2019 Gelson's ROY

The Shelby Report of the West’s

Retailer of the Year 2019

The Silver Lake store In April of this year, Gelson’s was rated “Best in the West” by Consumer Reports in the publication’s annual grocery store and supermarket rankings. The grocer also came in fourth overall out of 96 grocery brands from across the U.S. For that distinction—and many others—The Shelby Report has chosen Gelson’s as our 2019 West Retailer of the Year.

The upscale specialty/gourmet retailer today operates 27 stores in Southern California from its headquarters in Encino, California, right on Ventura Boulevard. Star sightings—of the Hollywood kind—are not unusual at Gelson’s. It’s also not unusual to have second- and third-generation shoppers filling the aisles as well (along with new converts).

Perhaps that’s because of the grocer’s mission statement: “To make shopping anywhere else unacceptable for consumers who value quality products, cleanliness, convenience and personal service.”

The company’s commitment to those ideals actually originated with Bernard “Bernie” Gelson, who founded the company in 1951 with his brother Eugene.

Bernie typically visited stores, greeting customers and team members and making sure his high standards of cleanliness and shelf maintenance were being implemented, while Eugene was more the office person.

Together they created a company whose stores today are known for their top-quality produce, meat, seafood and prepared foods as well as beautiful floral departments—all run by team members devoted to providing customers with an experience that is nearly unmatched.

Consider Sip and Shop, for instance—a service Gelson’s offers at its stores that have wine bars. A customer can walk in, hand their grocery list to a Gelson’s associate and then sit down and have a drink and some food while the associate shops for them.

Gelson’s customers are some of the most technologically advanced out there, so online shopping and digital marketing are increasing in importance for the grocer, which has been owned by TPG, a global private investment firm, since mid-2014. TPG, according to Gelson’s at the time, would support it in growing its store base and refreshing its locations.

That was true. In 2015, Gelson’s purchased eight Haggen stores at auction and reopened them the following year.

The grocer also has refreshed several of its locations, including its store in Sherman Oaks that had its grand reopening in early November this year. The store—in line with customer demand for ready-to-consume meals, beverages and treats—now offers takeout from Wolfgang Puck Express, Viktor Benes Bakery and Coffee Bar and local favorite Humphrey Yogart.

Gelson’s also is known for being first to market with new, often innovative, products. To find new items, it has launched a pitch event called Gelson’s Local Discoveries. Local product makers within 50 miles of a Gelson’s store—spanning Los Angeles, Orange, San Diego, Ventura, Santa Barbara and San Bernardino counties—vie for a time slot to present

their products to senior buyers and tell them why they should be on the shelves at Gelson’s. This year, Gelson’s held two of the events, in June and September, at its distribution center in Santa Fe Springs. There are 70 pitch spots for center store and 15 for fresh, including produce, floral and meat.

Gelson’s also now has the distinction of being the first retailer to carry the Impossible Burger, a plant-based burger that had previously only been available on restaurant menus. It proved to be the biggest product launch in Gelson’s history. Customers were buying 10 packs at a time (the limit), and the grocer says it saw a record number of new customers in stores.

But going back to that Consumer Reports honor…Based on responses from thousands of customers, Gelson’s earned the highest possible grade in categories including produce quality and variety; selection of locally harvested produce; meat/poultry quality; fresh store-prepared foods; helpfulness/attentiveness of employees; checkout speed and store cleanliness. It had the second-highest grade in selection of healthy options and variety of international produce.

Gelson’s President and CEO Rob McDougall said of the “Best in the West” honor: “This is a huge accomplishment and something of which we as a company should be very proud. Every day, our entire Gelson’s team makes this possible through their dedication and hard work. For nearly seven decades, we have remained fiercely committed to the vision of our founders Bernie and Eugene Gelson, offering the highest quality products, service and shopping experience to customers across Southern California.”

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President & CEO McDougall Details the Differentiation of Gelson’s Rob McDougall joined Gelson’s 13 years ago. He has spent his entire career in the grocery industry, starting as a bagger at the age of 16 at a Vons store in Yorba Linda, California. He liked the job, and it worked well with his school schedule. “I swore at that time I would never be one of those old guys in the grocery business, and today I’m one of those old guys in the grocery business.”

He spent the first 22 years of his career with Vons, moving up through positions ranging from store director (mostly in its Pavilions stores) to produce buyer and merchandiser. When Safeway purchased Vons in 1998, McDougall retained his job Rob McDougall but made the decision to go with a group of about 30 Vons employees to Penn Traffic Co. in Syracuse, New York. The McDougalls’ twin sons had just graduated from high school, so they felt the timing was right for Rob to sign on as senior director of produce and floral at Penn Traffic. After a year, the couple decided that wasn’t the place for them, so McDougall found himself having to do something he had never had to do before.

That’s where we pick up with excerpts from McDougall’s conversation with The Shelby Report’s VP-West Bob Reeves.

McDougall: So, I put my resume out for the first time ever and picked up a job at D&W Foods in Grand Rapids, Michigan, which was about a 25-store upscale chain.

I went there as the produce and floral director. I really liked it. It was a familyrun company and all about service…which reminded me and connected with my Pavilions days when Pavilions was new and innovative. D&W was new and innovative…It’s on the west side of the state, opposite of Detroit. It’s a beautiful part of the state. It’s unfortunately six months of winter and that’s hard. But we really enjoyed it there. In fact, our sons met their future wives there and both live there now because of those connections. So we often vacation back in Grand Rapids.

I worked for D&W for 10 years, and I would still be working with them today if the family hadn’t decided to sell. I had worked my way up at the company and was the chief operating officer. They decided that they wanted to get out of the business and take the money…(but) we were able to guarantee jobs for the rest of the company, which is great. All those employees moved over to SpartanNash (Spartan Stores at that time).

That’s when the Gelson’s opportunity came about. I joined them later that year (2007).

for it. That’s when they went to Arden Group with Bernie Briskin. Bernie said, “Well, why don’t I just buy your company and let you continue running it?” So, he did that, and he told Bernie Gelson, “You can run this company for 20 years.”

So Briskin came in, but he was almost a silent owner at that time because Arden Group was an umbrella that had several different businesses. Facsimile business, Mayfair Markets was in there—300-some stores, from what I remember—and some real estate holdings.

If I recall, Mayfair was just your traditional grocery store; nothing along the lines of what Gelson’s was.

No, nothing like it. Mayfair was kind of a basic store.

So when Arden did the Gelson’s acquisition (in 1966)…Bernie Briskin was out busy with those and Bernie Gelson was running the company even though he didn’t own it. But as far as everyone knew, he did. Then in 1986, Bernie Gelson retired, and his hand-picked successor, Allan Scharn, continued as president. After Allan came Bob Stiles, and then me (as president). (McDougall became president in 2012 and CEO in 2014.)

“We have a staffed front desk at every store where someone is there helping direct traffic or helping to answer questions for customers on the front end . No other retailer is doing that .” —Rob McDougall

Reeves: Of course, you were familiar with Gelson’s because you had lived in Southern California.

It’s funny; as I came up through Vons in supervision, we would take store directors or department managers through our local Gelson’s store to say, “How can they do it? Why can’t we? What’s the secret sauce there?”

I always held Gelson’s up on a pedestal anyway. When it first started, Pavilions was positioned against Gelson’s. It was to get that discerning customer who wanted more variety, wanted unique finds and wanted best quality and best service.

But having that opportunity to come to Gelson’s was just like a dream come true. It was 13 years ago.

Who did you succeed at Gelson’s?

When they contacted me, they were looking for a replacement eventually for John Vitale, who was the SVP of fresh, and eventually Bob Stiles (president). Both had pretty much said in the next few years they wanted to retire. So, I came to Gelson’s as senior director of produce and floral. I went from chief operating officer to that. It paid fine, but they also told me no promises, it was up to me. But they said the opportunity was there. I wasn’t worried about that; I knew I could earn it. I just wanted to make sure there was an opportunity.

John (Vitale) was such a forward-thinker in his day…Gelson’s was the first company to bring in full-service delis with homemade salads and all the different things. Everyone else would follow that, and that was big back in that day, but I feel like they rested a little bit on their laurels over the years…They were always changing, but they just weren’t keeping up with the times as much.

So, I think the CEO then, Bernie Briskin, wanted someone who was a little bit younger. John, getting ready to retire, was a great mentor of mine, and I learned a lot from him and the same with Bob Stiles. I just learned a ton from both of them and they were both so good at sharing that knowledge and “this is how things work here” and making sure it worked out for me. The way Gelson’s is today is the same way it was founded. If you look back at 1951, the Gelson brothers are the ones who founded it and they had the main focus of “we have to give the best service and we have to have the best quality.” And I would say today and all those years in between, that never changed.

