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Harps’ Culture Sparks Further Growth With Recent Acquisitions

Harps Food Stores growth

Harps Food Stores had “a bunch of irons in the fire in 2023,” according to Chairman and CEO Kim Eskew. Those “irons” are among the reasons the Springdale, Arkansas-based company has been named The Shelby Report of the Southwest’s 2023 Retailer of the Year.

Harps added 34 net new locations and moved into two additional states through recent acquisitions. Eskew said about 40 stores were acquired, with some closed and others consolidated. “After the smoke cleared, we had 34 additional locations.”

Harps has more than doubled in size since 2019, primarily through acquisitions. 

“I think every grocer knows that sometimes making the acquisition is the easy part,” Eskew said. “What you do once you’ve acquired the stores is the hard part. That’s bringing those folks into your culture and getting them to adopt that culture and to change their operation to conform to the way that you do business. And that’s hard.”

In fiscal year 2023, Harps expanded its footprint into southwestern Mississippi and central Louisiana through an acquisition of The Markets locations at the end of 2022. It also acquired Beachler’s Hometown Market in Prague, Oklahoma, in March 2023, and Janise’s Supermarket in Sunset, Louisiana, in July 2023. 

Harps operates 147 stores in six states. It is the largest employee-owned company in Arkansas, with more than 7,200 associates.

Kim Eskew headshot
Kim Eskew

J. Max Van Hoose, president of Harps, said the acquisitions were an important step in the company’s growth. 

“Onboarding that group, new states, the strain on your team for having stores that far away in terms of getting everything up and going impacts everyone,” he said. “Kudos to our group for their efforts in that.”

As Harps had acquired some stores prior to the most recent acquisitions, it had some experience of what to do to bring the new employees on board.

“If you look at our leadership group, there’s people in that group that have been part of an acquisition … so we have that story,” Van Hoose said. “Not to say that it’s always super smooth.”

David Ganoung, SVP and chief marketing officer for Harps, is very familiar with Harps’ growth through acquisition. He was part of one in 1995.

He had been working for Bentonville, Arkansas-based Philips Food for Less when it was bought by Walmart at the time the retail giant was first getting into the grocery business. When Walmart achieved enough grocery volume that it was transitioning to supercenters, it sold the standalone Food for Less to Harps in 1995. 

“I’ve been here ever since. The crazy part is my original hire date. I started in ‘83 as a carry out with the Philips company. I’ve never left, but I’ve been bought and sold – like a side of beef,” Ganoung said with a laugh.

He added that Harps has a “family feel” for its associates. However, maintaining that has been a challenge as the company has continued to grow.

Van Hoose said it is a change in culture for the new employees and may be a change in operations. Customers also are affected.

“It might take a little while for everybody to get on board. I would say that what has made it work is that historically, we have some experience with it, we have people that have gone through it. The other thing is that we are intentional. We come in and do some training meetings, do questions and answers,” he said, adding that the Harps HR team offers regular leadership training. 

“As part of that, you have people coming in and just introduce themselves and what [they] do, here’s the resources we have, please call me, we’re open book, we’re open door. Unfortunately, there’s not just a super recipe, and we have certainly tripped over ourselves occasionally. We just try to work on that.”

Presenting a new challenge is the fact many of the recent acquisitions are eight-plus hours from the corporate office in Springdale. For those employees to feel they are a part of the Harps family “takes a lot of effort from a lot of people,” according to Eskew.

During the acquisition process, he said Harps had nearly 100 team members traveling to those stores, working with the employees, “training, educating and hopefully building relationships so that they felt connected to what seems like to them this huge company that they were now a part of.”

These team members often spend months away from their families. 

“Everybody knows, this is what we have to do in order to grow the value of our company, and everybody wins … It’s a great team, great people,” Eskew said. “And really, I think a lot of our camaraderie grows when we just take this team of people some 500 miles away, and we’re working hard to bring this new group of people in our company.”

Eskew said the only way to make them feel a part of the Harps family was to spend time with them. He and his wife, Karen, took a week every month for six months and spent time in those stores. Meetings were held with the management team, and Eskew spoke at each one.

