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Interview with Les Slater.

Interview with Les Slater

It's been described as "the Disney World of Supermarkets," but in fact, it's a very serious, very successful operation. "It" is Stew Leonard's, the world's largest dairy (and other things) store, and definitely one of the best known family businesses in the country. Written up in Fortune, Sylvia Porter's Personal Finance, New York, The New York Times, Successful Meetings, and Tom Peters" "A Passion for Excellence," Stew Leonard's is an intriguing mixture of fun and food that seems to have avoided some of the pitfalls lying in wait for family businesses. Review of Business was fortunate enough to talk with Les Slater, a non-family member of the management team, who took some time off from his busy schedule to share with us some insights on what has been described as one of America's best run companies.

To begin with, some facts for those who don't live in the Northeast: what is Stew Leonard's? It's probably the only dairy store to have got into both the Guinness Book of World Records (1992 title for world's fastest moving stock) and Ripley's Believe It Or Not (world's largest sales of orange juice). Its sales are about $100 million annually; it has nearly 100,000 customers every week (all of whom are always right, see below); and it has a petting farm of barnyard animals in front of the store. Several other features of the store do distinguish it from other stores, and some of these undoubedtly help it maintain its distinctiveness as well as its continuing success.

First, and this is the feature that strikes everyone on their first visit, you go not just to shop, but to be entertained. Several audio-animatronic robots are scattered around the store; there's a group of animated milk cartons singing about the joys of milk, a cow that moos when a button is pressed, two singing dogs playing country tunes, and so on. Why?

Les Slater explained it this way. "Originally Stew Leonard started out as a milk deliverer, but that business was terminated because the State of Connecticut was putting in a highway, and it went through the business. He was left with two choices... get out or maintain the business but in a different way. From the very beginning, he asked his customers, and that's still being done today: What do you like? What don't you like? In the mid Sixties, the customers told him, if you could build a store and supply the same high quality products at a real good price, we'll come to your store.

And he listened to his customers and did it. A lot of his associates said he was crazy. He decided he'd better make it interesting, he'd better make it a fun place to go, because shopping every day is a mundane thing to do...Few people enjoy food shopping, and the idea of characters walking around the store dressed up as a cow or a duck or our singing milk cartons seems a little silly, but why not? It works for Walt Disney, although their purpose is only to entertain, while ours is to entertain and sell some products at the same time. A recent national survey found that happy shoppers spend up to 20% more."

It seems to work. Customer loyalty is remarkably high, and the exhibits in the store always have an audience.

A second feature is that shoppers can see much of the behind-the-scenes processing going on. At the center of the store is a glass-enclosed automated dairy plant that processes the raw milk delivered to it into the milk and cream products that shoppers pick up as they shop. A pervading aroma of fresh bread perfumes the air; look to your left, and see the bakers preparing the various bread items in the in-store bakery.

Third, the layout is unlike a traditional supermarket layout. There is only one aisle which curls around the store. Also the number of items carried is less than in a traditional supermarket; usually only one version of an item is carried, as the store buys in bulk and passes the savings on to customers. In fact, the original customer request remains fulfilled: items are price competitive.

Whether one looks at the glitz or the sales figures, customer loyalty or product freshness, one thing is clear: it works. Now Stew Leonard's is a family owned and managed business. It is structured as a partnership between Stew Leonard Sr. and his wife Marianne; his four children and several other relatives are also actively involved in management. Is there something that can be learned from this experience? In our interview with Mr. Slater, we focused on issues that are important not just for a family business but for any business. Issues such as growth, employee management (careful here: employees are Team Members at Stew Leonard's); customer relations and company culture.

RofB: We asked Les Slater, a non-family manager, first about his thoughts when he was first hired.

LS: I was apprehensive at first. I was with Ethan-Allen (the furniture manufacturer) and I worked at headquarters, but it was a very corporate atmosphere. When I heard that Stew Leonard's was expanding, I felt that with their history and their attention to customer service, it would be a very interesting company to work for. But it was a family business: I was given many cautions and warnings, because for family businesses, the growth potential is limited.

He pointed out that many of the potential problems with management of family business do not apply here, because hiring is done on merit, not nepotism; this is an issue that involves both present management and future growth.

LS: ...in order to grow, it is going to take a great deal of strong management.... The one thing that helps Stew Leonard's grow is his [Stew Sr.] attitude towards promoting from within, and the majority of the managers here as well as our store at Danbury are people who have started at the bottom and worked their way up through the ranks. The family is very much a part of the business; however, everyone realises that without the other managers, the business simply couldn't continue.

When the whole family is away together or a lot of the management team is visiting another store or at a convention, this question comes up: "Well, with you here, who's running the store?" And Stew's immediate retort is, "The same people who normally run the store!" So I have yet to experience any difficulty as far as the "family" aspect of the business is concerned. All the family members that work here started as soon as they were able. Stew Sr. has been careful not to impart any responsibility or power to any one in the family who hasn't earned the right to have that power or is not capable of doing so.