How did the Mayfair/Arden connection come about?

That’s interesting. So (in the 1960s), the brothers wanted to grow the business. They had the Burbank store (which is now closed) and they had the Encino store. They wanted to open North Hollywood, but they didn’t have the money

One of the things that Gelson’s has hung its hat on is service and quality.

Tell me a little bit about, for example, the meat department.

Let’s go department by department, and we’ll start with the meat department.

We have always hung our hat on the fact that you can’t buy better meat from any other grocery retailer. We carry prime and choice, but if you understand the whole range, choice has so many different levels. We carry the top of choice.

Prime has a lot of different levels, but it’s still just a couple of percent of the total beef category that you can buy from. We buy the top level. I’ve bought prime from others before, and it’s very equitable to our choice; our prime is better than theirs.

Another difference I think Gelson’s offers is that if I’m a customer and I walk in and I say I am having a party next weekend and I want Chateaubriand and I want 18 pounds, you guys can bring that to them, right?

Yes. Everything we do is around the discerning customer who really values good quality. We are not out trying to tell customers what they should buy… healthwise or different things. We want to sell them what they want to eat, but we want to give it to them the best. And the service is a piece of that. In the meat department, we have cutters all day long that are back there, cutting fresh meat and able to cut special cuts to order.

Every one of our competitors pulls their service delis out of commissaries—every one. We don’t. We have a team of chefs in every single store—at least six to eight chefs—making those salads up fresh every day. Not at a commissary, going in a truck, sitting on the freeway and getting to your store.

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If I’m a customer and I’m walking into that Gelson’s store, what is the first experience I’m going to have?

If you look at our newly built stores, we try to have the entrance be fresh, so maybe in the foodservice you have the service deli, the Wolfgang Puck. We are the only grocery retailer in the country that has a partnership with Wolfgang Puck. They refuse to go to anyone else, and Wolfgang Puck has been a partner for 30-some years. They are still very popular and current in Southern California so that works for us.

In the produce department, we’ve got produce buyers that don’t just buy from brokers and have it shipped to a warehouse. They are out in fields traveling and they are going to the LA Produce Mart at different times. We have very specific and strict criteria to bring it in and it’s not just FDA levels. A lot of grocers will say, “well, we meet the FDA.” We have higher standards than that, whether it’s brix counts on sugar, pressure testing the apples. We can’t go backward on that stuff.

You have team members on the floor all the time, right?

We stock grocery during the day because we want our people down the aisles.

So they can be asked questions?

That’s right. Or how do you use this? We have a staffed front desk at every store where someone is there helping direct traffic or helping to answer questions for customers on the front end. No other retailer is doing that.

We have the carving cart in the service deli where we are carving turkeys and prime ribs every day. I’ve got stores out there that literally cook 15 turkeys a day.

They’ll carve throughout the day and go through that many and it’s not even Thanksgiving.

Those are services you don’t get at other retailers.

Talk to me about the can labels all being turned the same way…You could drop me in the middle of a Gelson’s store and I could tell you what store I’m in just because of that.

We’ve always had a focus on in-stock conditions, so it’s super important for us to make sure we have every item in stock all the time. During a holiday week when I’m out in stores, I’ll call the next store and say what do you need? And I’ll drive it over there myself. We all take ownership for that. And then, on top of that, it’s very important that the shelves look good all the time. We get super high ratings on the cleanliness in the stores, and I think a lot of that comes

because things are so neat. People respond to that. I think it makes it feel clean.

The other thing that I’ve noticed in your stores is your people working the shelves will come out with the exact number of cans to go on the shelf.

They know their aisles; they know what they need. If you’re doing it during the day, it’s not as productive. All the other chains do it at night; we spend the extra for the labor. We don’t have lines at our checkstands like the others because we will spend for the labor. We have more help in produce. Other companies call produce up to check. We don’t do that. Produce clerks here don’t check. Why? Because you want them in produce.

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Blessings by the dozen

Rob and Leah McDougall have been married 41 years.

The couple has twin sons who just turned 40 and a dozen grandkids. Of the 12 grandkids, four of them are adopted.

One son and his wife adopted a baby when they had trouble conceiving; they conceived five times after that. The other son and his wife had three biological children and thought that was all they would have, but then “got a heart for adoption and through Olive Crest adopted three sons.”

While their sons and their families once lived in Yorba Linda, near Rob and Leah, they both have moved back to Michigan, where they met their wives (Rob was working for D&W Foods at the time).

Rob and Leah’s sons are identical twins, which is rare enough. But even rarer, one of his sons has a set of identical twin sons himself. They just turned 1, and “they’re the cutest little guys,” Rob says. “We are very blessed with that.”

Speaking of being blessed, of Leah he says, “she’s lived through the grocery business with me. She learned a long time ago that when we go on vacations, it doesn’t matter where it is, we’re hitting grocery stores while we’re there, checking and looking at different things. It’s in our DNA. She’s been through Europe and other countries with me checking out stores. I’m always looking for what’s next and what’s new and something they’re doing right.”

Rob and Leah McDougall surrounded by their grandchildren, oldest to youngest: Caleb, Aubrey, Kylie, Nathan, Braelyn, Jason, Brennan, Mathew, Brecken, Bria, Brady and Bryce.

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From page 20

How do you train a new employee coming through the system? How do you teach your employees to be servants?

We want them to treat customers like they would if they invited them into their house. Like I wouldn’t say “hi” and “welcome” if you came into my house?

That’s how we want them to treat our guests.

We spend a lot of money in training. We have a lot of videos. We have a lot of in-person training. There are mentors they are partnered with in the store, but honestly all of that doesn’t get them to where they need to be. It’s the whole team inside the store that has the longevity to help bring them along as well.

It takes time to build that, and there are a lot of people that just don’t make it.

They just don’t have the personality and they don’t have the drive to want to be friendly and outgoing and positive.

“We have always hung our hat on the fact that you can’t buy better meat from any other grocery retailer.”

—Rob McDougall

When you acquired the Haggen stores, did you bring the employees in also?

We did.

Tell me about that experience.

We put them through the same training that we would a new employee, but it’s a little tougher when you’ve got a 30-year veteran checker from a chain that is used to different service expectations and not used to unloading…the baskets for the customers. Other chains don’t do that, so that was a change (for them).

We invest a lot with mystery shops in the stores. We take progressive disciplinary measures based on mystery shops. We give them plenty of room to improve.

People will choose to leave on their own if they don’t want to improve. But we’re really pleased with the group that came from Haggen and stayed with us.

All your stores are union?

All my stores are union. Always. They went union in the ’60s.

Can you tell me a little bit about the strike that was just averted?

We put our plans together for sure because if you remember in 2004, 2005 we gained a lot of market share when the big strike went on for so many months. I wasn’t here back then, but I saw the numbers and that really propelled us. We really got customers in…So, the strike didn’t scare us. Our employees wouldn’t strike because we had agreed with the union to honor what they negotiated with the majors.

We weren’t worried about that; what we were more worried about is what are the two big negotiators—Albertsons and Kroger—what were they going to agree to and how was that going to work?

It ended up being fine. We’ll make it work.

You have stores that are located in areas of our city (Los Angeles) where celebrities like to shop and Gelson’s has always been one of those stores.

They feel comfortable, I think. Is that planned?

I think it comes out of a culture of customer service, where we will do whatever we need to for a customer. Like the meat; we will cut what they want. We’ll special-order what they want. We’ve been known to help sneak Brad Pitt out of the back of a store so the paparazzi don’t catch him—all those things to protect their privacy. We don’t want our employees going up and bothering them. We’ve done those kind of things for the movie stars that have come to shop with us,

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Ops SVP Donna Tyndall Has Blazed a Trail for Women in the Industry Donna Tyndall, SVP of operations for Gelson’s, was an early breaker of glass ceilings. She had to fight for her job at the Gelson’s store in Burbank, California, where she grew up, when still a teenager.

Downtown Burbank was where the first Gelson’s was located, and Tyndall’s parents shopped there.

“They were the type of shoppers that would go in every day and, of course, as kids we always wanted to go with Mom when she was doing the shopping,” DONNA TYNDALL Tyndall said.

In elementary school, one of her class field trips was to a Gelson’s store. They got to see behind the scenes, including the back room—a fond memory for her.

“My older brother was the first one to get a job at Gelson’s,” she said. “Then when my twin brother and I turned 16, we both went in for jobs. It took the manager about a year to hire me because I was a girl, and they didn’t really want many girls at that time. But eventually I got a job the day I graduated high school.”

That was nearly 47 years ago, and Gelson’s is the only company she has ever worked for.

Being with the company that long, she is one of the few people who saw firsthand how the Gelson brothers ran the stores.

