Interview: Shelly Broader, president of Kash n’ Karry/Sweetbay Supermarket.

By Bob Andelman

(This story originally appeared in the October 2005 issue of the Maddux Business Report, published in St. Petersburg, Florida. The story below is the unedited version and includes material that does not appear in the published version.)

Shelley Broader works customers in the prototype Sweetbay Supermarket in Seminole in a manner reminiscent of Bernie Marcus, co-founder of The Home Depot. She talks to everyone she encounters, charming them in conversation, infusing them with her bubbling enthusiasm, and tempting them to sample everything from blueberry sausage to lemon cream cake. When they’re looking for something special in the produce department she doesn’t point towards their object of desire and send them on their way. Instead, she guides them to its location and ensures their satisfaction. Marcus, known for biting the fingers of Depot associates who point instead of taking customers by the hand and guiding them, would be proud.

This is not your old n’ crusty grocery executive who has seen it all and cannot be moved by the latest and greatest variation on deli fried chicken. Broader, 41, is an evangelist, the woman who might just save supermarkets from themselves in the 21st century.

Even better, she has an unusually delicious sense of humor for a corporate executive.

In showing off Sweetbay’s extensive international foods aisle, the chain’s president and chief operating officer looks left, then right, then left again before pointing out her favorite British canned product. Assured no customer will see or hear her, she continues, displaying the sponge pudding like the finest of Barker’s Beauties on “The Price is Right.”

“I’m just too immature not to laugh at a can of ‘Spotted Dick’! It’s just wrong!” she says, cackling like a naughty schoolgirl.

• • •

Few readers of the Maddux Business Report have probably been in a Sweetbay’s yet, so consider this a preview of a store that may change more than a few family shopping habits in the Tampa Bay area in 2006. It’s already occurring in the chain’s out-of-town tryouts. Fort Myers and Naples were the first communities to experience the retirement of grocery discounter Kash n’ Karry and the arrival of Sweetbay. Even as you read this, the last K n’K stores in Bradenton and Sarasota are being made over. And in 2006, the 50 stores in the Tampa Bay areas will go under the knife and re-emerge with extreme supermarket makeovers.

Walk in a typical grocer’s front door and the first thing you see will be cash registers or a customer service desk. Boooooring! Walk in the front door of a Sweetbay and all of your senses will be assimilated, including sights and smells.

In the produce department, the average Sweetbay offers almost two dozen varieties of tomatoes and at least as many mushroom varieties. Then there are the exotics, including lemon grass, Thai coconut, cherimoya, kiwano horned melons, name, yautia, batata and a Broader favorite, celery root. “I boil it, peel it, cut it in cubes and add it to mashed potatoes with some horseradish. Here,” she says, scratching one with her nail. “Smell.”

“I’m obsessed with food,” Broader says. “Once I was in a restaurant when I was really young. We were having prime rib. I thought the bowl in front of me was coleslaw, so I took a big forkful – it was horseradish! The top of my head about blew off! But it started my love of food.”

A particular weakness: the bakery department.

“I try to operate at 30,000 feet, but sometimes I come down right to the cakes,” she says. “I ate an entire one of these while working in the store’s break room one day – it took four hours – and now it’s called ‘The Presidential Cream Cheese Fudge Cake.’”

A few bakery items will survive the transition from Kash n’ Karry to Sweetbay, including the chain’s signature home-style-baked donuts and Cuban bread.

If you ever see Broader walk from one end of a Sweetbay to the other, you’ll wonder why she doesn’t weigh 400 pounds. She samples everything in sight.

“My favorite cheese is white Stilton with blueberries and champagne. It’s the most decadent thing on earth,” she says.

If pronouncing Sweetbay the future of supermarkets sounds crazy at this juncture, consider some compelling evidence:

• BREEDING: Forget 50 years of Kash n’ Karry. Sweetbay’s ancestral line traces directly back to Hannaford, the “Publix of New England,” if you will. Founded in Scarborough, Maine, in 1883, it is one of the top upscale grocers in the Northeast and highly respected around the country.

• EARLY SUCCESS: Sweetbay, Kash n’ Karry, Hannaford and Food Lion aren’t even half of the 11 supermarket subsidiaries owned and operated by Delhaize-America. (The Belgium-based Delhaize Group has food operations in 10 countries on three continents.) And while the company trades on the New York Stock Exchange under the symbol DEG, it doesn’t break out individual sales per supermarket.

But here’s a number that Broader will disclose: 40.

