Delivering exceptional customer service and partnering with the communities it serves is what K-VA-T Food Stores’ Food City supermarkets are all about. “We are focused on our customers and the community,” President and CEO Steve Smith says.
The Food City banner dates back to 1918 when its first grocery store opened in Greeneville, Tenn. K-VA-T Food Stores, Food City’s parent company, began in 1955 when founder Jack C. Smith, his father, Curtis Smith, cousin Ernest Smith and uncle Earl Smith opened their first store in Grundy, Va.
Today, the company operates 105 Food City supermarkets throughout southwest Virginia, southeast Kentucky and northeast Tennessee and of those, 78 include a pharmacy and 81 locations offer fuel. K-VA-T Food Stores also operates Misty Mountain Spring Water, L.L.C. and its own 1.2 million-square-foot Food City distribution center. “We are not a general merchandise retailer,” Steve Smith adds. “We are a traditional supermarket format.”
The family owned company is also partially employee-owned – and has been for the past 30 years. More than 13 percent is owned by 8,000 of its 13,000 associates through the company’s Employee Stock Ownership Plan. “Being employee-owned is a differential advantage for us,” Smith says. “We take care of our associates, who in turn take care of our loyal customers.”
The company has an extensive training program in place for all associates, from entry level to management. Upcoming store managers are required to complete a comprehensive 52-week program. The program includes training in each of the stores’ departments, as well as those at the corporate level, operations and financial skills, human resource and leadership skills classroom training, evaluations, knowledge testing and a four-week minimum period assessment conducted by a store manager.
A number of Food City associates have received national industry awards in recognition of their achievements in the areas of customer and community service. The list includes eight finalists and three overall winners of United Fresh Retail Produce Association’s Retail Produce Manager of the Year, one Food Marketing Institute Retail Store Manager of the Year award winner, six Tennessee Grocers and Convenience Store Association Retailer of the Year award winners, three Kentucky Grocer’s Association Retailer of the Year award winners and two Women Grocers of America’s Women Grocer of the Year award winners.
When was the last time you had fun going to the supermarket? Never? That’s probably because shopping at the local supermarket is an obligation that many consumers don’t look forward to, but Food City is working hard to change that perception for its customers. “Our goal is to make each customer’s shopping experience as productive and enjoyable as possible,” Smith says.
To achieve that goal, Food City ensures that its associates are extremely helpful and engaging, while offering a wide variety of services and conveniences. Its departments are also filled with top-quality, appealing choices. “We merchandise what we market and market what we merchandise,” Smith says. The wine and floral departments can be a great place to find an unexpected must-have, but customers can also be enticed while browsing through the cheese, bakery or deli departments, which include an array of specialty gourmet products mingled among the customary offerings. Customers can also relax in the café, which offers free Wi-Fi service.
Food City’s full service meat and seafood departments offer pre-marinated and seasoned products, as well as a complete selection of top-quality meats that are all natural, including Certified Angus Beef. In-house meat cutters hand cut steaks, chops and roasts to order. The expanded grocery, frozen food, produce and health and beauty care departments go well beyond the normal fare with a huge selection of gourmet, international and hard-to-find items.
Food City’s pharmacies are staffed with highly trained professionals whose primary concern is the well being of their customers. Many of the pharmacies are now equipped with a drive-thru for greater convenience. Food City Gas ‘n Go fuel stations offer competitive prices on high-quality gasoline and many now sell diesel fuel.
“In every retail [outlet], one of the biggest opportunities is to not only retain existing customers, but attract new ones, as well,” Smith says. “One of the most effective methods is through your reputation.” Food City believes some of its best marketing comes from the people who walk through its doors and post on social media sites about their experience or the new items they found. The most successful way to do it, Smith says, is by taking those extra steps to ensure the customer has a positive and unique experience. “We want our customers to be our biggest advocates,” he adds.
Engagement may be one way to keep new and existing customers walking through the doors, but coupons and loyalty programs don’t hurt either. Food City offers a comprehensive loyalty program, which enables customers to gain points that can be applied to fuel purchases, reward-based coupons and offers, club membership and more. “We encourage our customers to take advantage of our wine, pet and baby clubs to receive helpful information and valuable savings on related items of interest,” Smith says.