“Gene was sort of the financial/business guy; Bernie was definitely the people person. He knew just about everybody’s name; if he didn’t, he called you ‘buddy’ or ‘friend’ or something like that. He got to know the customers. He knew where their kids went to school. In those days we didn’t take credit cards, but he was the type of guy that if somebody ran short on cash, he’d reach into his pocket and give it to them and say, ‘you can pay me next time.’ In fact, that’s how the Gelson’s charge cards started. He started writing them out a note, and we kept a Rolodex at the front desk with peoples’ names and charges. Once a month you’d pay your bill.”

Bernie also believed that if you take care of your employees, your employees will take care of your customers.

“So, as employees, we knew our primary job was customer service and to go above and beyond whatever it took, and he modeled that type of behavior,” Tyndall said.

He was also a stickler for cleanliness, she added.

“When I became a manager many years later and he was still with the company, you always worried when Bernie walked in the store because he’d find something on the floor that you had missed; it was always about clean stores,” she said.

While it was standard at the time for grocery store windows to be plastered Please see page 24

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DECEMBER 2019 • The Shelby Report of the West

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From page 22

and there are several that do. We have had Kardashians that shop our Calabasas store. The list goes on.

Years ago, I used to work at the Boys Markets in Encino…and they had a wine room upstairs where they had lockers for people to put their wines in. Every month they would have a wine tasting event in the store. You guys do things like that, too.

We do. We talked a little bit about service, but really service is always being redefined, and wine tastings are one of those examples. I think it was about maybe 10 years ago, during my time here, that we started doing those at the stores.

Everyone was afraid it was going to be stores full of drunks and stuff, but we’ve done it really well. We have the wine companies supply the help for it and teach the customers about it. We pair it with cheeses and different things, and we do that in all the stores on certain days of the week.

Then we started wine bars back in 2013. The first one was in Long Beach. And that’s just grown. The last one we opened was in Manhattan Beach and it quickly became the No. 1 wine bar in the chain.

It does translate to sales?

It absolutely does.

And because we have the kitchens and because I have chefs on staff, we serve tapas in the wine bars. So, we have unique things on the menu that they can cook up and have delivered. So, as we talk about the wine bar revolving around service, a new program that we brought in a couple of years ago with the wine bars is a Sip and Shop. That’s where the customer can sit down, give us your list, and we’ll go shopping for free for them. We have a lot of participation with that.

We are starting a program test this next year…leading us down the path of better identifying and rewarding our true customers. It’s not a typical grocery program where you have to use a card to save money. It is a loyalty program, but it’s more around a hospitality perspective, so it’s like your hotel points or your airline points. And then with so many points you get different levels. At the top level you’ll actually have our chef come to your house and cook dinner for you and your friends.

How do you use social media?

We use it so much better today than we did 10 years ago.

So, the Impossible Burger launched with us last week (Sept. 20)—the only

“We are the only grocery retailer in the country that has a partnership with Wolfgang Puck .” —Rob McDougall grocery store in the states (that had it initially). Impossible Foods wanted a billion impressions as we went to market; we hit 2 billion. That’s a lot of impressions, and everything is measured on impressions right now. We are on Facebook. We are on Instagram. We do digital. We’ve totally redone our whole website, and the app will come out here in this next year. We’ll test it in San Diego first; that will be the loyalty rewards piece.

Do you use the traditional weekly flier, too?

We never were on a weekly flier. We used to be on a monthly flier, but we are doing it about every two to three weeks now. We used to mail them to everyone, but this last year we stopped mailing altogether. They are available as you walk in the store.

Please see page 26 Donna Tyndall from page 22

with ads, Bernie preferred the windows to be left alone so there was a clean, clear view into the store’s parking lot.

Advocates for change Tyndall knew of two advocates for including more women in management at Gelson’s as she was coming up the ranks: Bob Stiles, who was one of Tyndall’s store directors, and Bill Roulette, who was the supervisor of operations.

“They were really the ones that convinced Bernie (Gelson) and Don Lee (VP) that we needed to get women in management because we didn’t have any. Their perspective was most of the customers, especially in those days, were women. So how can the men know exactly what the women want in the store? I wasn’t in the room when they were talking (Bernie) into it, but Bob and Bill came back to me and said we’d like you to get into management.

“That was in 1979; we didn’t have any women in management at that time. I’m happy to say that now in our company we do have a lot more women in senior positions,” said Tyndall, who has four senior directors of operations (most companies would call them district managers) that report to her. They cover all of Gelson’s 27 stores.

Keys to success Asked what she views as reasons for Gelson’s success, Tyndall said, “I think we create loyalty with our customers. So many of our customers now are second- or third-generation Gelson’s shoppers. It never fails, even if I talk to somebody who might have a complaint, they tell me how they grew up in the Valley and their parents all shopped at Gelson’s and they knew that once they had a family, they wanted to go to Gelson’s because it was the best food. We have a lot of loyalty, even with our newer customers.

“All it takes is for us to do that one thing, going above and beyond, and we try to wow our customers,” she continued. “I think you have to have your brand and stand up for whatever your brand is; ours is the quality and the cleanliness and the service and the convenience. And you have to execute it every day. If you don’t, the customers won’t trust you, they won’t come back. But I think our customers trust us.”

Tyndall also believes that the family feel that has been part of Gelson’s since the beginning still is part of the company’s culture, despite the quick growth from the Haggen acquisition.

“We’ve grown a lot in the last three years; we had 18 stores and now 27 stores.

That’s a pretty big jump for a small chain, but the nice thing is we have been able to keep that family environment, a family atmosphere,” she said.

Gelson’s retained the Haggen stores’ employees and maintained their seniority.

Tyndall said many of them had 20 or 30 years in already, “so to be able to come to work for us and maintain their seniority in the union so that they get their Please see page 26 Illy Coffee 12_WEROY.indd 1

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

“We’ve got produce buyers that don’t just buy from brokers and have it shipped to a warehouse . They are out in fields traveling and they are going to the LA Produce Mart ...We have very specific and strict criteria to bring it in and it’s not just FDA levels.”

—Rob McDougall

From page 24

Are they being phased out?

We’ll still have them in the stores because I think that’s where customers want to see the ads and they participate with it. But I think it’s gotten to the point where there is so much junk mail that comes to our houses that people just weren’t looking at them. We still do mailers with maybe a coupon mailer or ­specials at a holiday time. But as far as every month mailing to a million households, like we were doing, we’re not anymore. That was a big change for us.

We tested it in a couple of markets, and we ended up with no complaints or very few…

We are a partner with Instacart for online shopping. We partnered with them in September 2014.

I would think that would be a big business with you guys.

It has turned into one, but I was a little bit hesitant with it. We started small, and I was really cautious, as were a lot of the team, of turning our brand over to a third party. That scared me because, at the end of the day, the customer who gets a bag of groceries from Gelson’s, if those eggs are broken because they fell over in the car on the way there, she is still blaming us. And it still takes away from our brand. I struggled with that, but the good news is we tested it in just a couple of markets for several months and had no complaints. And things just went really well. It’s in all markets today, and we are at about 4 percent of our sales.

You’ve been working very aggressively at remodels as well, correct?

We have.

Can you talk a little bit about that? What are consumers are asking for in terms of a grocery store now?

For us, it goes back to the service element. They want a warm and inviting environment. Not that our stores aren’t all warm before we remodel them, but some of them felt a little bit dated. We are doing two to three remodels a year.

We are more than halfway through the chain right now.

But the idea is what are the new concepts—what I call the touchpoints—we can fit in there? A touchpoint to me is the wine bar because you’ve got a customer connecting. A touchpoint is a service deli. Wolfgang Puck is a touchpoint in the meat department. The poke bar is another touchpoint.

Please see page 28 Donna Tyndall from page 24

retirement and all that meant a lot to them.

“They trusted us, and now they feel like they are part of the family and they have been forever,” Tyndall said. “We gained a lot of really good, experienced employees who knew the customers in that area, and that’s important for us, getting to know the customers and creating that loyalty.”

She said that even though Gelson’s executives often aren’t able to get out to the stores as often as they used to when there were like 10 stores, the employees “still know us and look at us as family.”

Employees know they can reach out to her directly. Tyndall recently got a text from a store employee because he was worried about another employee.

“Our employees look after each other, and I think they feel like they are part of a family,” she said. “They might not feel the same way in a bigger company.”

COMPANY HAS OFFICES IN ENCINO, SANTA FE SPRINGS

Gelson’s offices are in Encino, where the company’s second store was located.

The offices actually were upstairs in the Encino store before moving to the current building on Ventura Boulevard. The company also had an office in Compton when it was part of the Arden Group as well as a small distribution center in Commerce. Four years ago, the Compton lease was not renewed as the company opted instead for a new warehouse and distribution center in Santa Fe Springs (pictured).

