2012 Nebraska Profile: In an Opportunity State of Mind
by Terrie Ellerbee/associate editor
Tim Myers, SVP of sales and retailer operations for Affiliated Foods Midwest, calls Nebraska a state of opportunity. Myers himself was an Air Force brat born in Omaha. He came back to the state four years ago.
“There’s a lot of growth going on in Nebraska, a lot of folks coming in,” Myers said. “I love Nebraska,” he said. “It’s a great place to not only be from but to come back to.”
Norfolk-based Affiliated Foods Midwest is on track for another record year despite some obstacles thrown in its path.
“In light of where the economy is right now—and also we had the imminent threat of some pretty devastating flood activity at our Kansas facility—even with that, record earnings, record growth,” Myers said.
Myers said the Missouri Valley floods last year posed quite a challenge at Affiliated’s Elwood, Kan., facility. The distribution center had to be closed, all the inventory taken out and sent to other facilities, and then distribution had to be re-routed as well. The Kansas facility also just got an 80,000-s.f. freezer addition, and that was expected to be ready by the end of March.
“It was done relatively seamlessly,” Myers said. “Obviously, you have a couple of hiccups, but everybody at Affiliated, along with our members, did a pretty yeoman effort to try to maintain their business and keep them in business. I think everybody did just an outstanding job.”
Martin Arter, president of Affiliated Foods Midwest, said the cooperative continues to pick up new customers, adding to its roster of about 850.
“The business model that we provide the independent retailer in today’s environment allows them to compete, grow and be profitable,” Arter said. “It’s a low cost of goods. Everything is transparent. They own the company. There’s nobody between us and the vendor getting the product that they need at the right price at the right time—and then the dividends go back to them.”
Arter said that the services offered in Nebraska alone would probably surprise some.
“For example, retail accounting for 400 stores, high-end gloss printings … we’ve developed new ways to work within the social media arena. We offer insurance services through our subsidiary,” Arter said. “We have no restrictions on the transportation side of the company as well; we’re very flexible on that end. We provide engineering services. There are a lot of core functions that happen here that can be utilized out of all the distribution centers. Along with that, you have all the banners and signage and printing needs that can be done right here in-house.”
Arter said Affiliated continues to seek ways to make sure independent retailers have every service available to them.
“We also have a pretty stout field team that’s out there assisting our members not only on the merchandising side, but also on their store financial side, trying to keep them profitable and help them identify opportunities so that they can continue to grow their business, add additional stores, additional square footage,” Myers said.
Arter is pleased that Affiliated continues to provide good jobs for people in Nebraska.
“The company as a whole has continued to offer employment and good jobs, and we’ve really been strong with really just wanting to make sure that we provide jobs, especially in this economy,” Arter said. “We’ve really focused on not only maintaining the jobs, but really focused on our members continuing to be profitable by offering these services and not outsourcing anything. It’s really allowed the company to be extremely strong.”
‘Common sense’ rules in Nebraska
Good jobs have kept Nebraska strong during the recession and slow recovery. Nebraska has one of the lowest jobless rates in the country. Its unemployment rate peaked at 5 percent in June 2009 and stayed there until December 2010. By December 2011, it dropped back to 4.1 percent.
“I don’t know anyone who’s looking for a job who doesn’t have one,” Kathy Siefken, executive director of the Nebraska Grocery Industry Association (NGIA), told The Shelby Report. “If you want a job, there’s one to be had.”
If there is an employment issue in the state, it is matching skilled people with open jobs, and Nebraska is taking on that problem. Siefken said a plan is under way to merge the state labor department (DOL) with the department of economic development (DED). The combined entity would work to ensure that high school graduates (Nebraska has one of the highest graduation rates in the country) understand their choices when it comes to acquiring the skills required for jobs that are opening up in the state.
“I think that’s what puts Nebraska ahead of so many other states is that we have people in government jobs who use common sense when they are developing programs,” Siefken said. “Isn’t that refreshing?”
And the common sense works both ways. Siefken appealed to lawmakers earlier this year to raise the licensing fee for grocery stores and restaurants in order to maintain funding for food inspectors. The increase is an anomaly in an election year that has generally centered on cutting taxes, regulations and fees.
The NGIA held its legislative reception on Jan. 19. The association sold almost 300 tickets and drew 75 percent of the state’s senators (see photos). At the event, Pat Hensley, assistant VP of operations at Hy-Vee, was recognized for his service as legislative committee chairman. He served two one-year terms in the role.
“I kind of joke about this, but it’s really serious,” Siefken said. “When you are the legislative chairman of NGIA, you are one of the most powerful grocers in the state, because you really do get to decide where we go and what we do as an industry.”
She said the legislative committee chairman is the one she turns to when an issue may suddenly come up and she needs an answer. Typically, though, she explains to the legislative committee what the issues are and its members decide which direction to take. Siefken follows up from there.
She is pleased, and likely speaks for many members of the NGIA, with Nebraska Gov. Dave Heineman’s approach.
“People want to spend more money, and the governor is saying, ‘You don’t get to spend more money,’” Siefken said. “That’s just the bottom line. He will veto almost anything that goes before him that will require additional fees or taxes.”
Lincoln to get new Super Saver, Walmart brings Neighborhood Markets to Omaha
Siefken said that grocers in the state continue to reinvest in their existing locations, while some of the larger chains are building new stores.
B&R Stores is building in northwest Lincoln. The new Super Saver at Fallbrook Place, at the intersection of U.S. 34 and Fallbrook Boulevard, should open by the end of this year. The 60,000-s.f. store will include an on-site bakery, floral department, a spirits department, a full-service delicatessen with outdoor seating and a drive-up pharmacy window. It also will have an in-store bank.
