Becoming an ESOP company fostered better commitment and nimbleness among Food Giant Supermarket’s employees.
By Tim O’Connor
When shopping at a Food Giant supermarket, it is not uncommon to see a meat cutter bringing shopping carts in off the lot. That’s because as an ESOP (employee stock ownership plan) company, Food Giant’s associates share a vested interest in making the company succeed and, therefore, are more committed. “I believe there is no such thing as a small or unimportant job in a grocery store,” CEO Kevin Ladd says. “To be successful, it takes the effort of the whole team pulling in the same direction.”
Food Giant Supermarkets operates 108 locations in eight southeastern states. The 51-year-old company’s market ranges from Henderson, Ky., to the north, south to Woodville, Fla. Its grocery stores comprise several brands, including Food Giant, Piggly Wiggly, Cost Plus, Pick ‘n Save, Market Place, Sureway and Mad Butcher.
Ladd attributes much of the company’s success to its ability to retain employees. Some people have been working for Food Giant for more than 30 years. “I know it’s an old cliché and old adage, but we try to treat our employees the way we want to be treated,” Ladd says.
Being an ESOP company is a big part of why people have stayed with Food Giant. Employees began sharing in the company’s profits in 2000. “By virtue of being an ESOP at Food Giant, your neighbors truly are the owners,” Ladd says. “It’s helped us a great deal with employee retention.”
Because it’s an employee-owned business, Food Giant is transparent with its people. Division and store managers receive copies of the company’s financial statements and know exactly how well their stores are performing. Further, Ladd has an open door policy and encourages employees and managers to contact him with ideas. “Anybody in this organization can call me at any time. I’m more than willing to listen to them,” he says. Ladd understands that there are often alternative ways to get things done and letting people have a say makes them feel important to the overall operation. “We try to be creative, and we want our employees to be creative,” he adds.
As big grocery stores become more homogenized with the same products and aesthetics, Food Giant has differentiated itself by embracing its status as a neighborhood store. “We’re a big company but we’re not cookie cutter,” Labor Director Mike Riney says. “You can go into any store and it has a different atmosphere about it.” Locations range in size from 12,000 square feet to as large as 40,000 square feet.
“We try to know many of our customers by their first name,” Ladd says of the approach Food Giant aims for. Stores are designed to create a cozy atmosphere that customers find inviting. “We still operate like a small chain even though we have 108 locations,” Ladd adds. Despite targeting a neighborhood feel, Food Giant is large enough to take advantage of economies of scale and drive lower prices for customers.
Food Giant is able to create that neighborhood feel in its store because of the way the company is organized. The company has 10 division managers that are each responsible for a region. Those division managers have the autonomy to operate stores according to local tastes and preferences. Customers along the Gulf Coast don’t tend to buy the same items as those living in Kentucky, Ladd points out, and division managers need to be able to accommodate those differences. “We don’t have a lot of red tape or bureaucracy a division manager has to go through,” he adds.
In many towns, the arrival of big-box stores shut down smaller and independent grocery stores. Food Giant doesn’t want to go toe-to-toe with the Walmarts and Targets of the world. Instead, it focuses on providing the best grocery shopping experience possible so that it can be the last supermarket standing and fill that niche.
“We try to do what we do well,” Ladd explains. “We try to provide services at each store.” If a customer wants a different cut of meat, Food Giant can cut it for them. Try to find an employee willing to do that at the typical big-box retailer, where everything is prepackaged.
Food Giant also offers more fresh and hot food options than its competitors. Ninety percent of its stores have a hot food deli and many have fried chicken programs. Many rural communities have few restaurant options so Food Giant often fills that hot meal role. Register lines don’t get stacked up eight-people deep because the company works to get customers in and out as quickly as possible. Ladd describes it as, “providing customers with the best service possible.”
One of the biggest changes in recent years is the springing up of dollar stores. Chains like Dollar General are carrying larger selections of paper products, coffee, detergent, milk and produce – items that used to be exclusive to grocery stores. Food Giant combats that encroachment by educating consumers that product sizes are not comparable in many cases. The company also takes advantage of “deal buys” and other special pricing opportunities whenever possible.
Food Giant continually invests in its stores to maintain its advantage over competitors and refresh the shopping experience. Ladd says the company typically earns a better return on investment when it remodels existing facilities rather than building new ones.
The type of remodel varies greatly depending on the size of the store and the amount of work needed. Generally, Food Giant is moving toward more open floor plans and is looking for equipment and display cases that are more energy efficient. The company is using more bunker-style cases within aisles and is adding walk-in beer coolers.
“We intend to control merchandising in our stores, rather than turning control over to our vendors,” Ladd says. “This is not an easy thing to do, but we feel it’s important we decide what is on our end caps and which products are allocated to the prime retail spaces.”
Food Giant’s investment in the shopping experience coincides with a technology upgrade effort. A partnership with NCR Corp. is helping Food Giant streamline its procurement to reduce costs and pass the savings on to consumers. A new scheduling program is also being tested at several locations that uses software to help store managers realign employees based on where the need is at different times of the day. Ladd says Food Giant is constantly exploring technology that can make the company more efficient.
Food Giant’s future doesn’t necessarily lie in the number of stores it can open, but the value it can return to its employee owners. When the company does acquire a new location, Ladd says it looks for a store that already has a strong team in place, a good ratio of sales per square foot and favorable rent factors.
After a buyout, Food Giant prefers to keep the store open during the transition and minimize disruption to avoid training customers to shop elsewhere. “We’re always on the lookout for new stores,” Ladd says. “We want to grow but we want to grow smart.”