“That’s really central to our company now that we go down as far as San Diego,” said President and CEO Ron McDougall. “If you think of Santa Barbara, San Diego, the desert, Santa Fe Springs is right in the center. It’s a great place to be.”

Buying for grocery items is done in Encino; fresh food and non-food buying is done in Santa Fe Springs.

While operations and the majority of the company’s executive staff are based in Encino, accounting, IT and HR, along with the company’s CFO, John Hammack, are in Santa Fe Springs.

McDougall and Tom Frattali, SVP of center store, supply chain and merchandising, have offices in both facilities.

“It works for us because you have to work around traffic. In a perfect world you’d want one location for everything, but when we started looking at where everyone lived it just didn’t make sense to close this one up and combine into Santa Fe Springs.

So many people live north of this office,” McDougall said.

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

From page 26

How do you create more of those? In the produce departments we’ve been putting in a kiosk where we do the cut melons and different things. They are working on the sales floor instead of working in the back room at a sink. That’s a touchpoint. The cheese kiosk that we have in there when they are cutting the cheeses and stuff—that used to be done in the back room. Now it’s done inside that kiosk. It’s a touchpoint for the customer with a food expert. Each of those things connects to the customer.

Can customers sit at your poke bar just like being at a sushi restaurant?

Will they make you whatever you want?

That’s two different things. Tied in with several of our wine bars we’ve got the sushi element. They’ll make it to order right there. But then we’ve added the selfserve poke bars over by the salad bars or by the meat departments, and those things have just gone crazy. The quality that we are known for transferred over to the poke, so people trust it. I wouldn’t buy poke at any other retailer because I know what we do with it. Food safety is very important to us; it’s really part of our culture. We don’t want to ever hurt customers, so we have to be right on it.

What else do you think is really unique about the company? You have been identified as best in class, basically.

When I dug into the details on the Consumer Reports study, I thought that was super interesting that although we rated one of the worst on price, the ratings were so high on the quality, so high on the service, so high on the selection and being first to market that it put us No. 4 on a list of 100. And they even said in the commentary that it’s not normal to have that.

You changed your signage to be a little bit more retro?

It’s our new logo. It’s a little more retro.

What was the thinking behind that?

If you’ve been through our remodels, the whole idea is how do we bring that California lifestyle into the store? Our color palettes, our displays and our offerings all kind of go around that Mediterranean feel. Jessica Siegel, our dietitian who does a lot of our recipes, her point is the Mediterranean diet has been the diet to be on for the last 1,000 years, so we focus a lot of our things on that. That doesn’t mean we don’t carry keto or all those things. As they come and go, we want to be a part of them as well.

We have one dietitian, Jessica, and one nutritionist. They are always traveling and doing tours, road shows, samplings, tastings, differ- Chef Abe van Beek ent things. We play that up.

Customers really do like it, and I think it adds a credibility to us as well.

You asked about the logo…

The previous logo, if you recall, said Gelson’s, the Super Market, and that’s kind of retro, too. But it was time to move away from that. We partnered with Shook Kelley, which is a design branding firm, and they’ve been super great partners with us.

They helped us on the stores.

They’ve helped us to kind of get our head around the whole piece of what do we want to be? And they helped us play “Every one of our competitors pulls their up being first to market better.

One of the things we’ve alservice delis out of commissaries—every ways done well at is being first one . We don’t . We have a team of to market. Before I even came on board, we were the first chefs in every single store …” stores to carry Jessica Alba’s —Rob McDougall Honest Baby brand products at retail. We were the first stores to carry Halo Top. We were the first stores to carry Intelligentsia Coffee.

Our grocery buying team does such a good job really searching products out.

We travel the world, go to the food shows. We go to Europe because our customers go to Europe and we want to see what they are seeing over there. We travel to see other retailers—not just in Southern California but across the United States and really across Europe—with the idea of what are people gravitating toward?

What’s the next up-and-coming product? That’s why we were so proud to be chosen for the Impossible (Burger) launch. (Impossible Foods) chose us because of our reputation, and I think we have improved that reputation the last 10 or so years.

What are your plans in terms of opening new stores? Do you have anything immediately you are looking at?

I’m about to sign a lease on a San Diego site.

You’ve got how many stores in San Diego?

Three. I think San Diego could probably support another three, in the right spots. Orange County, maybe one or two in the right areas. L.A.—there’s still plenty more for the right site. Santa Monica…Montecito, I’d love a store. We go up as far north as Santa Barbara…San Jose. So there are plenty of growth opportunities. Ideally, to answer your question, I’d like one new store a year.

How many stores now?

Twenty-seven. Haggen really exploded us. When we bought those, we had 18 stores. My first job as president after the acquisition was to close two, Pasadena and Northridge. I told the team, “we don’t need break-even stores,” so we got out of those and then we’ve been growing the company ever since.

What else is important for us to know about Gelson’s?

Let me touch on the team for a minute. (We have) longevity in the stores, which is huge for us. Being a union operator, they get good wages and benefits, and I think that helps keep them here. We don’t have quite the turnover that some of the other grocery retailers do. And I think that equates to better service, better name recognition when a customer comes in.

But our leadership team is really great, too. We have what we call the “first team”—10 individuals, of which I am one. It’s from executive directors up to the CEO. We’ve got a couple of members that have been with the company since they started working, a couple that have only been here the last couple of years and everything in between. What I love is the dialogue, the respectful contention that we get when we are talking about new things or change or different things.

You really do encourage adversity?

Respectful adversity I love. We are all here for the same reason and anyone who says, “well, we did that 10 years ago and it didn’t work,” well, the customer is not the same as she or he was 10 years ago. They are changing all the time, so we have to stay up with that. There are plenty of things we test and you know what? Sometimes we test things that don’t work and that’s OK. Sometimes we test things that do and roll it out and that’s OK. I’ve tried to create a culture that’s not afraid to test, make sure we measure right and then go. But a respectful contention, I think, is really important in a team because quite frankly, I don’t know everything. I’m not that smart. I’ve got a team around me that has a great breadth of knowledge both from within this company and from without. And that’s what I value.

Please see page 32

The Shelby Report of the West • DECEMBER 2019

A Brief Look at the History of Gelson’s Bernie and Eugene Gelson opened the first Gelson’s store in Burbank, California, on July 25, 1951. Bernie and Eugene had spent much of their youth in their parents’ grocery store in Iowa, where they learned the importance of exemplary customer service—giving every shopper the very best in quality, selection and value.

The Gelson brothers had moved to Los Angeles with their parents 14 years earlier and helped to run a store in Garvey before purchasing a small market of their own in the San Fernando Valley. But they were not content operating a smaller store.

The 25,000-s.f. store the brothers opened in Burbank was modern in design. The market’s front had a glassed instead of a cement front, an industry first. It was completely airconditioned and heated.

Also in 1967, the fourth store, in Century City, which briefly operated as a Mayfair, was converted to a Gelson’s.

Store No. 5 also opened in 1967, in Tarzana.

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The company has had just four presidents over its 68-year history: Bernie Gelson Co-founder with his brother Gene, Bernie Gelson served as president of Gelson’s while Gene was in charge of the administrative side.

(Bernie died in January 2005, just shy of his 85th Bernie Gelson birthday.)

From left: Gene Gelson, Dave Lasensky and Bernie Gelson.

The Burbank store dressed up for its opening.

Specially designed fixtures in all departments afforded ample display of the highquality items Gelson’s carried.

Spacious aisles—which would become a Gelson’s hallmark—and large shopping carts were available to make shoppers’ trips better. The first Gelson’s also set the stage for what would become Gelson’s tradition of exemplary meat and seafood. The store had an ultra-modern, self-service meat department, with stainless steel and enamel cases running the building’s full length. In full view of the customers was the meat cutting and wrapping room.

The Mayfair and Gelson’s divisions of Arden Group were run separately for decades. There were hundreds of Mayfair stores across the western part of the U.S., but eventually most were divested. The Palisades store was converted to a Gelson’s in the ’70s, and more Mayfair closures followed.

Eventually only three Mayfairs remained—the Silver Lake, West Hollywood and Hollywood locations.

In 1979, Gelson’s opened its Pacific Palisades store. The Rolling Hills Estates store was opened and closed within a year in the late ’80s.

Growth picked up in the mid-1990s. In 1996, the Calabasas store, a larger location at 40,000 s.f., opened, followed by the Northridge store in 1997 and the Sherman Oaks store in 1999. A former Mayfair Market in West Hollywood also was converted to a Gelson’s in 1999.

The Irvine store opened in 2000, followed by Dana Point in 2001.

