How are local grocers handling the increase in demand due to COVID-19? How are their supplier channels set up to meet the ebb and flow of particular products? And what changes must be made to address employee needs during this fragile time? We turn to a local Midwest grocer for their insights...
These are some of the pressing questions we addressed during an interview with Jake Heinen, a fourth-generation family member of Heinen’s markets, who is helping to run a 90-year-old grocery business.
History of Heinen’s
Started in 1929 by Jake’s great grandfather, Joe Heinen, the original store was a small butcher shop on the east side of Cleveland, Ohio. But Joe, who emigrated from Germany, had bigger dreams. Back then, stores were separate markets: you visited bakeries for breads and pastries, butcher shops for meats, farm stands for produce, and so on. This structure forced consumers to run all about town to get what they needed.
By 1933, Joe’s plan for a one-stop shop was in motion, carrying staples like butter, pickles, and donuts, in addition to his renowned meat selection.
Now, four generations later, Heinen’s has 23 stores in the greater Cleveland and Chicago areas and employs over 3,500 associates. One of the many things that distinguishes this business is their close relationships with suppliers and employees. Also, as a smaller independent grocer, they can quickly change direction to meet business and customer demands – a serious challenge for larger operations.
Specialty Suppliers in Produce & Meat
Heinen’s strategy is to truly ‘partner’ with their organic and conventional farmers. They are in constant communication about growing specs, pricing, and produce distribution. This assures Heinen’s of their supply while giving the farmer a reliable customer. By working directly with more than 75 Ohio and Illinois farmers who ship almost exclusively to Heinen’s own warehouses, they cut out the transportation middleman, therefore “limiting room for disruption and ensuring fresher quality,” as Jake calls it.
These relationships allow them to expand certain popular purchases, like heirloom-variety produce. In the summer they are 70% local but, to assure year-round supply, they also source from the U.S., Mexico, and Chile using large-scale suppliers, such as Western Growers and Driscoll Foods, also a family business.
Heinen’s promotes both conventional and organic foods. Entire quality control teams are dedicated to inspecting all products entering the warehouse to ensure their customers get the best products around.
In discussing the big picture of the produce industry with a Driscoll employee, they casually mentioned Heinen’s as a grocer that focuses on freshness, consistency, and packaging. They observe that Heinen’s devotes more floor space per square foot than most retailers. Furthermore, their produce team is very well-trained on the sourcing, nutrition, and value of all produce, something that’s also shared with their customers who buy more produce than the average grocer’s customer.
Heinen’s takes pride in its specific criteria to meet beef, pork, and chicken products. The company follows Joe Heinen’s advice that “we must buy the best to sell the best”. All their suppliers follow the practice of humanely raising and handling their animals and never treating them with added hormones or antibiotics.
By working with these trusted family businesses that allow exclusivity on their goods, products get to their stores faster and fresher. Because Heinen’s is comparatively small, they must have their own supply and not ‘stand in line’ behind the bigger chains. This, Jake says, has been a critical component of Heinen’s ability to be “flexible” during uncertain times, like COVID-19.
How has the Coronavirus affected Heinen’s?
“It has flipped everything on its head!” Jake explains. “It has made us rethink the way that we distribute, how we are buying goods and how we can quickly change direction within our current supply chain. We are living one day at a time – everything is fluid.”
Jake attributes Heinen’s trusted supply chain and lean management style to provide a nimble foundation for special situations, like COVID-19. What do we mean? Let’s start with their safety at the store level, because Heinen’s believes their associates’ health and safety is top priority.
Being deemed an essential business has its pros and cons.
On the upside, the grocers continue to make a profit and keep their employees working. However, every day these employees come to work, they put their health at risk, something Heinen’s considers top-of-mind.
Because they have just 23 stores, all of which maintain a level of what Jake calls “managerial autonomy,” they can address the needs of the associates quickly and precisely. When COVID was deemed a pandemic, Heinen’s installed plexiglass shields at its registers. Recently, Heinen’s was able to purchase face shields and masks for their associates who felt they needed these to work safely.
They also gave their associates the first ‘dibs’ on Lysol, toilet paper, and hand sanitizers. Furthermore, Heinen’s is allowing its staff to take a three-week furlough or, if they need more time, to use their paid time off consecutively.
As new state laws rolled out with the evolution of the pandemic, Heinen’s quickly placed signs in their stores to remind employees about hand washing, social distancing, and to avoid touching their face. Markers on the floor remind shoppers of what a safe six-foot distance looks like when waiting at the checkout line, and signs posted on the shelves politely remind customers to limit purchases of paper goods and cleaning products.
Changes from Suppliers during COVID-19
“If we didn’t have our long-term relationships with our suppliers, we would be in trouble,” said Jake. “Large chain grocers such as Kroger’s and Costco get fed first – we would be at the bottom of the food chain in procuring some products.”
While grocers like Heinen’s make necessary changes, so do suppliers. Grocery product manufacturers are experiencing a lag in production and are unable to keep up with unruly demand during this crisis.
Major packaged goods companies are shifting their focus from 20 choices to eight. For instance, Barilla used to have around 20 types of pasta, but now they are putting all their production toward just eight varieties. But once-choosy customers are now just happy to have any kind of pasta. However, even with limited product production, companies still can’t keep up with the demand – just consider the shortages on toilet paper.
Because of this, Heinen’s previous schedule of buying products to ensure a plentiful supply to customers has gone out the window. Being nimble and patient during this time pays off when orders are finally delivered to the warehouse. And to make things a little smoother during this disruptive time, the company is loyal to its devoted brands and accepts goods as they come in, not giving a particular vendor undue priority.
Consumer Behavior Changes
But all that is behind the scenes. Once in the store, Heinen’s is known for being a bright, cheerful place with quality meats, cheeses, pre-made meals, and fresh produce. Their flagship store even has a nice bar on the second floor – a feature many patrons are eagerly awaiting during this pandemic.
The biggest shift in consumer behavior Jake has experienced thus far in the pandemic is their online delivery business. Online grocery sales typically make up 3-4% of Heinen’s overall sales, but with coronavirus, their online business has tripled. This leaves questions about consumer experience and satisfaction. Sometimes online shoppers don’t pick the right things they’re looking for…what does that do to their experience? Will they use this platform more going forward? How can we maintain that in-store connection while our customers are shopping online?
Jake’s Major Takeaways
- Trust our food supply. This situation is unique and there are plenty of quality goods. They will continue to be available and handled in a safe way by producers and retailers. From the farm to the food manufacturers, everyone is working hard to bring quality food to the grocery store.
- Don’t hoard. Help your community by only buying what you need. Those who buy up all the toilet paper, hand sanitizers, and paper towels when they already have enough at home are putting their community at risk.
- Continue social distancing while shopping and take precautions. As much as we all want to get out of the house, grocery shopping should not be a family outing activity. Stay in and stay safe at this time, unless necessary.
- If anyone at Heinen’s store were to test positive for COVID-19, know that the store would immediately close and management would take all precautions to properly decontaminate and isolate. Furthermore, a third-party cleaning company with FDA-approved products would also disinfect the stores before re-opening.
In the long run, Heinen’s believes that their consumers will appreciate transparency in all that they do, because being a boutique family business puts them in the unique position of connecting with not only their associates to address their needs, but their loyal customers, too.
The Bottom Line
Locally owned and operated businesses like Heinen’s maintain a unique set of attributes that have benefited them during these tumultuous times. It has provided them with an ability to be flexible, to be safe, and ultimately to provide for associates and consumers in a way that treats them like family.