That’s 40 as in the former Kash n’ Karry stores that have been retired so far are doing, on average, 40 percent better in a year-to-year comparison as Sweetbays. “It’s early; nobody’s popping the champagne yet,” Broader says. “But consumers have really responded to what they’ve seen.”

• MANAGEMENT: When Broader was handed the Kash n’ Karry chain in June 2003, she was given the authority to do whatever it took. She achieved a cultural revolution in part by finding key cogs for her new machine from several already well-oiled engines with portfolios of best practices experience.

“I have finance guys from Food Lion,” she says. “Our corporate development and real estate person is from Wal-Mart. Our merchandising and procurement person is from Kash n’ Karry. Our retail operations person was at Kash n’ Karry for three years and prior to that was at Hannaford. Our marketing, HR and organization development folks are people I asked to come down from Hannaford.”

Broader, incidentally, was Kash n’ Karry’s ninth president in 17 years.

“When I came here, it was to help Delhaize focus on what the opportunity was,” she says. “It became clear it wasn’t about changing Kash n’ Karry. It was about developing a new brand.”

• TRAINING: Just because a cashier worked at Kash n’ Karry yesterday doesn’t guarantee he or she will be punching the clock at Sweetbay tomorrow.

“The person who just comes in and punches a clock but doesn’t like food has a choice – change or leave,” Broader says. “They either are motivated to change or they are asked to leave. It’s a different environment.”

Even the company’s employment application is different. Beyond the front-page basics requesting name, rank and serial number – and there are four pages in all – Sweetbay says “Let’s Talk Food.” Take Question No. 2, for example: “Tell us about your favorite foods. What makes them special to you?” Forget checking a box or writing one-word answers. Sweetbay wants whole sentences that demonstrate a knowledge and love of food from every position.

“Once you get inside,” Broader warns, “you will see questions that either inspire you or make you say, ‘These people are not for me.’ Retail pay rates are fairly standardized. What matters is whether we have people who are connected, rather than people who just show up. When you buy an auto part, the guys working in those stores love cars. They want to help you fix your car. We’re in the food business. And until now, we’ve done a poor job attracting people who love food.”

And with Sweetbay stores employing up to 30 people more per unit than the average Kash n’ Karry, the commitment to customer service is real. “We have 10,000 people who work for us,” Broader says. “If they’re turned on, they’re going to be great ambassadors.”

More questions:

• “What ingredients are in your favorite recipe?”

• “What three items will always be found in your refrigerator?”

• “Describe your favorite meal or food experience. What was the setting? Who were you with? What did you eat?”

That last question leaves enough room for an answer in essay form, incidentally.

• INTANGIBLES: Sweetbay, like Hannaford, smells irresistible from the moment you walk through the automatic sliding doors. The experience at both begins with the pungent aroma of fresh fruit and the racetrack layout then moves unsuspecting shoppers into the even greater aroma of a fresh bakery. Taste buds working overtime, the path then leads to the ready-to-eat deli, multiple fresh seafood counters (which, to their credit, don’t smell at all) and the butcher before you remember to pick up tawdry stuff like laundry detergent and Spotted Dick.

“It’s more crucial than ever for supermarkets to know where they fit in, what differentiates them from the competition, to have an edge,” says Jenny McTaggart, senior editor of Progressive Grocer magazine. “Wal-Mart’s edge is low price; you could also argue convenience. But on customer service, Publix wins. I think Sweetbay will be an interesting concept to watch. Our editor-in-chief went down there to profile one of their stores. He was pretty impressed.”

“Publix, Wal-Mart and Target are going to be the leaders for a while,” says Craig Sher, president of St. Petersburg-based Sembler Company and a long-time development partner with Publix in Florida and Georgia. “I think you’ll see Sweetbay right behind them. I think they’re on to something with the concept. I don’t think they’ll climb to No. 1 or 2, but they can be a strong No. 3 over time as long as they have capital committed and their leadership is good. I think their new stores are nice.”

• • •

When Broader took charge of Kash n’ Karry and its 144 Florida stores more than two years ago, the novice chief executive’s first dramatic act was closing 34 stores, primarily in Orlando, essentially abandoning that market.

The remaining stores have been converted by media market, moving south to north: Naples/Fort Myers, Sarasota/Bradenton and now, St. Petersburg/Clearwater/Tampa. The 50 stores here will receive their makeovers in 2006. There won’t be a single grand opening day, but none of the old K n’ K stores will officially close in the conversion either. There will also be two new Sweetbays built from the ground up in Riverview and St. Petersburg’s Midtown area.

