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Danny Wegman: Man with a mission

Rochester Business Journal
April 29, 2016

Danny Wegman rarely gets discouraged.

At one level, it is not hard to see why. The CEO of Wegmans Food Markets Inc. has a lot to be happy about—strong demand for the company’s offerings across multiple states, sustained success over a century that has earned the firm some of the most coveted national awards and rankings, and robust annual sales of nearly $8 billion.

However, Wegman’s positive outlook stems in large part from the new opportunities he believes are in Rochester’s reach today—the chance Greater Rochester has to write a new script for the future of the region and its urban core, he says.

As co-chairman of the Finger Lakes Regional Economic Development Council, Wegman has worked to tackle Rochester’s challenges head-on, believing problems—like poverty and workforce development—can be solved.

Wegman applies the same focus and energy to his day job. In the four decades since he was named company president, Wegman has helped grow the firm from sales of $223 million and 31 stores in New York alone to $7.9 billion in sales last year and 88 stores across six states.

He became CEO in 2005; at the same time, his daughter Colleen Wegman took over as president.

Wegmans this year is celebrating its 100th anniversary. The company was founded by Wegman’s grandfather, Walter Wegman, and great-uncle John Wegman. Robert Wegman—Danny Wegman’s father—took over in 1950 and was at the helm as it began to expand outside of New York in 1993.

Today, Wegmans employs more than 45,000 people, including nearly 14,000 here. The company recently was named America’s favorite grocery retailer by Market Force Information Inc. and ranked No. 4 on Fortune magazine’s 2016 edition of the 100 Best Companies to Work For—a list it has appeared on each year since 1998.

In 2015, Supermarket News—a grocery industry trade publication—ranked Wegmans 33rd in sales volume on its annual list of grocery sellers in North America.

The company’s strategy has remained simple after a century of practice: follow the customer from a few steps ahead, Wegman says.

In a wide-ranging interview this month with Rochester Business Journal reporter Kerry Feltner and Editor Paul Ericson, Wegman discussed how the company has grown and evolved over the last century, his relationship with his late father and his commitment to fighting poverty in the Rochester area.

An edited transcript follows:

ROCHESTER BUSINESS JOURNAL: This year is a significant year for Wegmans with the 100th anniversary. It also marks a personal milestone for you: 40 years since you became president of the company. Have you achieved the goals you set out to accomplish when you took the role? Has anything surprised you along the way?

DANIEL WEGMAN: A lot of things have changed since I became president. We look at it (as) following our customers from a few steps ahead.

Our customers don’t know what they’re going to want; they have a challenging life like all of us do and it’s our job to figure out what will help them do a better job with their life, whether it’s health, whether it’s convenience, whether its value. And so following that philosophy of trying to know where your customer is going has been a lot of fun.

I became part of a successful company that my dad ran and folks that I knew for a long time, and how could I help them be successful? I think that was my primary goal, and they certainly taught me a lot along the way.

They used to call me the kid when I started and not too many call me that anymore. (Laughter)

It’s changed a lot. The one constant, I would say, has been our belief in how the customers are going to continue to want food that’s easier for them to prepare for their families.

People have continued to get busier and busier whether they need to or not. I remember when I was a young boy I was playing sports, but it was a relatively contained time period. But now I look at my grandsons and they’re playing hockey, which is the most time-consuming sport I’ve ever seen.

So our job is to try to make food easier to put on the table or to put in the car, however it goes.

That’s probably the biggest change in our business—the joining with the restaurant business as it’s evolved and then not only just joining but having something in the middle that’s not quite restaurant, it’s not quite traditional food store, but it’s a big factor in a lot of people’s lives. And it’s not all or nothing; sometimes it’s some.

So, that’s the biggest change that’s taken place, and it all came about through that kind of thinking—what would help our customers the most? They weren’t really asking for it; we just thought that that was what they would want.

It’s taken a long time; it’s taken a lot of organizational changes, but it’s very important to our customers.

Long-term view

RBJ: In the letter you wrote marking the 100th anniversary, you quoted a philosophy outlined by your dad years ago: “To do something that no one else is doing and offer customers a choice they don’t have at the moment. This is the only reason for being in business.” Many companies can do that for a while; how do you think your company has

done it for 100 years? Not many have been able to accomplish that.

