WEGMAN FOOD MARKET - Case Study

 

WEGMAN FOOD MARKET - Case Study





By Prabath Withanage : 2007

This article is based on an assignment that I submitted for the executive MBA under the subject of Operational Management


THE IMPORTANT OBSERVATIONS I HAVE MADE FROM THE ARTICLE.

Company Overview
The company employs over 28,000 people and has annual sales of over $2.0 billion. In addition to supermarkets, the company operates Chase-Pitkin Home and Garden Centers and an egg farm.
The Wegman Food Market is popular for its high product quality and excellent service

Superstore Concept
The Wegman Food Market is different from another well-established supermarket because of their huge-spaced superstore concepts. (100,000 square foot superstores, double or triple the size of average supermarkets.,25 and 35 checkout lanes, employs from 500 to 600 people. full-service delivery -typically a 40-foot display case)

Product Variation - “stores within a store” Concept
Wegmans offers more customer convenience services and “stores within a store” than possibly any other supermarket chain. Customer can fulfill their various kind of food needs as well as some other different needs such as pharmacy, video rental, etc. under one roof. And also each store is a little different.

Fresh Foods and “farm to market”
fresh produce.- often as 12 times a day. Some of the foods come to the store as “farm to market”

Meat Department – Customized cuts
Butchers are available to provide customized cuts of meat for customers.

Departmentalization Operational Structure & Inventory Management
Each department handles its own ordering. Companywide inventory system
Departments take a monthly inventory count. Each department is responsible for ordering product

Quality & Customer Satisfaction
The company exercises strict control over suppliers, insisting on product quality and on-time deliveries.  Quality and customer satisfaction are utmost. Regularly evaluated in test kitchens, along with potential new products. Employees are encouraged to report problems to their managers. If a customer is dissatisfied with an item, and returns it, or
even a portion of the item, the customer is offered a choice of a replacement or a refund.

Employees Motivation
Employees are motivated through a combination of compensation, profit sharing, and benefits. In a Fortune survey of employees on the best companies to work for in the United States, Wegmans ranked #16.

 

 

Part 3

 


‘CENTRAL ISSUE’ IN THE ARTICLE

 

 

I observed that the central issue of this article is the successful Human Relationship management of the Wegman Food Market. Human relationships can be described as two parts The Own Employees and the Customers.  

The motto of the company states that “Employees first, customers second”.
It permeates everything they do. It demonstrates they understand the impact that satisfied and performing employees have on customer satisfaction, results, and reputation. They promise employees and customers: “Every Day You Get Our Best;” and they mean it.

Throughout the years, Wegman's philosophy has stayed consistent.  In a statement written nearly thirty years ago, the people at Wegmans stated,

 “At Wegmans, we believe that good people, working toward a common goal, can accomplish anything they set out to do. In this spirit, we set our goal to be the very best at serving the needs of our customers. Every action we take should be made with this in mind.  We also believe that we can achieve our goal only if we fulfill the needs of our own people. To our customers and our people, we pledge continuous improvement, and we make the commitment.”
(Wegmans,(1)2004).

Today, Wegmans provides full- and part-time employees with high-end market salaries, and many many benefits. Some of those benefits are shown below

•           Top Wages
•           Satisfying Work Experience
•           Friendly Team
•           Blue Cross/Blue Shield Medical Insurance
•           Prescription Plan
•           Vacation Pay
•           Holiday Pay
•           Employee Discounts
•           Direct Deposit
•           Scholarship Competition
•           401K Retirement Savings Plan
•           Wegmans Retirement Plan
•           A Dependent Care Reimbursement Account
•           Adoption Assistance
•           An Employee Assistance Program

And also the company management offers a wide variety of employee discounts and sports activities. All Wegmans employees can take advantage of:

  • Reduced membership to Fitness Centers

  • Join a Wegmans sports team

  • Employee and family discounts

  • Skiing -- a wide selection of discount packages in various areas around store locations.

  • Movies -- buy reduced-price tickets for participating theaters.

  • Cultural events -- museum programs for families, reduced admission, and reduced-price theater tickets.

  • Special activities -- discounts to a variety of fun centers, skating rinks, and area zoos.

  • Auto services -- specials for car repair and prepaid car wash tickets at reduced prices.

  • Sports tickets -- to selected teams in Rochester, Buffalo, and Syracuse, NY.

Ongoing discounts to many attractions throughout the country include Disneyland, Disney World, Cypress Gardens, Sea World, Busch Gardens, and more.

Additionally, full-time employees receive dental coverage, life insurance, personal days, and a medical spending account plan. Certain eligibility requirements must be satisfied.