Harrison Harps ribbon cutting
Harrison Harps ribbon cutting

 

“We just went into every store and would spend time talking to employees, one by one,” he said. 

The goal was to get to know them and have them get to know him and other Harps team members. Eskew said they wanted their new employees to feel that joining Harps will be the best thing that’s ever happened to them. 

“Building trust is really important. That’s the only way we know how to do it, is you’ve got to really know us.”

Eskew said sharing his story is a way to build that trust. 

“I started with Harps in 1977 at the lowest level, so I’ve been where they are. I always tell folks, you see me now and you think, well, I’m the CEO of this big company. And I said, but think of the poorest person you know today, from a small town in Northeast Arkansas. That was me. I was nobody. Nobody knew me. And I was just a student at the University of Arkansas, working a part-time job in a store in Springdale, Arkansas, because they had an ad in the newspaper that they were looking for somebody. And now I’m the chairman and CEO of that company.

“And believe me, if I can do that, then the next chairman or a future chairman or CEO could be one of the people in this room. Because we’re that kind of a company. And I remember when I became CEO, and I was going around the stores for the first time after that, I would have people say, ‘We are so thrilled that you’re the CEO because you’re one of us.’ I take that as a great compliment.”

Eskew said he wants people to feel like they can relate to him and that they matter. 

“The only way to do that is one person at a time. I think what we have accomplished, a lot of it in 2023, is building relationships with those new acquisitions, by doing it feet on the ground, in those stores, talking to employee after employee.”

Eskew credited his wife with helping to build those relationships. He said she “seems to have 100 percent recall of everything everybody tells her. So the next time she sees them she can say, ‘Your son was having a baby. Are they doing OK?’ And they’re blown away that she remembered that.”

He said the most fun part of his job is being in the stores and talking to the employees.

Goals for 2024

Looking at company goals for 2024, Eskew said the intent always is to grow. 

In the post-pandemic years, many people are resuming more of a pre-COVID lifestyle, including dining out more.

“You’re seeing food away from home growing faster than food at home now. If you look at AC Neilsen numbers across the whole retail universe, units are down,” he said. “Some of that is because people are transitioning back to eating out a little bit more, and we’re feeling that. Even the SNAP benefit reduction has impacted sales.”

Entering the new year, Van Hoose said Harps will deal with headwinds that come with “the softening of all the stuff that’s happened the last three years, from inflation to COVID to the money that the Fed poured into the economy. With all those things changing, you’re seeing a softening of sales.”

Vilonia Harps
Vilonia Harps

Eskew said he believes 2024 will be the most challenging year in a long time as far as growing same store sales. Even with inflation, people are continuing to return to restaurants.

“Eating out seems really expensive, but I look at our prices and they’ve gone up so much in the last three years, but we still have to try to grow. We’re always talking to somebody about an acquisition or looking for a new site.”

Jim Antz, CFO, said Harps managed “incredible growth” in FY2023, adding that the company continues to find opportunities to expand. This requires going into other areas of Arkansas and other states to find those opportunities because “it’s pretty saturated” in Northern Arkansas, he noted.

“There’s a lot of places in Southern Arkansas, all of Louisiana, a lot of small independents that don’t have that second or third generation that wants to take over,” Antz said. “There’s a lot of opportunities for us to grow that way. But just finding that growth is probably our biggest challenge.”

Harps also is addressing the fact that many leadership team members are in their 50s and 60s. Eskew said there will be “a significant transition in leadership” in the company, and they have to be ready for it.

“We have to prepare people now for when that happens. In a very deliberate way, we’re doing leadership training and trying to develop people, more or less the next generation leaders for our company, so that when the time comes we’ve got people ready to step up and meet the challenge,” he said. 

“And we hope that we’ll continue with the culture that we’ve tried to develop, that we think makes this a great place to work. And that’s a big deal.”

Harps’ formula for growth is working and the evidence is in the numbers. Eskew said company stock went up 22 percent in 2022. He estimated an increase for 2023 of about 15 percent. 

“If you’ve got a million dollars in stock, that’s $150,000 in value that went up last year because of our stock increase. The value of our employees’ stock went up $48 million. That’s value that we added.”

Read more independent store news from The Shelby Report.

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