WEGMAN: I think we have a wonderful advantage by being a private company. With public companies getting quarterly reports and so on, you get evaluated on a certain basis of financial results. I won’t say that financial results are any less important to us, but first and foremost I would say we’re a mission-based company, which means that we are free to pursue something that no one else is doing. Because why are we here? If we’re not here to do something different, what are we doing? Some businesses call themselves a fast second; that’s not what we are.

So it’s, I think, the opportunity to take a long-term view and not be profit-driven; but by being mission-driven, it always will challenge us. That alone will challenge us—what is (it) that we can do that frankly no one else can do?

And one of the answers to that is things that involve people. We’ve had a wonderful relationship with our people for 100 years, and so anytime we look to do something that might be difficult to do, if anybody can do it, our people can do it.

It gives us a chance to do things that other companies (cannot)—I don’t think they literally can do them; they don’t have that relationship with their people, they don’t have that belief in their people, and I don’t think they invest in their people the way we do. It’s all these things together that give us a chance to do stuff that others can’t do.

I don’t know of a company in the world that goes back and forth between restaurants and retail and in the middle the way that we do; just doesn’t happen. We have just remarkable chefs from all over the world, and what are they doing in a grocery store? It just doesn’t happen. Maybe it will as people see what we’re doing, (but) it’s really a challenge to do it.

A lot of things haven’t worked. We used to be in the fabric business—that’s what makes me want to keep pursuing the food. (Laughter) We used to be in the clothing business in a couple of different ways; we had them in our stores and we had jean shops called Old West—we’ve never been afraid to try things.

We had Chase-Pitkin, the home improvement business, and we never were quite large enough in that to buy properly, so we had to exit that business.

I think we’re fortunate in the food business that we were just big enough that we were able to do OK in it.

RBJ: What do you learn during those times when you realize it’s not working and how do you as a leader reroute, understand that direction is not the right one? How do you pick yourself up after those endeavors that don’t pan out?

WEGMAN: I think first of all we don’t want to do anything unless we believe in it. We’re not one (to) throw it against the wall and see what sticks—that’s not what we think. What do we really think our customers want? Do we think we can do it? And (then) we try very hard to do it.

For example, in some of the prepared-food areas that I’m speaking about, I think our first foray was probably sometime in the mid-’80s. It took us years. We probably lost more money in that business than anyone ever should, but we believed in it, so we stayed with it.

And there were other things that have their day and their day goes. We had areas in our stores where kids could come in and play video games, and it was fun for a while, but (the games) all got smaller (and) went home; it just changed.

We were in the photo-finishing business (and) obviously that changed. We had video stores; we still have dry cleaning in one place down in Ithaca—they still love it.

It’s always a challenge to stop doing something that you are trying hard to make good, but we just have to do that. We try to focus on what’s most important to our business, what is uniquely Wegmans to our customers, and try to do a great job there. That’s the lens we try to look at things through.

RBJ: One thing that you’ve been great at doing is employing people. You have nearly 14,000 people locally and 45,000 people companywide. In the Rochester economy, not a lot of companies have been able to do that. If you look at the RBJ 75, the top employers are dominated by non-profits, not profit-making companies. You’ve been very involved in working on the local economy. What are your thoughts on the struggles that private employers have to grow here?

WEGMAN: I won’t describe a lot of problems, but I will say what I see that’s exciting.

Even though we have a good number of employees, a lot of what we’re doing now is working with partners, which is our strategy because we’d rather stick to retailing and restaurants. We know those better, so for our production we’re working with partners. For example, the Kreher family that makes our eggs. They used to be our egg farm, but we didn’t see a long-term future in that for us. We thought others would be better (at it), so really they become part of our family. And as our overall egg sales grow, they do.

And you’ve got folks like LiDestri, who is a wonderful supplier to us and they’re growing. And (produce farmer) Doug Mason; he’s been selling to us for a hundred years—his family out in Webster. His business is growing.

Again, this is kind of a customer-driven phenomenon. You want production of goods to be closer here; you want less transportation, less harm to the environment and more jobs here, so actually there’s been a huge change taking place.

When I first came into the business it was kind of going in the reverse—you’re buying things from farther away—but today all of that is changing. Many of our meats come from much closer.

So, I think there are some good things going on in local business, at least in our part of the (economy). And in some of the other areas, I think there are some folks doing some great things.

The companies (such as) Paychex and so on, they’re certainly doing very well. And you’ve got some smaller firms that are doing well. You don’t get headlines with them, but they’re doing a wonderful job.