 These experiences translate into better customer service.

Wegmans also fosters employee satisfaction and achievement by listening to employee suggestions and recognizing them for their contributions. For the last 15 years, the Pittsburgh store has sold “chocolate meatball cookies” — suggested by bakery employee, Maria Benjamin, who originally made these popular cookies, from a secret family recipe, for other employees
This focus on meeting employee needs pays off. About 20% of Wegmans’ employees have 10 or more years of service and the turnover rate for full-time employees is only 6%; the grocery chain average is 19%. This means considerably lower employee replacement costs than most.

 

 

 

Part 4

 


KEY LEARNING POINTS OF THE ARTICLE

 

In the early years, there were several kinds of shops. Customers have to tell their needs to the shop owner or the assistant and bye needed products. At this time customers had not sufficient freedom to select needed items among several amount of items. And a few years later those types of shops expanded as individual supermarkets. Many of those supermarkets are relatively small and at some supermarkets customers can’t be able to walk without colliding with other customers. After a few decades, the supermarket concept rapidly developed and some strong companies located their branches countrywide as a chain. Although these chains dominate the market, there is plenty of room for new entrants.  The industry is ever-growing and to remain competitive, grocery stores must utilize the most recent information technology.

Wegman Food Market chain had come to market and dominated the market as a market leader. There are many reasons behind the success of the Wegman Food Market Industry. I identified some of those key points and I have described those in the following paragraphs.

Superstore Concepts and availability of a wide variety of products-
Wegman supermarket stores are Larger than most supermarkets. Stores run 80,000 to 130,000 square feet in size. Customers have more choices than possibly any other supermarket chain. More than 70,000 products, compared to an average of just over 40,000 (according to the Food Marketing Institute) in most supermarkets. Take cheese, for example: Wegmans usually has 400 specialty cheeses on hand. Wegmans offers more customer convenience services and “stores within a store” than possibly any other supermarket chain
Customers don’t need to walk throughout cities to find their needs and waste time. Wegman customers can find their most of needs under one roof. The layout of the food item arrangement is a key point of the success. Modern-day customers are regularly busy and this type of supermarket is ideal for them.

Customer Satisfaction
Another part of Wegmans’ success is how they cultivate customer service passion by encouraging each and every employee, regardless of position, to do what it takes to make sure no customer leaves unhappy. They have been known to cook Thanksgiving dinner for a family whose oven was too small for the turkey they bought. In the long run investments like these pay off. Gallup reports that shoppers with an emotional connection to their supermarket can spend as much as 46% more than non-emotionally tied customers. Not to mention the pride employees must feel knowing each of them can make a difference.
And also Wegman offers some loyalty programs for customers. When entering the customer at the business place if the customer feels he is just not an external person to the business then the customer is satisfied well. This concept is true for Wegman markets. Also minimum of customer waiting line increases customer attraction.

Employer Motivation
Motivated employees are the strength of Wegman Markets. According to the company motto, The employees are the first, not the customers. Also more about employer motivation are described under the Part 3 Section of this report earlier. Hence in the discipline of operational management, the employees can drive the organization towards success.

Quality Management
In Wegman, quality checking is not only a management responsibility. Employees maintain the quality of food at every stage. Also, customers can return poor-quality items to the Wegman and Wegman is responsible for even refunding the money to customers. This process increases the customer's trust in Wegman.

Adding technology to Supply chain management
Wegman initiated the data synchronization system among suppliers. Wegman is an early adopter of this kind of new technology. If a company can use technology to supply chain with proper technology management then any company gains significant advantages over competitors. This phenomenon is essential in food logistic management.

Web-based ebusiness
Wegman's website is an act as a major role in its popularity and reputation. Their Website helps customers save time, and money, and feed their families well. Shoppers can browse weekly specials, search through a library of recipes, or look up nutritional information for prepared foods. Wegmans was one of the first supermarkets to introduce electronic discounts in 1990 and bar-code scanning in 1974.
Hence use of the internet benefits a company in several ways such as advertising, information providing, making transactions, etc.

Wegmans Commitment to the Community:
Wegmans is a major corporate contributor in communities where stores are located. In addition to corporate giving, every store has a budget for community support. Giving is focused on several areas. This will benefit the company as indirectly. In society, people feel the organization helps them to upgrade their lifestyle and help them to survive some difficult occasions.   Hence the customers are close to the company. This relationship will be a treat to a new entrant or other competitors.

