West
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OF THE YEAR • 2014
March 2014
From page 37
Executive Bios
Over a 35-year career with Smart & Final, Tony Bernardini has worked as a store associate, store manager, district manager, director of Mexico operations, regional VP of store operations and VP of real estate. He currently serves as group VP-real estate.
Scott Drew, Smart & Final’s SVP of store operations, is a seasoned executive with more than 35 years of broad retail management experience. He began his career in the grocery industry in 1977 as a courtesy clerk and held various positions such as department manager, store manager, district manager and VP on his way to his current role. Drew is married with three children. His hobbies include spending time outdoors with his family, golf and sports. He and his wife Kelly reside in Orange County, Calif.
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THE SHELBY REPORT OF THE WEST
“It’s just a great format,” Hirz says. About 90 percent of the business at these locations is small businesses, and much of that is small restaurants, he adds. “Cash&Carry store managers know their top customers by name, where their restaurant is, what they buy, when they buy it,” he says. Cash&Carry has its own division president, Marty Trtek, based in Portland, Ore. Trtek has his own team—a VP of operations, a VP of sales and marketing and a dedicated buying team. But other corporate support functions, such as human resources, payroll and legal are handled through Smart & Final’s headquarters offices in L.A. Trtek and his team “do a great job,” Hirz says. “They are extremely focused on serving their business customers, and they have the experience and expertise to succeed in that mission. They understand what the business customer needs, and they work constantly to ensure they have the right products at the right price.”
Giving customers what they expect While much is made of localized product mix in supermarkets, Smart & Final has had success by keeping 90 percent of its product mix stable across its store base. That 90 percent includes the company’s huge selection of private label products, for which Smart & Final is well known. The 10 percent variable items are typically in center store, Hirz says. “We’ll change the mix based on the demographics.” The Smart & Final customer can’t be pigeonholed, and that’s a good thing. Hirz says sales are almost evenly split in four quadrants in terms of median household income—$25,000 and below; $25,000$50,000; $50,000 to $75,000; and $75,000 and above. “If I look at all four quadrants, we actually have almost a quarter of our stores in each quadrant, and average volume per store is fairly consistent in each quadrant. We do really well in the inner city and high Hispanic areas, and there are some great Hispanic competitors that we compete with. But we have stores in the inner city that perform really well and we have stores where median income is north of $90,000 annually where our stores do really well,” Hirz says. Of course, it is extremely important that Smart & Final has the right product assortment to appeal to its diverse customer base. “Our category management team has done a tremendous job of assuring that we have the right assortment for business, households and community groups. They also have worked aggressively to ensure that we are priced properly to offer a compelling value proposition,” Hirz says. Private label also is an important key to the business, as the company has about the highest level of penetration in the industry in terms of private label. How does Smart & Final have such success in that arena? A dedicated team with a sole focus on those products. “We do all our own private label internally; we have a vice president of private label that has a team of folks that do a
great job going out and finding the right new items, doing cuttings on a weekly basis against both national brand and our competitors’ private labels to make sure our quality is as good or better,” Hirz says. The company’s main private label is called First Street; it makes up about 75 percent of the private label sales. “It resonates really well with business customers and household customers,” Hirz says, adding that businesses in particular have come to rely on the quality and value of the private brands Smart & Final offers them. Another of its labels has been around for more than 100 years—Iris. This label is found on personal care items such as tissue, paper towels and health and beauty care. Not only was it the first private label for Smart & Final; it also was one of the first in the entire industry. Smart & Final’s dedicated private brand team is led by Raymond Swain, VP of corporate procurement. Along with Gary Somes, VP of advertising, they and their teams develop plans for marketing the company’s private labels. “They have contests on a regular basis, both consumer contests and associate contests, around private label to continue to promote the brand,” Hirz says. “I think they do a nice job of communicating the quality and value of our private brands.”
A great team is another big key In fact, Hirz has nothing but praise for all of his team members, top to bottom. “I really am blessed,” he says. “We have a great management team. When I got here four years ago, I was really impressed with the caliber of management. We have senior managers in the organization that have been here over 30 years.” Since the company started moving more into consumer sales with its Extra! stores, Smart & Final also has “added some folks that came out of retail background in the conventional side of the world,” he says. “If you look at the management team today, it really is a great mix of longtenured, experienced Smart & Final folks that have a great history of managing that business customer side of the business, supplemented with a few new executives that have joined in the last five years that come out of a more retail background.” But it all happens at the store, as Hirz realizes and appreciates. “And at store level, I’m sure everybody says they have great people, but for us, that’s not just a cliché. We have great people, we really do,” he says. “One of the biggest differences I saw when I first got here is how well our store managers know their business customers. “We have, in every store, a set of core business customers that all of our store managers know—they know who they are, where their store is, where their business is, what they buy.” An added level of sensitivity was needed when Smart & Final began to move toward offering more household goods in the Extra! stores and drawing more consumer business. The stores needed to make sure they didn’t stop giving businesses the level of service they needed. “As we have evolved into a more house-
hold space, the team has done a great job, particularly at store level, of figuring out that household customer, how to cater to that household customer, without losing a business customer,” Hirz says. “You still want to make the business customer feel special. “The business customer wants to come in, they still want their smaller store, they want to get in and out—time is money for them and they really don’t want to go get in line behind some household customer with a $100 order that’s a little slower to process. And our store associates do a great job of now, over the last several years, catering to a more household-centric customer base without losing sight of that business customer. Our business customer is a huge focus for us. Our business customer has actually grown, on a same-store basis, at a higher rate than household customers over the last three years now. And it’s really because our store-level associates are just going out of their way to take care of the business customer.” Sometimes that means the business customer sends in an order and a store employee pulls the order and has it ready for that customer when he or she comes in. “From entry-level service clerks to store managers, our store teams are second to none. Everyone is focused on what is best for the customer and providing a great shopping experience,” Hirz says. “And the teamwork you find at Smart & Final is unlike anything I have seen elsewhere. Our associates are constantly pitching in to help each other get the job done and resolve issues when they come up. You won’t hear ‘it’s not my job’ at Smart & Final. All of our associates are engaged and committed to our company and our mission. “Those outstanding store teams are further supported by an amazing district management team that has worked hard to grow the company. Our district managers and merchandisers make sure that all stores are looking their best and maintaining the highest possible standards at all times.” Hirz says the Retailer of the Year honor is “great for the team.” “Day in and day out they’re out in the trenches competing with some of the strongest competitors in the country. And the team continues to drive industry-leading same store sales, and at the same time, live our core values of Teamwork, Respect, Integrity, Growth and Accountability. I am honored to accept this award on behalf of our almost 8,000 associates.” At the corporate level, knowing how critical each layer of staff is to the success of the whole, Smart & Final has a unique (a word that keeps coming up) bonus program for team members. “Everybody in this building is on the same bonus program,” Hirz says. “Whether it’s my senior VPs, someone taking care of customer service calls or our great team of administrative assistants. They’re all on the same bonus program, and it’s based on company performance. We meet with every one of them every quarter and let them know how we’re doing. “As a result, our corporate team feels engaged and accountable for Smart & Final’s ongoing success. Everyone understands how their function contributes to the achievement of our key please see page 45
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