An ad from the original Gelson’s in Burbank.

The Mayfair store in Hollywood in the 1970s.

The Encino store.

In June 1964, the Burbank store caught fire, started by embers from lit cigarettes that were swept up at the end of the night. Eleven months later, on May 6, 1965, the store reopened.

The Gelson brothers sold their two-store company to Arden-Mayfair in 1967, but Arden-Mayfair executive Bernie Briskin retained the brothers to continue to run the stores.

At the time of the deal, Gelson’s was on the verge of opening its North Hollywood/Valley Village location.

“We’ve been known to help sneak Brad Pitt out of the back of a store so the paparazzi don’t catch him …We have had Kardashians that shop our Calabasas store . The list goes on ...”

—Rob McDougall

A store in Pasadena also opened in 2001, but it, along with the Northridge store, were closed down in 2013 and 2012, respectively, because they were “break-even” stores, according to Rob McDougall, who was named president in 2012.

Ladera Ranch was open for a couple of years as the grocer waited to build its Rancho Mission Viejo store and consolidate its southern Orange County operations.

In 2013, Gelson’s opened its first new store in 12 years in Long Beach. A store in La Canada Flintridge followed in 2014. That was the same year Gelson’s was purchased by TPG, a private equity firm. The firm’s backing soon allowed Gelson’s to grow by eight stores through acquisition.

Pacific Northwest grocer Haggen purchased more than 100 stores from the Albertsons/Safeway merger to create its southern operations, but that venture quickly folded.

Gelson’s acquired eight former Haggen stores in late 2015.

The stores were located in Del Mar, Rancho Mirage, Santa Monica, Ladera Ranch, San Diego, Thousand Oaks, Carlsbad and Laguna. Six of the stores quickly were opened under the Gelson’s name in 2016 but were reopened in 2018 with updated décor and amenities. One of the stores was remodeled before being reopened in 2016, and the other was remodeled and opened in 2017.

The Rancho Mission Viejo store also opened in 2017, followed by a Manhattan Beach store in 2018.

McDougall says his goal moving forward is to open one new store per year. He was about to sign a lease on a site in San Diego when he spoke with The Shelby Report.

Bernie and Eugene Gelson.

Allan Scharn—1985-96 Scharn was selected to be president by Bernie Gelson. He worked for an independent grocer called Serber’s Foods for six years before joining Gelson’s in 1960 as a grocery clerk. He moved up, becoming assistant manager and then grocery manager before opening both the Century City and Newport Beach stores as store director. He was director of grocery buying prior to being appointed president, a position he served in for 11 years.

Bob Stiles—1996-2012 Bob Stiles was named president of Gelson’s in May 1996. At that point, he was a 35-year veteran of the company, starting as a clerk at the Burbank store in 1960 and then the Encino store in 1962. He Bob Stiles progressed to grocery manager, store manager and director of grocery merchandising. Stiles was named VP of marketing for Gelson’s in 1988. He served as president from 1996 until he retired in early 2012. (Stiles died in November 2015.)

Rob McDougall—2012-current McDougall joined Gelson’s in 2007 as senior director of produce and floral. He succeeded Bob Stiles as president in 2012 and added the CEO title in 2014.

Rob McDougall

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

From page 28

And then TPG, our partner who bought us in 2014, has let us do everything we wanted to do. Since they came on board, we opened up our new warehouse and offices in Santa Fe Springs. That was a nice, huge investment that ROI’d quickly.

We’ve remodeled numerous stores. We bought the Haggen stores. It’s just been a great experience having that support.

The market is changing dramatically and at a faster pace than ever before. Is there one thing you can think of that you can share that you think is definitely the new thing that is coming and that is something that you want to be at the forefront of?

This is nothing that people wouldn’t know, but the big focus on the environment, whether it’s through an Impossible Burger or through no plastic straws or all of this, it’s just going to continue to grow. And the more we can be seen as forward-thinking in those kind of areas, I think, the better. Just because we’ve always wrapped a product in a certain package, is that really the right way to do it?

We have our private label water in a plastic bottle; I don’t think that’s a long-term decision anymore. We just always have to be thinking what are the next things so that we can be ahead of it, not behind it?

One of the things that I’ve always been impressed with is your floral.

With your background in floral I’m sure you probably have your fingers in that quite a bit. Can you talk a little bit about the uniqueness of your floral and you have a designer always available in your stores, right?

Thank you for bringing that up. That’s perfect in the service piece. Every store does have a trained floral designer, so you could bring in your grandmother’s vase and say, “Can you put an arrangement in this for me?” and get it filled right there.

We also have a really good relationship with the Floral Mart and going directly to the growing fields. Our floral team is great at building that department, and I would tell you it’s always been that way. I think Gelson’s has always been on the forefront of that, and customers want that. But we have to have the best quality. And they’ll pay for it. Our competitors have carnations and daisies and sunflowers. Not that we don’t have some of all of those, but you’ve got to have the hottest things, the best things.

What percentage of sales are in floral?

When I was at Vons, floral was on average 1-2 percent of sales. We are on average probably 3.5 to 4 percent, and on the holidays it just goes crazy.

“we have trained floral designers in every store …”

—Rob McDougall

Speaking of holidays, you guys really gear up for the holidays.

We do. The holidays are very big for us, and it’s not just the normal Thanksgiving, Christmas, Easter; it’s the Jewish holidays as well. We are really well known for having items in stock where most of our competitors don’t. It’s really the time that we’ve garnered new customers and get them into our stores. It’s a good time for us to share what makes us better with them.

We don’t sell frozen turkeys at Thanksgiving, so we are not putting the cheapest turkey in town out there and trying to get customers in. We sell fresh turkeys, and they come at a premium. We don’t overcharge for them, but they cost more.

We sell prime ribs that are like 500 bucks, and I can’t tell you how many customers buy them because for a holiday dinner they want the best, and if they want the best there’s no one else to go to. Those are the things that are so important for us.

Please see page 34

Having the Product Customers Want Fills Frattali’s Days Tom Frattali, SVP of center store, supply chain and merchandising, has a total of 40 years with Gelson’s. His first job was bagging groceries at the Newport Beach store in 1977, when he was 19 years old.

But he almost didn’t take the job. He was 19 and had just moved to Orange County and thought he would explore his options and not just take the first job that came along. He became acquainted with Don Lee, Gelson’s GM at the time, and Lee asked Frattali if he wanted a job.

TOM FRATTALI Frattali said no, but by the time he got home, he had changed his mind. He reasoned, “You know what? I like the food industry, and it works well for school.” (He was in college at the time.)

So he called Lee and said, “I’m sorry; I will take the job.” Frattali’s store director was Allan Scharn, who later would become president of Gelson’s.

In his early days with the company, Frattali was able to observe firsthand Bernie Gelson and his emphasis on “taking care of that customer at any cost.”

“Our commitment to quality and service hasn’t changed,” Frattali said. “How we get to that may have changed, though. The business has evolved with social media and customers’ purchasing habits and trends over the years, but what our principles are really haven’t changed. We just always want to be better from year to year with how we conduct ourselves, how we run the business, how we treat our customers and what we give our customers to be able to purchase as far as quality.”

Out-of-stocks are so unpalatable to the company that team members will purchase what’s needed from other retailers when necessary. These situations arise more often around holidays, whether it’s hot dog buns for the Fourth of July, eggnog at Christmas or a certain matzo meal or wine for Passover.

In fact, Gelson’s has built a reputation for being the place to find what one needs for Passover or any other holiday or special occasion, said Frattali, who is responsible for center store procurement (grocery, liquor, wine, deli, frozen foods, dairy, HBC) as well as the distribution center and Gelson’s merchandising team that goes out to the stores.

“We get new customers because they’ve heard from friends or relatives that if you want something, go to Gelson’s and you’ll find it. Our business during the holidays, no matter what holiday it is, increases because customers who may not shop with us every day will come shop with us for an event,” he said. “If they are going to throw a party or they are going to entertain their family, no matter what it is, they want to make sure that they have the product, and they can guarantee that they can get it at Gelson’s. It’s something to be proud of.

“Any time there is any type of issues where something out of our control, we’ll go and do whatever it takes to make sure that the product is on the shelves,” Frattali said.

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

CMO Bagan: Keeping Gelson’s Relevant to Customers, Today and Tomorrow Chief Merchandising Officer (CMO) John Bagan calls himself a “newbie” at Gelson’s, having been with the company just over three years. But he’s no stranger to the world of retail.

His background is all retail—about half in grocery through work with Jewel, American Stores and Albertsons; about a quarter in general merchandise with Target; and a quarter in specialty retail with Guitar Center, the job that brought him to the Southern California marketplace.