 

 

 

Part 5

 


COMMENTS AND RECOMMENDATIONS REGARDING THE OPERATIONS OF THE COMPANY

Competitiveness, Strategy, and Productivity
Wegman’s strategy is basically based on employer motivation. This strategy makes significant gains for Wegman. Employer motivation directly increases other operational functional efficiency such as productivity, customer satisfaction, quality, etc. Many companies give their priority to customers or the goods and services they produce. I recommend maintaining this strategy further without any hesitation.
Other major strategies in operational discipline are superstore concepts, store-in-store concepts, availability of a wide range of products, and significant use of technology for the supply chain. Those strategies gain competitive advantages and also Wegman can sustain steadily in the supermarket industry. new entrants difficult to follow to Some of those strategies.

Forecasting
There is no information about forecasting techniques in the article which is followed by Wegman. But in the food market with strong competitors, Wegman will need to do some forecasting techniques to predict future food demands.

Product and Service Design
Wegman offers goods as well as services at their supermarket. Due to their innovative and state-of-the-art services and atmosphere, this business has flourished and has been able to maintain a wide customer base.  By focusing quality on selection and service, Wegmans has been able to develop into an innovative and competitive grocery chain.
Wegman’s also offers movie rentals, film development, and pharmacies, which all add to the shopping experience.
To remain competitive, Wegmans focuses on the generic strategy of differentiation of products.  It sets itself apart through a unique blend of atmosphere, selection, quality, and customer service.  By maintaining these values, Wegmans has created positive name recognition and customer loyalty.  These aspects, when combined with other business practices and functions, help Wegmans contend by differentiating itself from the competition. I recommend these differentiations be maintained in the future with more innovative ideas.

Customer Relationships
Wegmans takes great pride in customer service.  From the beginning, they have expressed their desire to please the customer with quality service and a warm atmosphere.  They have included amenities that ease the shopping experiences of customers.  Wegmans utilizes Customer Relation Management techniques to “gain insight into their needs, wants, and behaviors in order to serve them better” (Haag, 2004). 
The ultimate goal of Customer Relations Management is to limit the number of unhappy customers and provide customers with positive business experiences.

Management of quality
The total quality management process is maintained in the Wegman. And also employees are concerned about the Wegmans quality.

Supply Chain Management
Wegman decided to use Global Data Synchronization TO COMMUNICATE WITH SUPPLIERS. Global Data Synchronization is the continuous electronic sharing of accurate data between suppliers' and retailers' information systems.
Wegman’s goal is simple. Wegmans sync data with their suppliers. This will eliminate waste, deliver immediate results, and prepare us for success together in the future. Accurate, synchronized data eliminates inefficiencies in the supply chain. Also, suppliers products will move through our supply chain with speed and precision, including suppliers new item introductions. Data Synchronization will allow suppliers to increase the efficiency of their business with Wegmans.

Internet
Customer service at Wegmans is also evident when using information technology. The Wegmans’ website helps customers prepare, and save time, and money. But according to the modern information technology developments, this web site does not meet modern standards with compare to other competitors. The site only "looks and feels" type.
Wegmans will have to design a website to fulfill the brand promise online. The website literally makes meals easy by providing tools that help customers plan and shop for meals more efficiently:
•Advanced Recipe Searches that allow customers to add ingredients directly to an online shopping list.
•Online Advertisement that provides detailed information on weekly specials - in excess of what's printed in the Sunday paper.
•Shopping Lists that sort themselves according to the walking path of the customer's preferred store.
•Weekly Email Updates that remind customers of what's fresh and new in their store.
•Food Library that answers the most detailed questions about unusual ingredients
According to the above outcome, i strongly recommend Wegman to design or redesign a web site and position the company to compete in other ways.
Wegmans Commitment To The Community

Wegmans is a major corporate contributor in communities where stores are located. In addition to corporate giving, every store has a budget for community support. Giving is focused on these four areas:

  • Food for the needy

  • Donations to neighborhood activities such as community festivals

  • Support to help young people become healthy, productive, and independent adults

  • Support for the United Way as an effective way to fund programs that make a difference

Wegmans has awarded over $63 million in scholarships to more than 20,000 employees since the company inaugurated the Wegmans Scholarship Program in 1984. About 2,500 students have active scholarships each year while they attend colleges and universities across the country.
In 1987, Wegmans formed the Work-Scholarship Connection to reduce the dropout rate in the Rochester, NY City School District and teach at-risk youth the skills they need to hold a job. More than 1,000 middle and high school students participate each year. (www.wegman.com)
The social activities will benefit to Wegman indirectly. And those benefits will be a long-term investment for Wegman. I recommend Wegman to improve these types of social activities.

 

 

Part 6

 


REFERENCES

By Prabath Withanage : 2007

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