There will most likely by 108 Sweetbay stores by the end of 2006, when the conversion process is complete. Beyond that, and without releasing specific numbers, Broader promises “significant” new store growth in Tampa and St. Petersburg.

Sweetbay has different real estate requirements than Kash n’ Karry did on access and egress from the road, visibility and who its outparcel and shopping center partners are, preferring complementary users, not competitors. With in-store pharmacies and liquor stores, for example, it isn’t interested in locating next to a CVS, Walgreen’s or independent liquor stores.

“We’re looking at a lot of existing sites now that are currently occupied by a tenant thinking of leaving and we’re also looking at new construction,” Broader says.

Including Winn-Dixie stores?

“I think everybody is looking, absolutely,” she says.

• • •

What, you may wonder, does Lakeland-based Publix Super Markets think of this ugly duckling turning into a beautiful swan in its own backyard?

We have no idea.

In response to our written request for an interview with Publix executives on a wide range of topics, company spokesperson Maria Brous responded thus:

“Our stategy (sic) and success is simple – we focus on customer service, quality of product and best value for our customers. Our goal is to provide the best shopping experience possible, and we know we have been successful when our customers refer to ‘their Publix’. Our business philosopy (sic) has made us successful for 75 years and we’re looking ahead to the next 75. No matter who the competitor is, no one matches our commitment to service and to our communities.”

And – no kidding – Brous misspelled “strategy” and “philosophy.”

An appeal to Publix President Ed Crenshaw (the subject of a Maddux Report cover story in July 1996 when the grocer entered the Georgia market) brought a similar response – without the typos.
“I appreciate your desire to include a more definitive response for your story. I do hope you understand it would not be appropriate for me to participate. Publix has been very consistent with the response to media requests of this nature and to make an exception would not be fair to others.”

(Albertsons and Winn-Dixie also declined comment for this story.)

But with Winn-Dixie in retreat (a.k.a. bankruptcy protection) and rumors swirling that Albertsons may abandon Florida (it exited Northeast Florida in May, selling six stores to Jacksonville start-up, Rowes), there is an opening for a new No. 3, especially for one with the resources that Delhaize brings to Sweetbay.

Broader has no illusions of knocking Publix off its throne as Florida’s No. 1 grocer, although she isn’t intimidated by it, either.

“I think they’re great, an incredibly well run company,” Broader says. “They have terrific execution, a great real estate strategy. Sweetbay is not looking to be No. 1 in market share in a market where the ratio is 900 to 1 in store count. We’re not trying to imitate what Publix does. They execute their go-to-market strategy flawlessly. We’re trying to do something different and give people a viable option.”

Broader threw in the towel as far as Kash n’ Karry’s discount concept ever succeeding against Wal-Mart, which No. 2 in the state. That’s a move with which no one takes issue.

“Wal-Mart has been huge for a long time, longer than most people realize,” says Chuck Cerankosky, an analyst who follows Albertsons, Kroger, Safeway and Whole Foods Market for KeyBanc Capital Markets in Cleveland. “But they segment the market to a lower tier and upper tier. Wal-Mart is not known for selection and higher quality. That’s where Whole Foods Market, Wild Oats or Publix can do a better job, especially in the fresh food categories. To the same extent that not everybody wants to buy clothes at Wal-Mart, the same goes for food.”

(According to The Shelby Report, a grocery industry trade publication covering the Sunbelt states, Wal-Mart is the grocery market share leader in the following SE states: Alabama; South Carolina; Tennessee; Mississippi; and Louisiana. It is second in: North Carolina; Kentucky; Virginia; Georgia and Florida.)

As for Albertsons…

“I hear a different rumor about a different competitor every day,” Broader says, “ever since Albertsons made the announcements of adopting the GE model of being one or two or out. But you can’t hold every decision in the hopes something will change with your competition. Anyone after a share of stomach is a competitor to me; I consider 7-Eleven a competitor. When we made the decision to start a new supermarket chain in Florida, Winn-Dixie was a viable competitor, as was Albertsons. If one of those banners change, it’s still competitors going after the same food dollar.”

Winn-Dixie, obviously, has serious competitive issues ahead. They’re going to operate a leaner company and need to find a niche and stick to it.

“I don’t know if they have time to do it,” Sher says. “You have to change margins and image to go against Wal-Mart. I think they need to invest more on their stores. The knock on them has always been their stores were less up to date.”

Albertsons is another enigma in Sher’s eyes.