At Gelson’s, Bagan oversees the marketing team, inJOHN BAGAN cluding branding and store design; the purchasing and merchandising teams; and all the buying, assortment, pricing, promotion and visual merchandising in the stores. He also oversees supply chain, comprising the distribution center, transportation and logistics. Reporting to Bagan are Yvonne Manganaro, executive director of marketing; Tom Frattali, SVP of center store, supply chain and merchandising; and Paul Kneeland, executive director of fresh foods and floral.

Even as a “newbie,” Bagan is clear on what has historically set Gelson’s apart: the focus on the customer.

“We’ve been all about great quality products, kind of over-the-top customer service and attention to detail; really convenient stores, very clean stores, in great locations. Historically that’s all been kind of what made us what we are today.”

Not to rest on those laurels, though, Gelson’s has, over the last few years, “tried to figure out how can we build that history, that great brand and presence we have in our market and see what we can do make ourselves even more relevant to today’s customers and our future customers,” Bagan said.

With new store designs, the goal has been to make it “more of an experience, really emphasizing the community nature of the food experience, adding more space into our new stores and our remodels for things like places to gather, places to sit and enjoy food in-store.”

The primary incarnation of that has been the company’s wine bars. There are about a dozen of them in Gelson’s stores today, the first opening in Long Beach four or five years ago.

“We’re finding that is really a great place to try to bring back the community aspect to our stores. It used to be that grocery stores were a center of the community.

Most people would go as a family; you’d know the employees,” Bagan said. “That’s kind of gone away over the years as groceries have gone more online and have become more transactional. We’re trying to bring that social aspect, the experience and

the community part, back to it.”

Then, since customer service has been so important for Gelson’s over its history, Bagan said the next question that was asked was: “How do we take that new customer service orientation into a relatively new concept like the bar?”

That’s where Sip and Shop was born, he said.

A Gelson’s wine bar.

“At our bars, a customer can come in, hand us their grocery list and we’ll go pick and bag their groceries for them while they sit there and enjoy a glass of wine with a friend and some tapas.

We do it for free. We’re really trying to enable that (community aspect). That’s kind of a cool thing,” Bagan said.

“I really love that we have this rich history over the years of a great brand taking care of our customers and high-quality products and great customer service. But we’re also not afraid to look at that and say what are the ways to modernize that to make sure that we’re just as relevant today as we were 68 years ago,” he added.

#goals Translating corporate goals into store-level implementation is a challenge for any retailer. Training programs and certifications historically have been used by Gelson’s for that purpose. This year, executives devised three companywide goals “to communicate to the entire organization and that everybody could participate in advancing,” Bagan said. The 2019 goals are:

• Create an even more welcoming and friendly environment for customers; • Tell our marketplace how special our product is, especially in three a­ reas—

our produce, our gourmet salads and our Certified Angus Beef program; and • Make sure we’re providing the best quality every day on every product.

Goal cards were printed up and sent out to the stores for reinforcement. Posters and videos also were created as reminders. In company meetings, people are expected to know what the three company goals are.

“On one side of the card, it’s got those three goals, and on the flipside it’s got the top three ways we can deliver each of those things,” Bagan said.

Under “creating a more welcoming and friendly environment,” suggestions ­include greeting every customer and asking people at checkout if they found everything they needed.

The cards also feature “actual facts about our Certified Angus Beef program— that it’s the top 1.5 percent of prime beef that’s sold in the country,” Bagan said.

“People can carry those cards with them, and it reinforces ‘here’s the top three and this is how I can help achieve them.’

“We’re just proud to be such a longstanding part of the food scene here in Southern Cal and to serve our customers,” Bagan said.

From page 32

Our No. 1 produce item day in and day out is avocados. Thanksgiving week, when everyone else is selling yams…that doesn’t mean I don’t sell yams, but it’s a lot of avocados. It’s just crazy how many, because we are known to have ripe avocados all the time. That’s another customer service edge.

If you look at our meat department, we have great sales on our prime and everything else, but do you know what my No. 1 meat item is? USA grown lamb rib chops. Why? Because they are the best rib chops. If you like lamb and you haven’t had those, they are the best.

And then grocery just does a great job bringing in the unique finds. We just started something this year, Gelson’s Local Discoveries. We’ve done two of them now; it’s almost like speed dating. Local product vendors who are chosen to participate get 20 minutes with a buyer to show their product. This isn’t for brokers; it’s for individuals who are trying to come to market with some new items. And we are coming away with such great finds that set us apart from our competitors as well.

We have all the chefs shopping with us. There’s not a store that I walk that I don’t run into a chef that is shopping. They may go to another store, too, to get one thing or another, but they do the bulk of their shopping with us because they know we have the quality. I usually try to find out what they’re going to somebody else for so I can get that in.

Thinking about the diversity of our company, I am really proud that we have several women on our executive team and we have a good diversity of backgrounds throughout the stores. We love that diversity.

The other thing I think is interesting about our customer…we had Oliver Wyman do a study last October (2018) and we found out, no surprise to us, that we overskew with anyone 35 years and older. But what I found is that we also overskew with 25-35-year-olds making more than 100 grand a year. That’s a good thing. So part of the change and when you talk about the logos and things is how do we continue to attract those younger people with disposable income? Because that’s really our customer.

CONGRATULATIONS! Savant Construction congratulates Gelson’s on being selected as 2019 West Retailer of the Year!

We value our partnership and look forward to many years of future success!

Savant_Gelsons_WEROY_122019.indd 1

11/7/19 8:05 AM

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

Gelson’s Known for Excellent Fresh Departments Gelson’s earned the highest possible grade in Consumer Reports’ annual supermarket survey in 2019 in categories including produce, meat and poultry and fresh store-prepared foods.

Paul Kneeland, executive director of fresh foods at Gelson’s, said, “I’m very proud of what we do from the fresh perspective.”

He oversees produce, floral, meat, seafood, the service deli—“which is also known lovingly in here as the kitchPAUL KNEELAND en”—and bakeries. “All the good stuff,” Kneeland said.

He joined Gelson’s in May 2017 from Kings Food Markets in New Jersey, where he worked for 10 years. He has spent a total of 38 years in the grocery business, starting when he was in high school in Boston.

“I started bagging groceries, and the store directors used to ask me to do different things, like maintenance. Whatever they asked I would do. That continues to now.

Whatever ends up on my plate, I have no problem jumping on it,” he said.

Kneeland has been friends with Gelson’s President and CEO Rob McDougall for nearly 20 years, getting to know him through share groups. He made the move to the West Coast when McDougall called him about the job opportunity.

“The timing happened to be right,” said Kneeland, who has spent the bulk of his career in produce, adding experience in other fresh departments in the last 15 years.

He said Gelson’s customers “have a really good appreciation of excellent products and service, and that’s what we are all about. We live it, we breathe it every single day. They know they can come here for the finest fresh foods.”

Kneeland said Gelson’s will continue to expand its fresh offerings, continue to “really create an elevated experience for the customer in fresh.”

Meat department Gelson’s Markets this year became the only grocery chain in Southern California licensed to carry the Certified Angus Beef brand of USDA Prime Beef. In order to qualify, beef must pass not only the USDA’s very stringent “Prime” standards, but also all 10 Certified Angus Beef standards for marbling, maturity, appearance, tenderness and consistent sizing. Less than 1.5 percent of beef meets these ultra-high quality standards. A variety of steaks and roasts as well as ground beef and patties are offered at Gelson’s, which has an in-house butcher at every store from opening to closing every day.

As a retention tool in the meat department, Gelson’s offers an apprentice program “that helps take team members to the next level in their careers,” Kneeland said.

Service deli Next year, Gelson’s plans to rebrand its delis as The Kitchen, according to Kneeland.

One of the signature items customers can find in the deli case is Jessica’s Salads, developed by the grocer’s corporate dietitian, Jessica Siegel. “She’s developed a whole litany of salads that are healthy eating, vegan, vegetarian salads in the case.

And they are really good,” Kneeland said.

A lot of time is spent to train associates in the deli, Kneeland said. They spend three days offsite before learning to interact with customers at the store.

Siegel is somewhat of a local celebrity, appearing on KTLA. In addition to creating Jessica’s Salads for the service deli and other recipes, she provides tours called “Shop with a Dietitian” and offers nutritional Gelson’s dietitian Jessica Siegel is counseling for customers. somewhat of a local celebrity, appearing on KTLA. In addition to creating Jessica’s Salads for the service deli and other “We have an amazing floral team in recipes, she provides tours called “Shop store that really knows how to execute, re- with a Dietitian” and offers nutritional ally knows quality, really knows their cus- counseling for customers.

Floral

tomers,” Kneeland said.

