While most retailers find efficiencies in automation, this dairy-based C-store chain finds success in using a high-touch and low-tech strategy. It’s not unusual to go through an entire shopping experience in complete silence. Whether it’s because there are no sales associates to help you find a product, a self-check-out option at a grocery store, or the ability to scan the products before you even get to the register—there’s been a shift in the retail world that’s been touted as a way to make shopping more convenient for consumers.
In reality, most of these changes have served the companies instituting them more than the consumers. By making consumers do more of the work, there is a decrease in overhead and an increase in operating efficiencies. Although this might work for big-box retailers and large supermarket chains, at Dairy Barn Stores, the idea of making the customer work more than the company is outrageous.
“Our business model relies on us providing a tremendous amount of service to our customers,” said Hari Singh, president. “It’s possible to go to a supermarket now, buy a week’s worth of groceries, and not say two words to anyone. At Dairy Barn, you can have a conversation with a live person even when you are just buying a quart of milk.”
Dairy Barn was founded by the Cosman family in the 1950s. The same family owns Oak Tree Dairy, which is now the only milk pasteurizing and packaging plant on Long Island. Dairy Barn was formed in response to the family’s desire to become vertically integrated so it didn’t have to depend on large supermarkets that might come and go or constantly ask the dairy to cut prices.
By developing its own line of C-stores, Oak Tree Dairy had a complete outlet for its products, from the farm to the customer, bypassing the supermarkets and holding onto the integrity of both its products and its business. During that time, women started entering the workforce, and the days of home milk delivery were quickly becoming obsolete. By offering customers a drive-through convenience store, the Cosman family secured its place in the hearts of Long Island consumers.
Today, there are 46 Dairy Barn stores across Long Island. And as other wholesale dairies exited Long Island, because of the strengths it’s gathered from servicing its own C-stores, Oak Tree Dairy became the last dairy standing. As a result, the dairy plays a more active role in servicing other business customers, including supermarket, discount, and drugstore chains.
“The expertise we got from operating our own stores allowed us to survive and grow our marketshare for milk products across Long Island,” said Singh. “In most instances, it’s the Oak Tree Dairy brand going into these stores; in other instances, we private label. In our Dairy Barn stores, we’re putting in the Dairy Barn label.”
The progression to handling private label business happened during the last 14 years. As competitors in the process industry went out of business, the company realized its position as the only wholesale dairy distributor on Long Island gave it a unique advantage from a pricing standpoint. The dairy began testing its wholesale business model by bidding on school contracts, offering lower prices but still making a profit. From there, its wholesale business took off.
In recent years, the company’s ability to offer lower prices because of its geographic location has been an even greater advantage. When oil hit $140 a gallon, Singh said the cost of distribution became a major factor for most but an advantage for Oak Tree Dairy.
“Being on Long Island gave us an edge over many of our competitors that were coming from farther distances,” he said. “Efficiencies have been incorporated into our business over the years. Because we’re privately held and watch our numbers closely, we have an edge over the competition.”
Dairy Barn’s unique service offering is another differentiator in a competitive industry. Customers can drive up to either side of a Dairy Barn, hand their shopping list to an employee, and know the products they’re getting will be fresh and tailored to their individual needs. Store managers are given the authority to stock their locations with products that might not necessarily be at each Dairy Barn just to meet customer needs.
“The store manager has a very good sense of what’s moving and how and has a close relationship to the customers,” said Singh. “A manager will know, for example, if Mrs. Smith prefers one brand of ice cream that we don’t officially carry. S/he has the power to make sure we have that brand in the store.”
With such personalized customer service, Dairy Barn has been able to steer clear of the IT investments many larger retailers find necessary. The stores have a fairly small footprint, and the company’s product offering is only about 300 products. Many of the advantages technologies offer retailers in managing thousands or even hundreds of thousands of items isn’t applicable to Dairy Barn.
In addition, Dairy Barn store managers know every product in the store, and the store is inventoried every week from top to bottom. Singh said the company experimented with automatic ordering, but for the amount of products carried in the stores and the level of quality customers have come to expect, having managers handle the ordering and inventory was more effective.
“There’s a trade-off as you get into large numbers of products, which is typical for most convenience stores,” Singh said. “We haven’t seen a tremendous advantage from automating the ordering or inventory processes in the stores. We probably use technology less than any other convenience store chain.”
From the ashes
Ten years ago, Oak Tree Dairy burned to the ground. To survive, the company bought milk from other dairies throughout the region, cross-docked it on flatbed trucks, and rebuilt the dairy on the concrete slab on which it had burned.
The company continued functioning and servicing Dairy Barn stores, but more importantly, not a single Oak Tree Dairy employee was laid off in the year and four months it took to rebuild the facility. Singh believes the dedication the company shows to its employees and the dedication employees show to the company is a major factor in its ability to survive while other dairies on Long Island have not.
“In a day and age when other companies wake up one day and decide to get rid of 10,000 people, we look for efficiencies so we don’t have to get rid of even a single employee,” he said. “A big part of what’s kept our company successful is having a dairy behind us that’s geared to supporting our operation, but it also goes back to our high-touch culture.”