Food City offers a variety of private label products for its customers, including Food City, Food Club, Harvest Club, Bistro Deli Classics, Paws, Valu Time, Full Circle, Top Care, World Classics, Academix, Domestix, Electrix and Easy Clix. The large selection is thanks, in part, to the company’s Topco membership. Topco is a buying co-op that includes a number of the top-50 regional retailers, wholesalers and foodservice suppliers. “Non-competing members gain additional buying power, which is essential to operating on a more level playing field with larger competitors like Walmart,” Smith explains. “It has been a valuable opportunity for our company and other regional companies.”
Smith serves as a member of Topco’s Board of Directors and was the former chair of the Food Marketing Institute and ex officio member of the National Grocer’s Association.
The supermarket also offers what it calls legacy brands, including Kay’s Ice Cream, Terry’s Snack Foods, Lay’s Meats, Moore’s Potato Chips, Chuck Wagon Dog Food and Kern’s Bread. “These previously discontinued regional favorites have been brought back by popular demand using the same recipes and flavors,” Smith says. “They are exclusive to Food City and are therefore not available at other retailers.”
Food City is a well-known partner within the communities the company serves.
“The economic environment we have been operating in for the past four to five years is challenging,” Smith says. “There are fewer people in the workforce, income is a negative compared to where it once was, and as a consequence, people are spending fewer dollars. The mortgage and electric bills aren’t negotiable, but people can change what they buy at the supermarket.”
To help boost local economies, Food City hires locally and buys produce from local farmers – who were in desperate need of an outlet more than one decade ago.
The decline in tobacco usage left farmers in Food City’s hometowns looking for alternative crops to grow. Food City began partnering with them in the early 2000s, Smith says. This gave local farmers a new source of income by growing new crops for a guaranteed buyer.
“We pride ourselves in selecting the best possible products for our customers and our local farms are known for producing some of the finest products in the country,” Smith says. “Buying locally is the logical choice. It provides our customers with the freshest produce possible, while lending additional support to our local economies.”
What began with a small number of items supplied by a handful of local farmers has now grown into a multi-million-dollar operation. On average, Food City buys $6 million in fresh produce from local growers annually. Many items are delivered directly from the farm to the store the same day they are picked. “It doesn’t get any fresher than that,” Smith notes.
Environmental benefits are an added bonus to the program. Instead of driving across the country for produce, trucks travel a mere 50 to 60 miles, which saves fuel and releases fewer emissions into the air, Smith notes.
On the weekends, farmers have a standing invitation to visit their local Food City to talk about their crops. “People really like knowing that farmer Joe – who they may know personally – is the person that grew the squash or tomato they have just placed into their shopping cart,” Smith says. “Having farmers onsite allows our customers to hear first-hand what this partnership means to them. Because of it, many [local farmers] have been able to keep their family farm, buy a tractor or pay their taxes.”
Food City created the Wayne Scott Memorial Grower of the Year award in 2007 to honor one outstanding grower every year. The award is named in honor of Unicoi County, Tenn., farmer Wayne Scott, one of the first to partner with the company. “Scott’s Strawberries continue to be one of our most sought-after products,” Smith says. “Wayne Scott was one of the finest, most honorable men I have ever had the privilege of doing business with. We thought it befitting to honor his memory and dedication to the agricultural industry with this annual award.”
Harvey Lafollette of Hawkins County, Tenn., a partner to the supermarket chain for more than 15 years, was the 2013 recipient. Farming has been a lifelong career for the Lafollette family, who produce hanging baskets, bedding plants and vegetable plants.
Growing up, Harvey Lafollette worked in his family’s greenhouse on evenings, weekends and during summer breaks. He was also a member of his high school’s Future Farmers of America organization. After graduation, he began farming full-time by creating dish gardens for sale to a local florist. He soon expanded the operation to offer florists throughout Tennessee, Virginia and Kentucky with dish gardens and tropical and greenhouse plants.
In 1996, Lafollette purchased his own farm five miles away from his family’s farm and constructed 20 greenhouses. After he was contacted by Food City to produce plants for sale in its retail locations, Lafollette built an additional 20 greenhouses and began producing hanging baskets and bedding plants for the entire supermarket chain. Lafollette hopes to continue the tradition by passing the family farm to his sons, Dustin and Jake.
In 2013, Food City purchased more than 149,000 plants from the Lafollette greenhouses, as well as cabbage, jumbo bunch green onions, jumbo pumpkins and fall squashes.
Food City purchases produce from a number of local farms, including those in Grainger, Blount, Hawkins, Unicoi, Jefferson and Sullivan counties in Tennessee and Scott and Carroll counties in Virginia.