Every store has a floral designer, and the floral buyer formerly worked in the stores, so he “understands the stores, understands how it is supposed to look. He has a vision in his mind, as does the floral director also, that this is how it is supposed to look—California grown, highest quality and what’s special. When you walk in, you’re hit right in the face with it,” he said.

Bakery In the bakery, Gelson’s has a coffee kiosk that offers beverages to complement products from bakery vendor partners such as Viktor Benes and Renaud’s.

In the Del Mar store in San Diego County, the bakery is known as Little Cakes Kitchen in honor of Gelson’s partnership with the well-known family-owned and -operated bakery in northern San Diego.

Little Cakes Kitchen specializes in gourmet cupcakes, most of them featuring Italian buttercream frosting. Its 100-plus rotating flavors include such favorites as Red Velvet, Chocolate Toffee, Lemon Berry, Strawberry Milkshake and Snickerdoodle, as well as two that helped Little Cakes become a repeat Food Network “Cupcake Wars” winner: Tuxedo and The Pearl.

In addition to small cakes (from gender reveal cupcakes with blue or pink buttercream hidden inside to sprinkle “smash cakes” for young kids), Little Cakes offers full-size cakes, cheesecakes, pies, cookies and other baked goods. Special orders are welcome, with vegan and gluten-not-included options.

“We are over the moon about this partnership,” said Don Hein, owner of Little Cakes Kitchen, of the March 2019 collaboration. “For me, the name Gelson’s has always been attached to the absolute highest quality products and we are honored to have our bakery serving their customers. It’s very much a dream come true.”

“Little Cakes has an amazing back story—a husband and wife embarking on a new business and, through passion and creativity, building it into a popular brand,” said Gelson’s President and CEO Rob McDougall. “This is a natural partnership for Gelson’s to launch in the San Diego area, and we are excited that our customers will soon be able to walk into our Del Mar store and see Little Cakes inside.”

Food for the wine bars Kneeland said the wine bars that operate in some Gelson’s stores are a collaborative effort between fresh foods and the wine department.

“We just relaunched that menu with a new design,” Kneeland said. “We just added burgers to it; we just added an Impossible Burger to it…During Hatch Chile season, we added a Hatch Chile burger.”

Foodservice staff prepare the tapas, or small plates, offered at the wine bar.

Wolfgang Puck pizza is another option.

Kneeland said the wine bars have “a pretty awesome vibe.”

A reputation to maintain Kneeland learned early on that Gelson’s is a retailer that has a strong family legacy.

“Many of our customers first came to our stores when they were with their parents, and a lot of our customers have been coming to the stores for 30 years,” he said. “The people that come in now are like family to our employees. It’s amazing.

We are so blessed to have amazing employees in the stores that just care so much.”

He also learned early on, and appreciates, that because there is a family-type relationship between the customers and the Gelson’s staff, they will share what’s wrong.

“When I or my team go in the stores, we talk to people all the time. We say hello and ask them how their family is; you know what’s going on in their lives a lot of the time. That opens the door of communication and they are going to tell you exactly what’s wrong which, coming from New Jersey, I love. Just hit me between the eyes with it. It’s a great opportunity for us as a team as we go in to have that conversation and have that face-to-face with people.”

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

Nelson: Promote Them and They Will Stay Hee-Sook Nelson, VP of team development and public affairs, recently celebrated her 30th anniversary with Gelson’s.

Her first grocery job was at a Vons store in Santa Barbara. She worked there while she was a student at the University of California-Santa Barbara, where she earned a degree in film history and sociology.

Not unlike many of her fellow industry executives, she didn’t think she was going to remain in the grocery industry.

HEE-SOOK NELSON “It was just one of those things that evolved,” said Nelson, who grew up in west Los Angeles. She worked in public relations and financial sales after college, and then, while trying to decide if she wanted to go to graduate school or law school, “I ended up at Gelson’s while I bought some time.

“It just so happened that I kept on getting moved up in Gelson’s, and I realized that I loved the company and I actually love the business,” Nelson said. “That’s how it kind of evolved and…now I’m here for 30 years.”

Gelson’s executive Bill Roulette spotted her potential and told her she should be moving up the company ladder. He mentored, encouraged and pushed Nelson along the way, as later did Donna Tyndall, Gelson’s SVP of operations.

“I always revered her (Tyndall) as a woman leader in our company; she kind of set the pathways for women here,” Nelson said.

Nelson was one of just a couple of female store directors in her earlier years in the company, but “today is different. I’m really proud to say we work in a company where we have an executive committee with two female executives (Tyndall and Nelson). And we have an executive director that is female, Yvonne (Manganaro). We have a senior director that’s female, Jacquie (Slobom, senior director of store operations). So, I would say for our size, we are pretty diversified. We have a voice, and it’s nice.”

She was quick to point out, however, that being qualified for a job is required as well.

“I think it’s not just about diversity; I think it’s being qualified,” she said. “But it’s nice to have the diverse opinions. I think there’s a sense of people feeling like that there is balanced team in our company, and I think that’s important, especially today.”

Continuing education When Tyndall was a supervisor, she sought ought Nelson to attend the USC Marshall Food Industry Management (FIM) program, which is designed for those with the potential to move up in the grocery industry. Nelson is a member of the FIM graduating class of 2003. Tyndall was a FIM graduate, as was Roulette. In fact, he was a member of the first FIM class, Nelson noted.

Speaking in her capacity as VP of team development at Gelson’s, Nelson said the company has refocused efforts on sending team members through the FIM program as well as the Retail Management Certificate Program (RMCP) through the Western Association of Food Chains (WAFC).

“Rob (McDougall, president and CEO) really wants to uptick the focus on education, as do the rest of us,” she said. “We think it is very valuable and important, and we are sending two people (to the FIM Program) this year. We are really pushing education through right now. We really appreciate the FIM Program, the RMCP. We’ve been trying to arm our people with more knowledge and education.”

History and progress Nelson feels that Gelson’s is in a sweet spot of maintaining the family culture that has characterized the company from the beginning while embracing growth and change.

“When I first started with this company to now, we’ve had considerable growth, but I feel like Gelson’s is still family, I really do, and I think everybody who works here really feels like it’s family. We actually all care about each other, and that’s a nice thing.”

She said people like Bill Roulette and Bob Stiles “really set the tone, and Donna’s been here her whole life, literally. She really bleeds Gelson’s and she’s very adamant about trying to keep traditions alive.

“But the good thing is when the people come in from the outside like Rob (McDougall) and John (Bagan), we became a little more apt to try more things, new things. We took on those (eight) Haggen stores all at once. That was a big change for us, acclimating all those stores into the fold. Everybody worked hard for two years, very hard. But we are on the other side now.”

The four pillars of Gelson’s Nelson laid out the four pillars of the Gelson’s organization: “It’s quality—quality products and quality people. Cleanliness—we are always very in tune to cleanliness in our stores. Convenience—making it a great shopping experience for our customers, from clean stores to having products available to them; convenience folds into a lot of things. And then we call it personal service instead of customer service because we try to think about that we need to do to up-notch our service and make sure that we are not just talking about customer service. We want people to feel special when they come in.”

Because of these high standards, job seekers “have to pass our ‘litmus test’ of if they really care about customers, if they really care about our four pillars; can they live up to that promise to our customers? In every training, our goals and four pillars are repeated often.”

AFFILIATIONS Organizations that the Gelson’s team participates in include the Western Association of Food Chains, California Grocers Association and California Grocers Association Educational Foundation, National Grocers Association, Food Marketing Institute, International Deli, Dairy, Bakery Association, Fresh Produce and Floral Council, Produce Marketing Association, City of Hope and Olive Crest.

In conjunction with the opening of the Rancho Mission Viejo store in 2017, Gelson’s presented $1,500 donations to RanchLife, The Reserve at Rancho Mission Viejo, San Juan Capistrano Equestrian Coalition, Laguna Playhouse and Sendero Animal Hospital.

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

Technology Is a Tool for Business and Customers Ron Johnson, VP of information technology (IT), joined Gelson’s a little over two years ago, having come out of a career in management consulting for specialty retail, mostly at The Walt Disney Co. What drew him to Gelson’s? His “love of food. I always loved the grocery companies.”

He succeeded Gelson’s long-term IT leader, Doug Freund, “who had been here for decades and had done a lot of good stuff, so I got to come into a good place,” RON JOHNSON Johnson said. “It was a really easy team to join.”

A resident of Pasadena, Johnson spends some days in Gelson’s Encino offices and some at the warehouse and office complex in Santa Fe Springs because he has parts of his team in both locations. He said he spends about half his time on day-to-day tasks like keeping technology running, compliance tasks, security, pipeline and portfolio management—the “blocking and tackling of IT.” Another 25 percent is interacting with the rest of the senior team on projects and plans and the other 25 percent is devoted to keeping up on what technology is available out there and what might be available in the future.

