty food items, and the recession hasn’t dampened Heer’s spirits.
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For Premier, which has $450 million in annual sales and 9,500 employees, the art begins with knowing its strengths. Beauty services, especially hair care, comprise the company’s sweet spot, according to CEO Brian Luborsky. He estimates that no other company does more facials or massages in the US.
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When Directron.com was established in 1998, e-commerce was just starting. Traditional distributors and wholesalers were just beginning to sniff out opportunities on the Internet, but Michael Chang, president, decided to take a chance.
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Unlike most retail Web sites, Costco.com works to complement Costco Wholesale’s business to the benefit of current members. Rolled out in 1998, the site maintains the same low margins as its bricks-and-mortar counterpart but has between 15 million and 16 million visits within every four-week period.
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Transition has been the name of the game for the commerce division of Discovery Communications for a while. In the past year, the division went through a strategy shift that started in mid-2007 with the decision to close the Discovery retail stores down and focus more on the company’s licensing and home video businesses.
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The famous story of the tortoise and the hare sums up the life of Caputo’s Fresh Markets perfectly. While others big and small have crashed and burned, Caputo’s has proven that slow and steady really does win the race. “Our philosophy continues to be that we would rather have six well-run stores as opposed to many mediocre stores,” said Sam Fantauzzo, director of operations. “We don’t rush to expand, and our main focus is always on growing the existing stores.”
Founded in 1958 by Angelo Caputo, what began with the first store in 1958 in Elmwood Park, Ill. today remains a family business. Although the company now has six locations, it remains true to its original mission of being a neighborhood destination with fresh products. From an open-air fruit and vegetable market that evolved to include meat, deli, a bakery, and Italian specialty items, Caputo’s now aims to serve the ethnic markets of the Chicagoland area, with Hispanic, Middle Eastern, and other customers receiving the same level of personalized service that made Caputo’s successful in the first place.
For most of the company’s history, Caputo’s remained a one-store operation. It wasn’t until 1991 that the company reached the limits of growth that first location could have. Expansion into Addison, Hanover Park, Bloomingdale, Naperville, and South Elgin was done at a measured pace, averaging one new store every five years. The Bloomingdale, Naperville, and South Elgin locations were opened in 2004, 2006, and 2007 respectively, and although future expansion is part of Caputo’s long-term plans, the pace is unlikely to increase.
Although expansion of the number of stores may move slowly, improvement on existing locations is continuous. The original Elmwood Park store was replaced in 1986, and the company is planning to move again to a better location vacated by Circuit City. The Addison store has also been moved four blocks from its original location.
The last two stores came into the fold by acquisition. The company was able to take advantage of marketplace changes while holding to the tradition of building each store to suit the neighborhood. The Naperville location was previously owned by Marsh Supermarkets, an Indianapolis-based chain that struggled to catch on because of its generic, large-chain nature. The South Elgin store was previously a Dominick’s, a formerly local chain that has seen its shine fade since being acquired by Safeway.
Another differentiator for Caputo’s is its La Bella Romana private label line of products, which literally means “the beautiful Romana,” named after Angelo’s wife Romana, who passed away in 2004. According to Fantauzzo, Caputo’s is one of the original Chicagoland stores with its own high-quality private label products.
“In general, whether it is our own private label or other products we handle in the store, we make sure it is a superior product,” he said. “We don’t handle inferior products because that wouldn’t do our reputation justice.”
The store does, however, highlight the La Bella Romana name. Endcaps are often focused on private label products because it helps ties the private label brand to the Caputo’s name. The private label products also allowed Caputo’s to expand its business without expanding its physical foot print at an unsustainable pace. The products have helped build a loyalty to both the La Bella Romana and Caputo’s names as the company expanded over the years. The company has even grown to the point of opening an online store, Shopcaputos.com, that offers any products available in stores to be shipped anywhere in the US.
Fantauzzo is well aware that consumers are looking to stretch their dollars now and are concerned about being able to affordably feed their families. Prices are structured around that focus in weekly ads. Because of the competitive nature of the market, Caputo’s works to give itself an advantage by passing savings on to the consumers and making sure they know it.
“We have some incredibly low prices with an emphasis on perishables like meat, produce, bakery, and deli,” said Fantauzzo. “Our customers know they can get a great deal that they can build a meal around.”
Buoyed by core staff members, many of whom have been with the company for 25 or 30 years, Caputo’s has some sensible policies that help ensure it is constantly developing a workforce that recognizes the importance of maintaining a top reputation. Employees are encouraged to help recruit and recommend people they know, which helps bring in candidates with a higher percentage of success. All hires still have to go through multiple interviews, including an initial interview with the store director before meeting with Fantauzzo.
“I always ask people what their personal interpretation or definition of customer service is,” he said. “There are many right answers, but their reaction helps you be sure you are getting a decent employee you can direct with some training. You have to have the right individual before you can train them to do anything, and understanding the importance of customer service makes a difference.”
Changes to the company are sure to continue, including a new salt water refrigeration system being tested at at the Naperville location. Originally installed by the Marsh Supermarket, Caputo’s is investigating whether the new system could be cost-effectively installed at its other stores. A more environmentally friendly system, it doesn’t use traditional gas refrigeration like those at the other Caputo’s stores.
Keeping in touch with the pulse of the consumer base is something Fantauzzo said is critical to maintaining customer loyalty. Contact information for company leaders and store directors is clearly posted throughout each store and printed on each receipt. Fantauzzo said customers are very liberal about voicing their concerns, so Caputo’s is equally vigilant providing the right variety and the best value possible.
“If that means we have to buy truckloads of product and take advantage of our facilities, whether that means the large back rooms in our stores or use our distribution center, that’s what we’ll do,” he said. “Our buyers will always remain focused on getting the best deal possible and helping to make Caputo’s a neighborhood destination. We have to make sure we continue to set ourselves apart and take care of each customer one day at a time.”
With the recent influx of companies providing mail-order DVD services, some might think the reign of video rental retail stores is coming to an end, but the team at Hollywood Entertainment knows this isn’t the case. According to Sherif Mityas, president and CEO of Movie Gallery Inc., Hollywood Entertainment’s parent company, the home video industry is an $8 billion a year market, and $5.5 billion of that capital still depends on brick and mortar retail outlets.
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