Among all of the competition from grocery stores in Southern California that keep Gelson’s Markets on its toes, the one chain it has to keep its eye on the most is itself. With 18 stores across Southern California, Gelson’s has built a reputation of quality and continues to raise the bar with the freshest food and concepts. That commitment has continued to attract discerning shoppers who expect the best every time they shop at Gelson’s.
“Based on our history and commitment to service and quality, our customers hold a high level of expectation of us – a very high level,” President and CEO Rob McDougall explains. “Our challenge is that we never want to disappoint the customer. The good part is that because of that our customers are very loyal. When the recession came, we took a hit but we didn’t take the same size of hit that other high-end companies did. We’re very connected to our communities.”
And that goes for new and old communities. From its oldest locations in Encino and Valley Village to its newest locations in Long Beach and La Cañada Flintridge, Gelson’s connects with each community on a personal level while maintaining consistent quality from city to city.
Gelson’s opened its Long Beach location last November and the La Cañada Flintridge store opened in March. The La Cañada Flintridge store, in particular, absorbed customers and employees from its Pasadena location that closed a year earlier.
“Although Pasadena can certainly support a Gelson’s, we didn’t have a good location there,” McDougall explains. “In La Cañada Flintridge we found a good location just six miles from the Pasadena store, so we picked up Pasadena customers as well as new customers. Also, when we closed Pasadena, we were able to transfer those employees to one of our other locations and we offered them to come to La Cañada Flintridge when it opened. I’m happy to say we had zero layoffs. The goal was to get as many of the old Pasadena employees in the new store so we could connect familiar faces with our returning customers and make the transition easier for everyone.”
McDougall says Long Beach and La Cañada Flintridge have both embraced their new Gelson’s Markets, and it’s likely because Gelson’s took the first step. Even before the stores opened, Gelson’s management team became active in the communities. In Long Beach, the company helped sponsor the city’s yachting Congressional Cup and even had its logo printed on a sail for one of the competing sailboats.
The city also has a large LGBT presence and a Gay Pride Parade that rivals West Hollywood’s, McDougall says. Gelson’s set up a booth and passed out job applications and informative pamphlets to introduce itself to the community. It also connected with schools, churches and synagogues, offering free tours of its other locations with its registered dietician Jessica Siegel. It took similar steps in La Cañada Flintridge, but instead of a sizeable LGBT community, the city boasts a prominent educational foundation that Gelson’s has been involved in.
“We’re happy with the way both communities have embraced us,” McDougall says. “The outreach we did really paid off in getting us connected with the neighborhoods.”
The strategy Gelson’s uses to increase sales is a balance of sticking to what it does best while also evolving to meet new consumer demands. For instance, at its Long Beach location, the company opened a wine bar featuring wine and craft beer where customers “can order a glass of chardonnay or Fat Tire beer,” McDougall says. They can then either continue shopping or head upstairs to the store’s rooftop area featuring soft seating and a view of the marina.
McDougall says the deli is one of Gelson’s growing stars, as consumers look for quality prepared items. Gelson’s has led the growing trend with an executive chef, Peter Fiore, who overseas all of its deli recipes and eight to 10 chefs at every store who prepare those recipes at the store. Many of those recipes were designed by Gelson’s in-house dietician Jessica Siegel and some are even named after her – Jessica’s Crunchy Kale Salad, Jessica’s Antioxidant Chopped Salad or Jessica’s Spinach & Grape Salad.
In addition to in-house expertise, Gelson’s also relies on its valued business partnerships that help the company maintain its high-end reputation. For instance, the company has partnered with Unified Foods for nearly 40 years for the majority of its grocery items. Unified Foods continues to supply Gelson’s with many of the branded products its customers desire.
“One of the trends we see in grocery that isn’t verbalized, but you pick up on it, is that many retailers are moving toward private label,” McDougall says. “We do have some but as the competition cuts down on brands, we realize that our customers still want brands and we can’t lose focus on what they want. As others move to private label, they actually push more customers to us.”
Business partnerships touch nearly every aspect of Gelson’s operations, including purchasing, distribution, IT, construction and maintenance, marketing and store operations.
Grounded in Value
Each operation at Gelson’s is grounded in the values that retailer has maintained since 1951: quality food and exceptional service. No matter what the cost, McDougall says Gelson’s has not wavered from those values. If that means produce buyers traveling to the Los Angeles Produce Mart to do the day’s buying at 1 a.m., then that’s what Gelson’s buyers will do. If it means carrying only prime and choice meats and doing all the ground meats in-house – never select and never ungraded – then so be it.
“We get credit from our customers for having better products,” McDougall says. “For instance, they can find the same produce at other stores, but they don’t have the same shelf life and quality as ours. Even in the grocery section where it’s hard to differentiate we stay a step above. I can’t say our Campbell’s soup is different from Ralph’s, but I can say that we travel the world looking for new and cool items at food shows throughout the year because our customers travel and see new foods so we want to keep up with them.”
Gelson’s is focused on taking this proven model and venturing into new markets. After being purchased by TPG in February, the investment group made it very clear they were buying into the plan of one to two new Gelson’s openings each year. In addition, McDougall says the company is looking to grow to San Diego and just north of Santa Barbara.
“TPG is very clear that they want to grow us,” McDougall says. “In the last six months we already opened two stores. But with Cerberus (Albertson’s owner) buying Safeway, it may be more. I don’t think we will have an issue picking up several sites.”