“They’ve tried to sell their stores and exit the market and not lose everything,” he says. “They have decisions to make; they’re just kind of treading water. They have an announced corporate policy that if they can’t be No. 1 or No. 2, they get out. Well, they’d have to invest really heavily to get to that. That’s really tough when you’ve got Publix and a Wal-Mart ahead of you on the ladder.”

Cincinnati-based Kroger has emphasized being No. 1 or 2 as a strategy for many years, says Cerankosky. “Retail rewards economies of scale. Albertsons has shown willingness in recent years to exit markets where it has small market shares. They have a lot of stores in Florida but they’re spread throughout the state and have strong market share holders ahead of them. They’re still digesting their American Stores (merger) from 1999 and they’re not doing as well as Kroger and Safeway in recovering from the recession and other competitive factors.”

(The American Stores merger brought Acme, Jewel-Osco, Osco Drug, Sav-On Drug and Lucky stores in California under the same roof with Albertsons In 2003, Albertsons – the nations second largest grocery chain overall – also acquired Shaw’s and Star Markets in New England.)

Tampa-based RMC Property Group works with Publix to find and develop new stores across Florida, as does Sembler Company. Both companies discussed the Lakeland supermarket with some trepidation.

“Sharing info is not their favorite thing,” says Mitchell Rice, CEO of RMC. “A component of what we see of their strategy is looking to have their existing stores maximize their strategic location. We see Publix doing significant remodeling of their existing stores. At Dale Mabry, & Linebaugh, they tore the store down and built a new prototype in its place. That’s a painful process for Publix because they have to close the store and be down. I think they justify it by having other stores in the relative trade area. They spend a lot of money in older facilities remodeling but they’re left with the same physical plant.”

Publix is now growing in South Carolina, Tennessee and Alabama; they pretty much have Florida covered, says David J. Livingston, managing director of DJL Research in Pewaukee, Wisconsin. “Publix is smart and they will not cannibalize sales unless nearby stores are so successful they need to take pressure off.”

During the 1990s, Publix experimented with 60,000-square-foot superstores, a strategy it appears to have backed away from in favor of more targeted neighborhood stores (such as the 29,000-square-foot shops at Carillon and University Village in St. Petersburg or scaled prototypes of 39,000 and 49,000 square feet), a natural foods banner, GreenWise, and a Hispanic foods concept, Sabor.

“I toured the Sabor store in Hialeah,” says Progressive Grocer’s McTaggart. “My impression was that they’ve done their homework. They’ve had many years of catering to Cuban customers. They have good products and know how to do it. If anyone can do it, Publix will be the one to watch.”

While most of the attention in the Florida market has focused on Publix and Wal-Mart, Sher says that Target and membership warehouses such as Costco and BJ’s shouldn’t be discounted as big players in the grocery business.

“I think Target is on a major push to broaden their base in Florida,” he says. (Sembler developed the Super Target store at the new Clearwater Mall.) “It’s a high priority for them; they perform well here. Publix is more selective. It seems like they’re everywhere. They’ll replace substandard stores and upgrade them. They’re not slacking; they’re very consistent in what they do. They’ve got some interesting new concepts, including the Spanish one and the GreenWise, whole foods concept. They’re going to try a few of them. I think they’re smart to customize Publix to different areas. If you can hone a concept that’s good for a Latin population, that makes sense. And if certain areas want more than the usual Publix, that makes sense, too. Publix can merchandise anyway they want because they’re that good.”

Sweetbay isn’t the only grocer nipping at Publix’s heels and with design on a bigger piece of upscale market share.

Whole Foods Market, which has only one of its seven Florida stores on the west coast (in downtown Sarasota), is a national dynamo in the organic grocery market. It hasn’t announced plans to open a store in Tampa or St. Petersburg yet, but economies of scale and the growing upscale residential environment suggest that announcement could come at any time. (The company declined to comment on expansion plans.)

“We did a Whole Foods store in Atlanta,” Sher says. “It’s a great store, a beautiful store. They will be here in isolated places. They may do one or two in the Tampa Bay area. They’re not one to be on every block. I would think they’d go to South Tampa first. Somewhere with lots of parking.”

“Sooner or later they will,” agrees David Conn, a senior vice president of retail services for CB Richard Ellis in Tampa. “I can’t imagine they’ll run with the lone outpost in Sarasota and nothing else.”
Wild Oats, however, is already under construction with its first Tampa Bay location at Walter Crossing at Dale Mabry Highway and Interstate 275, where in March 2006 it will be a neighbor of the new Target store.