“We enjoy a great partnership with a variety of local farms,” says Mike Tipton, director of produce and operations. “And we are proud to be the exclusive retail outlet for a number of them and, of course, our customers love the added convenience.”
Health and Wellness
The company has launched a number of innovative health and wellness initiatives. “As an employer, not only do we have a responsibility to provide our associates with the necessary benefits to ensure good health, but as one of the region’s largest retailers, we have a responsibility to our customers, as well,” Smith says. “Healthy eating habits are a vital component to a healthier community. It’s important that our shoppers understand their health risks and the health content of the foods they consume. But it’s also important that we provide healthy choices that are easy, convenient, inexpensive and quite frankly, that taste good.”
Its pharmacies provide a number of health screening and programs. More than 100 of its pharmacists are now certified to administer annual flu vaccinations. The team has been instrumental in implementing annual screening programs, which provide free in-house health screenings for all Food City associates. Since the program began four years ago, the company has seen health care costs decrease while the weekly cost to its associates has remained stable.
In 2010, Food City launched NuVal, a nutritional scoring system, which scores food on a scale from one to 100 by taking into consideration more than 30 nutrients to determine an overall nutritional quality score that is prominently displayed on shelf signage and labels. The program provides shoppers with the necessary information to make more informed purchases at a quick glance.
Food City also partners with the University of Tennessee’s Healthy Living Kitchen, Quillen ETSU Physicians Doc/Chef program and UT Medical Center to offer on-site digital screening mammograms in a number of its locations. The regional Wellmont Health Coach visits several locations and offers physicals and screening mammograms. The company also funded the donation of salad bars to several area schools in conjunction with United Fresh Produce Association’s Let’s Move Salad Bars to Schools program.
The company also supports a number of community organizations and agencies. Since its inception, Food City’s School Bucks Program has donated more than $15 million to area schools. “With the pressures schools have been under due to budget constraints, this program helps them do much more than they were able to do on their own,” Smith says.
The School Bucks rewards program was initiated to help schools purchase computers and other much-needed equipment. Customers specify the participating school to receive points, which are earned every time the family shops and are totaled annually to determine the contribution that will be awarded to each school. The company commits $600,000 per year to the program.
Food City’s Charity Golf Outing raises more than $400,000 annually to benefit local charitable organizations, in addition to their annual Race Against Hunger drive that provides more than $400,000 in assistance to local hunger relief organizations each year. The company’s Mission Able project recently donated $135,000 to benefit Paralyzed Veterans of America and committed to be a major sponsor for the upcoming Medal of Honor convention to be held later this year in Knoxville, Tenn. Other initiatives, including United Way, Susan G. Komen, Relay for Life, The American Cancer Society, American Heart Association and Juvenile Diabetes are also supported by Food City.
Food City is the second-longest-running sponsor in NASCAR racing through its sponsorship of two of the sport’s most popular events – the Food City 500 and Food City 300 – at Bristol Motor Speedway in Bristol, Tenn. It has contributed more than $500,000 in proceeds from the annual Food City Race Night events to local nonprofits.
Building for the Future
Food City continues to grow through new store construction and the expansion and remodeling of its existing locations to ensure its infrastructure is sustainable for the future. “While we are continuing to add new locations where warranted, as the housing market has declined over the past several years, we have focused a great deal of our efforts on updating our existing stores,” Smith explains. When the economy does turn around, he adds that the company will be in a better position to address the needs of growing communities.
In 2011, the company purchased property vacated by a local hospital for the purpose of constructing a new corporate headquarters to improve its efficiencies. “Prior to constructing our new corporate support center, our team worked from five different locations spanning the town and country,” Smith says. “The separation created costly duplication of effort and interfered with collaboration and the sharing of resources.”
Food City spent two years building a 132,000-square-foot facility on 17 acres in Abingdon, Va., and 350 of its employees were moved in to the new space in October 2013. The building includes a new state-of-the-art data center, which services the entire chain, as well as open spaces for improved teamwork.
In the future, Food City plans to remain focused on good, stable and profitable growth, Smith says. “We don’t want to get bigger just to increase our store count,” he adds. “We want to continue to improve upon our operation and leverage the volume needed to compete with retailers larger than us in a manner that doesn’t jeopardize the service or quality of our stores. We’re extremely passionate about what we do and we’re committed to continuing the simple philosophy our company was founded upon nearly 60 years ago, to ‘run the best store in town.’”