Increased competition may shut down most family owned supermarkets, but this purveyor of fine foods isn’t worried thanks to an approach focused on a true love of food. Increased competition may shut down most family owned supermarkets, but this purveyor of fine foods isn’t worried thanks to an approach focused on a true love of food.
Pyrotechnics may only be a side job for Kim Mackenthun, but the fireworks he lights for the city of Waconia every Fourth of July perfectly illustrate his desire to deliver a fun experience to his friends and neighbors.
As the president and CEO of Mackenthun’s Fine Foods, a single-site family owned upscale supermarket, Mackenthun describes his approach to running his business as “taking the drudgery out of grocery shopping and making it a little bit more fun.”
During the holiday season, for example, Mackenthun hires a pianist to play in the store and, for nearly a decade, has had the same Santa and Mrs. Clause sit in the store to take pictures with shoppers of all ages. On Mother’s Day, children don mini Mackenthun’s aprons to decorate cakes for their mothers, and a 4-H petting zoo can be found outside the store certain Saturdays in the summer.
But as the fourth generation of his family to run Mackenthun’s Fine Foods, the president understands making the shopping experience more enjoyable for customers also comes down to what he can offer and what value he provides. After researching what his customers wanted and what would make it easier for his 235 employees to do their jobs, Mackenthun added 12,500 square feet to his store.
All told, Mackenthun’s Fine Foods spans 62,500 feet. The expansion added more room for its deli, bakery, and produce sections, as well as its floral, gift, and greeting card departments. It also added new items, such as a sushi bar, an olive bar, and an expanded cheese section. Although these weren’t items Mackenthun had considered before, customer feedback surveys pointed him in the right direction.
“We did a number of customer focus groups and had our wholesaler, Supervalu, do a market analysis a couple of times,” said Mackenthun. “Supervalu also did telephone interviews with 400 customers to find out what they wanted. I would say 90% of our changes came from customer feedback.”
The company also enlisted its employees in the process. Mackenthun’s Fine Foods’ management team meets twice a week, and, once a month, part-time employees and front-end managers meet to give their input. During the construction process, the company reviewed plans with department heads and employees to find out what would make their jobs more efficient.
“I couldn’t design a deli to work the best by myself. I want my deli personnel to help me with the design because they work in there every day,” Mackenthun said. “We took a lot of input from our employees.”
After the $3.5 million expansion and renovation was completed and the store opened in July 2008, two major competitors entered the Waconia market—Walgreen’s and Target—and both have expanded grocery sections. A market analysis reported that Mackenthun’s Fine Foods should have expected a 15% drop in sales due to the increased competition, but Mackenthun hasn’t seen it yet.
“We have stayed about 3% ahead last year’s sales,” he said. “It’s a tough economy, and we have new competitors, so we’re happy with those results.”
In 1917, Arthur Mackenthun, Kim’s grandfather, opened his store in Waconia. When Kim’s father, Marvin, returned after serving in WWII, he and Arthur imported a sausage maker from Germany to enhance their sausage making business—something Arthur’s father had gained fame for out of his modest butcher shop in Plato, Minn. When Arthur opened his meat market in Waconia, he laid the groundwork for Mackenthun’s Fine Foods. Now, under the guidance of the fourth and fifth generation of the Mackenthun family, with Kim’s children starting to take the helm, Mackenthun’s Fine Foods hasn’t left its roots behind but has expanded with two private-label lines.
Mackenthun Select items are made and packaged to the company’s specifications. The Mackenthun’s Made line covers items made inside the store, such as those famous sausages.
Mackenthun said, just as with so many other fine foods, there has been an evolution in the sausage business. “The basics were bologna and wieners, blood sausage, liver sausage, and headcheese, which we still do, but now we make 18 kinds of bratwursts, such as bacon brats, cheddar brats, sauerkraut brats, and wild rice brats.”
Although the company’s success in its fine food selection has maintained a steady pace over the years, six years ago, Mackenthun wanted to further expand the business. He acquired a local pharmacy and put it in the store. Mackenthun said the process has been a learning experience.
“I knew the inventory would be costly, but in my financial projections, I hadn’t considered the insurance and slow-pay turnaround,” he said. “You end up with hundreds of thousands of dollars in receivables. It was a foreign concept to me.”
Despite those initial stumbling blocks, the company has managed to stay on track with the pharmacy end of its business by reducing overhead through IT investments on the grocery side. Mackenthun’s Fine Foods became the second grocery company in the state of Minnesota to use electronic shelf labels.
The labels produce an LED electronic read-out that’s controlled by store-based satellite dishes. When a price is changed, the electronic shelf labels are automatically adjusted. “You never have a price that’s different from your shelf tag to your scanner,” Mackenthun said. “It gives us the opportunity to do price changes faster and more accurately without having to staff additional people.”
One of the reasons Mackenthun believes his store has grown despite an influx of competitors is the group of employees dedicated to making each customer visit the best. All employees receive individualized training, depending on which department they’ll be working in, and they’re expected to be as passionate about their jobs as the owners themselves.
“We tell them our history, why we love doing what we do, and that if they want to work here, they have to learn to love it too,” said Mackenthun. “We need a bunch of ‘foodies’ working for us.”
In addition to offering coupons in its weekly circular, the store provides recipes and other suggestions and has tasting events to make shoppers’ in-store experiences more enjoyable. Mackenthun said the biggest clue he’s seen recently to indicate that he’s on the right track with customer needs is their reaction to the new layout of his supermarket.
“When people walk in, you see them take a deep breath,” he said. “Our store has more of a relaxing atmosphere than most, which is why people describe shopping at Mackenthun’s Fine Foods as a comfortable and enjoyable experience.”
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