There’s a man, Tyrone Reeves, who makes machine parts, and his business is doing fabulously. The reason that we’re so close to Tyrone is he employs a lot of disadvantaged folks and is helping train them so that they’re going to have a successful career at the other end.

What’s nice here is, we didn’t know Ty before the Finger Lakes (Regional Economic Development) Council started, but we got to know him on that. We just work together and you find a lot of good things happen.

I think companies are doing well here. There’s a demand for more people all the time—well-trained people or talented people—and that’s a good sign. Nobody’s saying I’ve got these good employees, do you want them? It’s very exciting, and we know that from the work we’ve been doing.

Are we taking off like North Carolina? Maybe not, but I think there are some things to be optimistic about.

Poverty in Rochester
RBJ: Poverty and workforce development are very important issues to you. Why are they so important to you personally? Wegmans has done a lot over the years to give back and work toward decreasing the poverty rate and joblessness rate. However, we’ve all seen the statistics that show Rochester’s poverty rate worsening. What are your thoughts on the progress we’ve made?

WEGMAN: They’ve always been important for me and who knows why. I went to McQuaid; they always taught me to help others and it becomes part of your DNA—how can you help people—and it also became part of our company’s mission.

Because we wanted to hire folks from the city, but we didn’t have stores in the city. We said, what can we do? So my dad devised a program, which ended up being (Hillside) Work-Scholarship Connection. Because he knew that if kids would come and work for us and if they did a good job at work, they would do well in school. I think it was all the disciplines of showing up at work. You go back and you put those into your academic life

So, really it was a combination of wanting to do something to help people help our community and a business need—that’s pretty good when those two things can go together.

Poverty itself is a huge drain on any community. Colleen, my daughter, is the chairman of United Way today. She’s trying to help people; that’s always been part of what we’ve tried to do.

The United Way, for example, ends up helping half the people in our community and, of course, we don’t even know it really. And so it was, what can we do to help this place, which frankly has been so good to us.

RBJ: Do you ever get discouraged?

WEGMAN: I tend to be a very happy person. I tend to be a very positive person. If I get discouraged, it’s late at night; I wake up the next day and things are much better.

RBJ: In terms of the anti-poverty initiative, what do you think some of the most effective strategies will be over time?

WEGMAN: I think to solve any problem you have to break it into small, manageable, measurable areas, and I think that that’s the direction that’s been chosen. They’ve decided to work around East High—the Beechwood neighborhood. They’re trying to take that area of the city and do some focused initiatives in there that they believe will make a difference. I believe that’s the right way to solve problems, so I’m very happy with what’s been chosen there. It’s not all laid out and buttoned down, but it’s getting closer and so I feel good about that part of it.

I feel it’s a real significant challenge. And the reason for that is, one of the worst things for an individual is to have a long-term disability problem. Because when you stop working, you get used to that. So if anyone ever has a problem at Wegmans and they’re out with a disability, we try to get them back to work as fast as we can because otherwise it’s just a bad thing—you get used to doing not what you should do.

So, an individual who has a problem with their life and (is) not doing what they should do, they get stuck in that thinking that that’s the way life is. And I think that’s a big part of the cycle of poverty.

Now there may be other factors in there; I’m not saying they’re not. But the reality is you get stuck and then that’s your life. What I really believe is the best strategy: yes, we have to work on the adults that are in poverty because we can’t ever ignore them—that’s not what we want to do—there are things we can do. And hopefully this effort around the East High area will teach us and produce scalable best practices that we can share. But I think the thing that we really need to do—and if we would have started it 30 years ago I don’t think we’d have anywhere near the problem we have—is to graduate kids.

We know how to get kids jobs; we’re not doing it.

We run programs in Rochester, Syracuse, Buffalo, (Maryland’s) Prince George’s County (and) we can graduate 90 percent of the kids that we work with. We’ve got 4,000 kids in the program now, and what it takes is a whole community.

I don’t know of the right word to describe this issue. If we have a problem with kids not graduating, what we do is we beat up on the school—everyone does it—and we say, well, what’s wrong with the teachers, what’s wrong with the district, what’s wrong with the school board? I don’t feel that way.

Parents of many in the inner city have been stuck in this cycle of poverty, which means they’re used to certain things and they don’t necessarily know how to solve the problems that actually their youngsters are having. They don’t even know how to solve some of their own problems.

So, the mentor’s job is really to provide skills and guidance to the youngsters that their parents just aren’t able to do. It’s not that their parents don’t care; it’s that they don’t have the skills.