Raybould said that, as is the case at all Super Saver stores, the Fallbrook Marketplace will cut its beef fresh in the store daily.
It will be the fifth Super Saver store in Lincoln and one of nine in Nebraska and western Iowa.
Colorado-based Natural Vitamin Cottage also is building a store in Lincoln. The 13,000-s.f. store at 212 N. 48th St. is opening on March 20.
Arkansas-based Wal-Mart Stores Inc., which has been quiet in the state since opening a 105,908-s.f. store in Gretna in September 2010, is bringing its Neighborhood Market format to Omaha. At last count, five are planned, according to reporting by the Omaha World-Herald. Three locations have been announced: 90th and Lake Streets; 132nd Street and W. Maple Road; and Tregaron Town Center at 25th Street and Capehart Road in Bellevue.
Service keeps Baus’ stores in business
Larry Baus has been in the grocery business for 44 years now. He started out bagging groceries at a Hinky Dinky, an Omaha-based chain. He worked for the company for 19 years until it folded and among his duties there was produce supervisor for 26 stores from Omaha down to McCook, he said.
“I did a lot of driving,” Baus said. “I really got to fall in love with the rural part of the state, the small communities.”
He’s lived in Lincoln most of his life, and that is where his two stores are located. Baus owns and operates a 9,000-s.f. A Street Market at 3308 A St., and a 10,000-s.f. Village Market, located at 3211 S. 13th St. The A Street Market got a remodel recently, inside and out.
Baus said the company is looking at acquiring another site or two that fit its marketing model.
“We are very service oriented,” Baus told The Shelby Report. “We do try to be very strong in the perishables departments and our customers have responded to that. Our meat department is very strong in both stores. Produce department, our deli in the Village Market store, those are all the keys to our success in the neighborhoods. We’re very well supported by the neighborhoods, the people who live in those areas. That’s actually our slogan: ‘We’re Your Neighborhood Store.’”
He appreciates the role his stores play in the communities they serve, and that sometimes less is more.
“People are always telling us they’re so glad we’re there. I think we are kind of an alternative to the big box store because we are smaller,” Baus said. “People can get in and out quicker, and we emphasize that in our advertising, that you can come in and buy your groceries in 20 minutes and you don’t have to walk through a 200,000-s.f. market to get a loaf of bread and a gallon of milk. That’s the kind of thing that we’ve emphasized.”
He said he knows waiting in line is a problem at big box stores, and that won’t happen in his stores. It all comes down to customer service, he said, whether it’s an old-fashioned notion or not.
“I walk into that big box store or a large department store and there’s people waiting in line. We don’t allow that to happen,” Baus said. “Our rule is that if there is somebody in line and another customer walks up, we open another register. Nobody waits in line—and we carry out groceries. It’s in many ways a throw back to the old days when everybody carried out groceries. It’s something that I think people appreciate, and they know that we appreciate their business when we do that for them.”
There are even rules: Two sacks or more, carry out. If an elderly person or a mother with small children has a one-sack order, their groceries will be carried out to their cars, too.
“We work on service every single day,” Baus said.
Employees are trained to help customers, particularly the elderly, if they’re having trouble locating items in the store.
“We also help customers shop,” he said. “If a customer is having trouble finding something, we’ll have an employee walk with them and help them. We’re very sensitive to that. Being a smaller store we’re able to do that. The big stores, they can’t.”
Some employees have worked at Baus’ stores since they opened 18 years ago in the A Street location.
“We’d have customers who come in with their babies,” he said. “And now their babies are working for us.”
He said employees have an investment in the local stores.
“Their friends might have worked here or an older sibling might have worked for us, so we don’t have the problem that you have in a lot of the big stores. They’re impersonal. You’re a number. You’re a body,” Baus said. “In our stores, you’re a person. People feel like it’s their store, the employees do, and they are very protective of us and very interested in our welfare.”
Baus said his grocery company will continue to pound home the difference between his smaller, more service-oriented locations and the big box stores.
“I think that you see in the industry … even the big companies are coming out with smaller stores because they see there is a need for that and there’s an interest in it, so our challenge is to keep our business model out there for the customers to see. I think it’s worked so far and our challenge is to keep that going.”
Baus is vice chairman of the board of the NGIA. He, like Siefken, appreciates Gov. Heineman’s conservative fiscal policies.
“He recognizes that we’re the backbone of a good economy, and there are always bills in the legislature that impact our business,” Baus said. “Our executive director [Siefken] does a great job of monitoring these bills. Our legislative committee meets with the board and we decide which ones we need to actively be involved in. We have all our state senator’s and our federal representative’s telephone numbers and we don’t have a problem calling them.”
Looking ahead, he sees credit card fees as a major issue.
“It’s such a large part of our business and a growing expense and that’s something that we need to keep working on, keeping credit card fees affordable for all businesses, large and small,” Baus said.
Many retail grocers have been looking to just survive the past few years. They’ve cut their costs, put their best face forward and hoped for the best as customers clamped down on their wallets.
Siefken said people have been cautious with their spending because they heard “stories about how bad the recession is and ‘what if you don’t have a job tomorrow,’” she said. “So people really did tighten up … what we saw was a change in their spending patterns. They weren’t buying high-end items and spending a lot of money, but they were still shopping in grocery stores. We saw an increase in shoppers, but probably not an increase in the dollar amount that they spend.”
For some, like Larry Baus, just hanging on has been an accomplishment. He is proud of the company’s “ability to adapt to the things that are happening.
“Our concept of service and not compromising what we’re trying to accomplish in the service area—I know that labor costs are one of the major expenses in running a business, but being able to balance controlling labor costs with keeping our level of service, I am proud that we’re able to do that,” Baus said.
Geoff Welch, regional manager for The Shelby Report of the Midwest, contributed to this report.