“One of our real estate strategies for this year and next is to do greater density in our existing markets,” says Wild Oats Communications Manager Kristi Estes. “Our South Florida stores are doing really well; Tampa is a natural extension of those.”

The 26,000-square-foot Wild Oats store is a new prototype for the company, offering expanded organic produce, meat and seafood selections as well as a new in-store café. And it is flying in the face of the traditional image of natural foods stores that in the past tended toward rehabilitating abandoned supermarket and drug store locations and keeping overhead low.

“We’ve been doing a lot of stores in lifestyle centers – alongside high end boutiques and stores like Target. They’ve been very successful,” according to Estes. “With all of our new stores we seek out high traffic locations.”

The Wild Oats store will employ about 150 people and be open seven days a week from 7 a.m.-10 p.m. – typical hours for mainstream grocery stores, not narrowly defined boutiques.

“Publix definitely could be a competitor of ours,” Estes says. “We compete quite a bit with conventional grocery stores. They are introducing organics more and more.”

Wild Oats will definitely compete with Fresh Market, a similar concept that recently opened stores in Countryside and Tampa. Estes hadn’t heard of Sweetbay yet. “If there are other stores that offer natural and organic foods, we tend to grow the market together,” she says.

• • •

To the casual shopper unaware of Sweetbay’s lineage through Hannaford, the expectation might be that this is a nice experiment that will crash and burn. But that’s not likely. A visit to a Hannaford store in its Scarborough, Maine, headquarters community reinforces the notion that there is little of a random nature in the presentation, organization, pricing or even the lighting at Sweetbay.

One of the subtle keys to a store’s success and culture is its collection of store brand products. Publix-branded products, for example, often do well in side-by-side taste and quality comparisons with national brands. Kash n’ Karry store brands… well, there wasn’t much to recommend them.

As for Sweetbay branded products – there are none. During the early days of the transition, Broader stocked her new stores with pre-packaged Hannaford-branded foods as a stop-gap measure until Sweetbay was large enough to justify ramping up product of its own line. But then something unexpected happened. Sweetbay customers really liked the Hannaford foods, especially the frozen gourmet “On The Go Bistro” line, which includes crabmeat tartlets, cranberry & brie phyllo, spinach walnut ravioli, and molten lava cakes. And for the many transplanted northerners in Florida, finding the Hannaford brand is like being reacquainted with an old flame.

“All of our fresh departments are branded Sweetbay,” Broader says. “When we were making the decision to transition, we looked at costs on private label brands. But we would have had to carry Kash n’ Karry and a Sweetbay private label. The cost of carrying a label with such low volume was economically prohibitive, so we looked at what outside label we could use. We decided the depth and breadth and quality of Hannaford would be a great way to reduce the cost of the transition. What we’re finding now is making that label exclusive at Sweetbay is an advantage. We may well be Sweetbay offering Hannaford brands in the long haul. It’s been well received.”

• • •

Shelley Broader never dreamed of a career running a supermarket. The Spokane, Washington, native majored in broadcast journalism at Washington State University and figured she’d be in front of a camera, reporting on four-alarm fires, police reports, stuff like that.

“When I graduated and did my internship, I hated it,” she says.

Derailed from the life she imagined, Broader relocated to Boston in search of a “big city adventure.” She wound up employed by a mutual fund company, discovered a love of finance and she earned a National Association of Securities Dealers Series 7 investment broker’s license.

Through a series of moves with clients she landed Hannaford Brothers Co. as a client, working on a debt placement for them. They told her that if she wanted to advance her career with them, she’d have to learn their business from the ground up.

Broader accepted a position as manager of an inner city Hannaford’s grocery on Central Avenue in Albany, New York. But before they let her run the store, she had to start with the basics: running a cash register.

“I was a cashier, and not a very good one,” she says. “Even worse, people I had done multi-million-dollar deals with were coming through my line and they were horrified. I’d look at them and I knew they wanted to call their attorneys. To say I changed careers was an understatement.”

Ron Hodge was the New York division head for Hannaford back then; he’s now the company’s CEO and Broader’s mentor for 12 years as she rose to senior vice president of Hannaford.

“He said, ‘You’ll know right away – you’ll either love it or hate it.’ I love it. The people side of it, the products, the strategy. It’s a great business.”

Bob Andelman worked as a cashier at a Stop n’ Shop supermarket during his senior year of high school in North Brunswick Township, New Jersey. He was never considered future management material.

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