Another thing (is if) you’ve got a class to teach, if someone can’t do well in the class, how much time can you spend with them? So, you have to have another source for remedial and those who aren’t quite making it.

We know how important jobs are. Employers are not used to hiring young people; that’s not what they do.

We’re fortunate in the sense that that’s what we do. Our success depends on 15- or 16-year-old kids. Because if you come to our store and you get treated poorly by a 15- or 16-year-old, you don’t blame that little kid. You blame Danny, and so they have to be right on. They have to be great.

So, we know how important they are.

Most companies don’t think this way, which is fine. Nothing wrong with the company, but the kids need the jobs. They grow up in an area where they don’t see a lot of successful folks working.

One of the most enlightening times is when one of these folks comes to our store and sees that they can do a better job than the person next to them—it changes their life and it’s so much fun for us because I know these kids.

So, jobs are a huge issue; we have to face jobs more than we have. I’ve tried for a number of years on it (and) had some success with Strong Memorial Hospital. I hope to have more success with Rochester Regional (Health) because they have a lot of jobs that are suitable for part-time kids.

Not every business (does), so we have to deal with that, and if it’s an economic issue, it’s an economic issue. For us, it used to be kids would stay a year. Let’s say it costs us $5,000 to train a youngster, so it’s $5,000 a year. Today, the kids with work scholarships, they stay with us six to seven years, so you can save $25,000 by having that youngster stay for six years—that’s pretty good.

And second of all, in our world the more you’re with us, the more you know; the more you know, the more you can help customers; the more you help customers, the better our business.

The other issue in the whole thing has been funding and that’s still an issue.

I think what’s most important here are community leaders. I think we need the county executive, we need the mayor, we need the head of the United Way, we need the head of the (regional) council, we need the head of the chamber—we need all the folks involved in this. We need one plan.

If everybody’s doing something different and they’ve all got their boards and they’re all (saying) what should we do? And I hate to say it—they use our marketing philosophy of doing something that no one else is doing. No, no—wrong time, don’t apply that now.

I’m serious. They’re using the right skill, the wrong time; that’s exactly how they think and it doesn’t work. … We need one plan. Do it and even a mediocre plan done really well beats the heck out of a great plan done in random ways.

That is the biggest challenge that I think we face.

RBJ: So how do we get from here to there?

WEGMAN: Insist on that.

Back to the economic council again—that’s why it kind of began with that. The competition forced us—the governor said, you have to have focused areas. You can’t have everything, you can’t have 50 initiatives, you can’t have 50 focus areas. So we ended up with three pillars and three enabling areas. … So that was great and that’s what we’ve got to do as a community. We’ve got to pick a few areas and let’s just nail them.

And what I recommend (is) if we said we’re going to have 2,000 more students in work scholarship by 2020 and 500 more jobs by 2020, we would be saving another 1,000 kids a year who don’t graduate. We only graduate half the kids. It would totally change. So then look back on our community after it’s done; we’d have a whole different community.

Wegmans downtown?

RBJ: Would you ever consider putting a Wegmans downtown?

WEGMAN: Wegmans (stores) are huge, that’s the problem. They don’t fit the neighborhood. If they weren’t huge and they didn’t do the volume they did, the pricing isn’t the same so you’d have to shift the model.

It’s not that we don’t care about it. One of the things that we’re doing is supporting Foodlink very aggressively, and they’re serving a lot of meals to a lot of people.

We would have to develop a different model anyway. It wouldn’t be Wegmans as you know it.

So we’re trying to say, what are the things out there that are working and how can we support them, and we think that’s the best way for us to operate.

The nice thing about the food business is, frankly, you can contribute from day one. You’re not at high productivity, but you’re not a drain. So, you start at one end; you learn cutting, slicing, dicing. You learn various skills all along the way, but you’re contributing at the same time.

We’re thinking at the end of a two- to three-year period that these folks are then employable by any food service operation in the area. We think that not only will they be making meals for those who need them, they’re actually going to school at the same time yet learning to get a career. That’s how we think we can help.

RBJ: What is your reaction to the state budget that just went through with the new minimum wage law?

WEGMAN: We’re extremely happy that the minimum wage is $12.50 versus $15 in New York City. They could put the $15 in New York City and it would be fine. I wish we were opening the (Brooklyn) store today. That’s not an issue because that’s what you need to pay anyway to get good help.

Here, the cost of living isn’t as high, so we think that $12.50 is much more reasonable for the area. Having worked on economic development and trying to create jobs for five years, I couldn’t be happier that we’re not saddled with the $15 minimum wage.