The IT team as a whole—about 20 people who report to Johnson—is responsible for all technology-related operations: finance, payroll, human resources (HR), supply chain, buying, merchandising, support, POS, etc.

Johnson has e-commerce and marketing experience from roles at Disney, “so that’s a passion for me,” he said. “Not that those other things aren’t important; they are extremely important and incredibly hard to do. But part of my challenge and part of the fun I’ve had here is getting us to think about technology as a tool for our consumers and our business partners as well.”

One of the goals is to make the customer’s digital experience as rich and beautiful as an actual Gelson’s store. That’s important because the typical Gelson’s customer is quite tech-savvy.

Gelson’s generates much of its own social media content but also has retained an agency to help with more technical content such as videos.

“We feel like it’s doing a lot of good for brand awareness and allowing us to tell our stories,” he said.

The company continues to fine-tune how it connects with customers, knowing it must be done “in a way that’s super authentic to Gelson’s. Probably not a club

card, probably not a ‘deal of the day,’” Johnson said. “Maybe our customers are more interested in wellness or nutrition or new products or local offers, things like that.”

Gelson’s, in fact, is known for introducing new products, “but we can always do more to tell the story and make sure that people can find the products and learn more about them,” he added.

Emphasizing the high-quality takeout food available at the stores is another story that Gelson’s needs to continue to communicate with customers, Johnson believes.

“We are certainly every bit a grocery store, but we are also a series of small restaurants where you can pick up something and go right to your dinner table,” he said.

He says Gelson’s will continue to fine-tune its digital marketing and e-commerce plans, tweaking them frequently as the technology world changes so frequently.

“In terms of technology, we’ve got a ways to go, but we are excited that we don’t have to build all this stuff from scratch. There are some wonderful partners out there that are starting to scale up, and they really like companies of our size. They can pull together a series of solutions that make sense for us.”

“We are certainly every bit a grocery store , but we are also a series of small restaurants where you can pick up something and go right to your dinner table .”

—Ron Johnson

Congratulations to

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

Marketing at Gelson’s Mirrors Where Customers Are Headed Yvonne Manganaro, executive director of marketing for Gelson’s, became connected to Gelson’s in 2002 in a consultant capacity. She was working for Bernie Briskin, a former owner of Gelson’s, and he asked her to handle some special projects. When someone in the advertising department opted not to return following maternity leave, Manganaro became a full-time employee of Gelson’s, in September 2003. At that time, the advertising department was largely devoted to print, such as weekly ads in YVONNE MANGANARO the newspaper.

“The department has changed a lot,” said Manganaro, who has an MBA with an emphasis on marketing and strategy from Anderson School of Management at UCLA. While she was pursuing her undergrad degree in history at UCLA, she worked for a single-store operator in Westwood Village called Breadsticks.

The store was a member of Certified Grocers (which later became Unified Grocers and now is part of UNFI/Supervalu), and Manganaro says she “learned everything there. I started as a checker, and all checkers had to throw stock. I moved into bookkeeping after a while. I worked in management. I learned a lot about the grocery business hands-on at that little operator.”

An evolution in marketing Asked how marketing has changed since she arrived at Gelson’s, Manganaro said, “There’s been a big evolution that really mirrors our customers. We haven’t been pushing our customers in any direction; we are following where they are already going.”

She said Gelson’s customers have a high penetration of iPhones and Android smartphones.

“They are very tech-connected. They are very aware of what’s happening, and they tend to want to be on the cutting edge, or right after the cutting edge, of technology.”

That means Gelson’s now has a sharp focus on digital marketing, starting its social media interaction with Facebook before adding Pinterest, Instagram and Twitter.

“We’ve dabbled with a few other things but, for us, Facebook and Instagram are where most of the action has been,” she said.

The company has revamped its website a couple of times in recent years. “Making

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it mobile-responsive is the most important step forward that we’ve made within the last couple of years,” she said.

The biggest thing on the horizon for the company’s marketing efforts is the Gelson’s app, which is expected to launch in 2020. It will be available for both the Apple and Android platforms.

“That’s a big leap forward for us,” she said.

She also said Gelson’s partnership with Instacart for online shopping and delivery has been really important, giving the grocer the ability to offer that service to customers who want it.

Gelson’s was an early partner of Instacart, offering the service since September 2014. She said at first Instacart shoppers often would seek out input from produce and meat managers in the stores when putting together orders because they knew Gelson’s customers are discriminating.

“The Instacart shoppers would ask them to please pick out items for the customers until they became more accustomed to what they would want,” she said.

The Gelson’s legacy Manganaro came to work at Gelson’s when Bob Stiles was the president, and she said his example of “saying hello to everybody, having a kind word, having a joke, having something special to share with everybody really set the tone for me and for a lot of the people that are here now as far as carrying that Gelson’s legacy forward…

“Each leader of the company has added to it and kind of made their own, but the fact that they’ve pulled that legacy forward is, I think, what makes Gelson’s so ­special. There’s a lot of longevity in the grocery industry in general, but Gelson’s ­really has that.

“When people ask me where I work and I tell them I work for Gelson’s Markets, it’s always incredible to immediately hear people say, ‘Oh, I love Gelson’s.’ A lot of people don’t have that same reaction when they talk about where they work,” Manganaro said. “Having the opportunity to work someplace that people really love and respect, and there’s that history within the community that they shop with you, their parents shopped with you, and in some cases, even their grandparents shopped with you— that’s really incredibly fulfilling. Couple that with being able to come to work with people that you genuinely like and enjoy, and there’s a reason why the l­ongevity is as long as it is with Gelson’s.”

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DECEMBER 2019 • The Shelby Report of the West

2019 West Retailer of the Year

New board member Klug calls Gelson’s ‘uniquely superior’ Sue Klug joined the Gelson’s board in July.

The former longtime Southern California food industry executive said, “What made me want to join the board was really the strength of the management team.

“Rob McDougall is a seasoned CEO, and with executives like Donna (Tyndall, SVP of operations) and John (Bagan, CMO) and Tom (Frattali, SVP of center store, supply chain and merchandising), it’s just a great group of leaders that have really strong values,” she said. “It’s a team anyone would want to SUE KLUG work for and, to me, it is just an honor to be a part of it.”

Today Klug serves as EVP and chief marketing officer (CMO) for Republic Services, a recycling and non-hazardous solid waste disposal company based in Phoenix, Arizona. But prior to joining Republic in 2016—following four years as EVP/CMO at Unified Grocers—Klug spent more than 30 years in leadership positions with Southern California supermarket retailers Albertsons and Safeway. A Southern California native, Klug brings a deep understanding of the competitive California grocery sector to Gelson’s, the grocer said.

“We are thrilled to have Sue Klug join our board of directors,” said McDougall.

“Her savvy marketing and operations experience in wholesale grocery, supermarket retailing and waste/recycling services will bring valuable insight to Gelson’s, and we are grateful to have her on board.”

Klug believes Gelson’s is “uniquely superior” in the Southern California marketplace because it combines “center store value with extraordinary food and beverages on the perimeter that you typically would have to go to a specialty store to find. In my opinion, no one else in Southern California offers that.”

Gelson’s also has “always had a very strong reputation for delivering to vendors what they committed to, delivering to customers what they committed to,” she added. “They have a strong culture around their customers, and you can see that play out in the stores. I think it’s refreshing, and I think customers recognize that as a differentiator in the market.”

As a smaller retailer—27 stores—“they really understand the marketplaces in which they operate and they are empowered to make the decisions,” Klug said. “They don’t have to check that with someone else that operates in a different state or halfway across the U.S. I think you can see and feel that when you’re inside their stores.”

For all of those reasons, “I think the sky is the limit,” she said.

Prior to joining the Gelson’s board, Klug’s previous industry board experience includes the Independent Grocers Alliance (IGA) in Chicago and Western Association of Food Chains in L.A. County, where she served as its first female president and chairperson. She has been recognized with numerous industry honors, including the Food Industry Managers’ Sales Club’s Top Woman in Industry and The Shelby Report of the West’s Woman Executive of the Year.

Members of the Gelson’s executive team, from left: Hee-Sook Nelson, VP-team development and public affairs; John Bagan, chief merchandising officer; Tom Frattali, SVP-center store, supply chain and merchandising; Paul Kneeland, executive director-fresh foods and floral; John Hammack, CFO; Rob McDougall, president and CEO; Mark Motsenbocker, executive director, HR and risk management; Ron Johnson, VP, IT; Tim Mahoney, executive director, operations; Donna Tyndall, SVP, operations; and Yvonne Manganaro, executive director of marketing.