How One Iconic Grocer Deals with COVID-19
By Dale Buss
Stew Leonard’s stores have made lots of adjustments, like most other grocery retailers in America, to survive and emerge from the coronavirus pandemic. Those changes have included shaving profit margins, discontinuing popular sampling and buffet programs, escalating certain types of merchandising, culling SKUs from overpopulated categories and coping with unavailable products while making room for items that materialized suddenly.
But Stew Leonard Jr., the third-generation chief of the half-century old chain of seven supermarkets based in Norwalk, Conn., believes all this too shall pass – mostly. He foresees a day when bountiful buffets once again will entice shoppers at Leonard’s stores in New Jersey, New York and Connecticut and his managers will be looking to sell Fourth of July cakes and balloons instead of masks with American-flag themes imprinted on them.
“We’re just an hour away from the World Trade Center,” Leonard told CPGmatters by way of explaining how he sees the nation – and his business – settling down post-Covid-19. “And our stores are in metro New York areas. Whole communities were paralyzed after what happened during 9/11. But now, if you want to buy some of the most expensive real estate in Manhattan, go to around Freedom Tower,” which was erected on the site of the buildings destroyed during the terrorist attacks. “It’s all come back.”
His views aren’t to diminish the many significant concessions that Americans have had to make to the coronavirus, Leonard said. While stay-at-home orders and sheltering in place naturally benefited supermarkets as they supplied cowering populations seeking comfort in eating, Stew Leonard’s and other grocery stores have wrenched their operations mightily to serve customers, employees and their markets as a whole amid the crisis.
Leonard ticked off some of the biggest adjustments. For one thing, sampling programs were “erased,” he said, and “CPG brands always have had strong demonstration programs.” His stores also had to eliminate their popular buffets, which ranged from olives to bagels and allowed people to taste food before they bought it. At the same time, “with everyone cooking and eating at home and schools and restaurants closed, people bought and tried a bigger variety of CPG items” anyway.
“We’ve even seen that in our stores,” where about 60 percent of Stew Leonard’s sales are of private-label items, he said. “A lot of people have tried our new items. In any event, all brands are going to keep seeing a little bit of a lift in the post-Covid-19 era.”
And while sales have been strong at Stew Leonard’s throughout the pandemic, various categories and individual items have experienced lots of changes. Early in the pandemic, of course, Stew Leonard’s couldn’t get enough toilet paper and paper towels, just like every store in America. “We had to go outside regular channels to fill in,” he explained. Curiously, too, Birds Eye shorted Stew Leonard’s on its usual supplies of frozen vegetables, so Leonard’s managers had to cast about to make up the difference.
And even over the longer term, the chain has dealt with some funky results of the fact that most restaurants and schools – two hugely significant outlets for Americans’ meals – were closed while supermarkets remained open. Supply chains began adjusting in part by peddling foodservice-oriented product lines to supermarkets.
“We had five-pound bags of French fries in our store for $5 apiece, and we’ve sold 20,000 to 30,000 of those,” Leonard said. “They’ve flown off the shelf. We also have big, 25-pound bags of flour, which we never would have sold before. These have been largely institutional products with that kind of packaging; the French fries didn’t even have a label on them. Some of our packaging is just in Spanish.”
At the same time, Stew Leonard’s has thinned out its SKU count in a number of categories because of the pandemic. “Instead of having 14 flavors of ice cream, for example, we’ve kept the eight best sellers,” Leonard explained. “The eight are selling so fast that you don’t want to waste your time and effort on the bottom six.”
Hand sanitizer has come out of nowhere to rank as a consumer staple now, of course. So have masks, and Stew Leonard’s has sold about a quarter-million masks so far, including those imprinted with cows (Stew Leonard’s mascot) and Fourth of July graphics.
Meanwhile, pandemic patterns have nudged Stew Leonard’s to treat its interior real estate a bit differently. For example, as frozen-food sales have burgeoned, Leonard’s store have added freezer cases to handle more fish. And Stew Leonard’s has added distinct baking sections in the wake of the boom in home baking during Covid-19.
“We’ve never had a big baking area, just a big in-store bakery,” Leonard said. “But now all of a sudden everyone is starting to bake at home, and people are buying a lot more flour and yeast.”
There have been lots of reports nationwide of erratic pricing and even price gouging over the course of the pandemic, including initial spikes in the prices of eggs and, more recently, higher prices amid short supplies of meat cuts coming out of big processing plants where the coronavirus took a particular toll on employees. “But those things have come back to normal as the supply chain is starting to fill itself up again,” Leonard said.
His stores are anchored in one of the hardest-hit regions in the United States, the New York metro area, where the shock of the pandemic is likely to linger for years. So Leonard has observed that, “although we’re opening restaurants and so forth, I don’t feel that consumer confidence is there yet. People are afraid to go out to a lot of places. So a lingering wait-and-see attitude is prevailing.”
At the same time, he expressed optimism that the Stew Leonard’s experience – an iconic one for consumers and a company culture that has been praised by management experts – will snap back to its traditional form eventually.
“I can’t tell you how much people loved the buffets and all the food samples in the store,” he said. “Right now, everyone obviously has had to bypass those things due to the virus. But once we get a [COVID-19] vaccine – it won’t be overnight, but slowly everyone will be right back to enjoying their buffets.”