So, I thank the whole Legislature and governor for coming up with it. I think (it is) a very good compromise.

Looking ahead
RBJ: Where do you see the Rochester economy in the next five to 10 years?

WEGMAN: I feel very good about it. Is it going to be growing at 10 percent a year? No, I don’t think so. I don’t think that’s why people are here. I think it’s a wonderful area. It’s a great place to raise a family; it’s 10 minutes from one side to the next. I think if you change that, you’d really change Rochester. It’s an area that people like.

I’m extremely excited about some of the things in agriculture that are going on. At one point young people wanted to get off the farm. Well, you’d be amazed now how many people want to get on (our) farm. They love it and the reason is a lot of what we do is brand new.

I guess it’s just part of our DNA to do things that other people aren’t doing, but we do a lot of that on the farm.

Our soil is very hard and a carrot—they don’t grow on our farm because they won’t go down, so we have to grow round carrots. That’s a different type of carrot and the folks love it and they get a chance to experiment on their own. They truly enjoy that chance to do it.

And enough of the folks that do that, they enjoy being around each other.

Those are the two things they love about the farm: doing things that no one else is doing and the camaraderie of it all. It’s fascinating to see that.

Most of them are younger; they’re out of college, they’re not just looking for a job, they’re looking for a meaningful job is my point, and it’s been truly amazing. I think that’s happening in a lot of agriculture around here because it’s new stuff and it’s fun. If you’re just driving a tractor around—it’s probably run by a computer anyway, tractors are already driverless. We don’t use those big tractors; that’s not our business.

RBJ: Where do you see Wegmans in the next decade?

WEGMAN: It depends on where you are. There’s a huge difference between the Wegmans out of town and in Rochester.

In Virginia, where we do business, it can take you half an hour to get to someplace one day (and the) same day it can take you 2 ½ hours—it’s a huge difference. I’m relatively sure that in a few years we’ll have a very small Wegmans that is much more convenient to people to serve those areas. It doesn’t seem to make as much sense here, but we certainly are developing the products today to serve those needs.

So, I see that as what will happen next—a different type of store. Otherwise, we can’t serve people.

Father and son
RBJ: This year is significant for another reason. This month marks 10 years since your father passed away.

WEGMAN: There he is. (Wegman points to a portrait of his father on the wall.) He’s there every day. Shows up to work—he always beat me to work and he still does. And he stays longer.

He loved our business. I think one of the most fortunate things about my relationship with my dad was I really bought—totally bought—into his philosophies. His philosophy of treating people right and the value of that—we call it the “I am a merchant” philosophy. I totally bought into that.

So in many ways he lives with us all every day. Seldom does a day go by we don’t use one of his quotes or something like that just because we know it works. I think we’ve been fortunate to have had good success since he’s not here anymore, but in many ways he is. I think that we had a great relationship and I think we’ll continue to.

There were certain things that he singled out that were extremely important to him, and the first was the lines. There was a time in our business when we had very few service departments; we had zero. He made all the company self-service at one point, so the only place you’d have customer issues was around the front end. We really didn’t have front-end managers at the time.

The store managers ran the store, so if the store manager was doing something else, the front end could really turn into a mess like that. So he made a point to the store managers—don’t let that happen. We all faced it; we called it the glare. We didn’t know how long he’d been there but it was scary.

We got into cooking things. He got obsessed with pizzas, so if your pizza wasn’t right he’d really be very upset and he’d tell you how to make a good one and what was wrong with yours.

What he really did is he showed that he cared. He cared about the business. He cared about the people. And he was incessantly in the stores when he was here, so those kind of things are remembered for a long time.

The thing that is maybe most memorable, we reframed his picture in the store, and he said, “Never think about yourself, always think of others.” That sticks through the whole company.

We’re a hard company to give a compliment to because if you say, “Joe, that was a fabulous job that you did,” he’d say, “No, it wasn’t me.” It bounces. That is the truth. And where you really screw up is if you just say, “Yeah, thanks,” because (it is) all the people behind you who really make it happen anyway.

He had that great skill. He won the Horatio Alger award (and) he gave that speech—it just sticks with all of us. Those are the things that make a company and we’re fortunate in that we’re a family company and they stick with us because we’re a family.

RBJ: Do you have any succession plans at this point?

WEGMAN: It’s a family business so I’ll be involved in one way or another, but I think that certainly that will change. I think it should.

5/6/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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