RofB: We also asked how this aspect affected other personnel, and found that the "family" aspect also applies throughout the company.

LS: There are a lot of companies that frown on family members working within the same company. Stew Leonard thinks the complete opposite: the more family members he can have working together, the better. We have two brothers doing a tremendous job, and one of the benefits is they are not only working for me, they seem to be working for each other...there's a lot of unseen pressure there. For those Team Members who have other family members already working, they not only have to work for their respective manager/supervisor, they also have to show their parents, their aunts and uncles that they can do the job just as well as anyone else. But although Stew believes in nepotism, he does not believe in favoritism!

[Well over half of the 1,000 people working at the store also have at least one relative who also works there.]

RofB: Do you think this affects employee turnover?

LS: Stew Leonard's turnover compared to the supermarket industry is outrageously low. I would like to think that part of the reason is because we have family members, and also it is the way we manage the folks who work here.

RofB: How is that?

LS: It takes happy people to create happy customers. Stew feels that if you treat the Team Members with the respect and the kindness they deserve, that treatment will be imparted to our customers. If you feel good about the job you are doing, if you feel good about who you are working for, the way you are being treated, it's almost impossible not to treat the customers the same way.

RofB: So your treatment of personnel is also part of your approach to customer service?

LS: Absolutely! What is important, in the beginning and in the end, is the customer service aspect. It's great that we talk with these fun things the customer sees, the singing animals and the rock at the front, but they are only the trimmings...the real important part, what built this business, is customer service.

RofB: Would you like to expand on that?

LS: You probably noticed the rock when you walked in the store [a large 6,000 pound rock of granite with the following carved into it: "Rule 1: The customer is always right. Rule 2: If the customer is ever wrong, reread Rule I."]

We want the customer to go away saying "I'm glad I went to Stew's today."... When I first started working here, my main job was as Director of Cashiers ... the thing I tried to stress most to the cashiers was that they were one of the most important people in the store because no matter what kind of day the customer had, the cashier held that customer's attitude in their hand. The customer could be in a great mood, come in the store, get bumped by another customer, find that whatever they wanted was sold out at the time, tear their pantyhose on a display ... and by the time they got to the register could be in a bad mood, but if the cashier gives just a smile, that customer can feel great. It can also happen the other way around. You can come in here, get everything you want on sale and sail right through and get to the register, but if the cashier is just chewing gum and not paying any attention to you or just takes your check and doesn't even look you in the eye, you can forget that great time. But it's not just the cashier, everybody in the store has the power to make the customer feel good, and they use it.

RofB: How do you do that?

LS: Attitude is the key. The phrase we use is "We don't train people to be good, we hire good people to train." We try to find the individual who has a smile on their face, who likes other people; we try to grab them because they've got something that you can't train - their mother and father did that for them. If they don't come in to you with a good attitude, get ready to have problems. But if they come in with a good attitude, you can easily teach them skills, and that I think is the crucial thing here at Stew Leonard's. We spend a lot of time trying to find good people with nice attitudes who like to help other people, and then we do our part by giving them lots of opportunity.

RofB: Do you also have a formal training program?

LS: Absolutely. Each of our 16 departments has a formal training program, especially now with the new store coming on line. We also use the buddy system here quite a bit. We try to match up a new team member with a trainer and their schedules will be matched for a two or three week period so the trainee can depend on the buddy and hope to get any questions answered, and be pointed in the right direction. You can have lunch with that person, and just get off on the right foot. Every manager tries to do this with all new recruits.

RofB: One of the problems all family businesses have is with succession/survival and with growth. We've heard about how the company is run, and the emphasis on getting the best people seems to be solving the succession problem. It also seems to be helping out with the growth problem; what can you add to this?

LS: Stew's philosophy is to promote from within, give the top jobs to the people who have earned them. We have had a retail outlet in Danbury for the last five years; the actual store officially opens August 1991.... While the store was under construction... the idea was to put up a tent. It wasn't so much to sell merchandise as it was a way to grow our management while we also got the people in the area used to Stew Leonard's; we found out who our customers were, what they want, what they don't want... originally, only Christmas trees were sold there, then it expanded into a garden center business and then we started selling some produce in a farmers' market type of arrangement. All the while, the store construction went going on...Now we have a giant farmer's market under a huge circus tent.

Review of Business: In summary, we were impressed with the courtesy of the store and the staff. We left with the following thoughts. Stew Leonard's has passed the first generation barrier; it has a distinct operating style, and while many may think that some of its distinctiveness is gimmicky, much of what the company does is applicable to any company. Fair treatment of employees and customer courtesy are obviously universal characteristics of any business; can we learn from the successes of others?
COPYRIGHT 1991 St. John's University, College of Business Administration
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Symposium: Family Business; manager of the world's largest dairy store, Stew Leonard's
Publication:Review of Business
Article Type:Interview
Date:Jun 22, 1991
Words:2317
Previous Article:The Institute for Family Business at Baylor University.
Next Article:Avoid decision making disaster by considering psychological bias.
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