Retail Executive of the Year

As CEO of Green Hills Farms Super Market, Gary Hawkins leveraged technology and local vendors to build loyalty.

By John Karolefski

Over the years, Green Hills Farms Super Market’s CEO Gary Hawkins used a mix of high-tech tools and locally sourced products to establish his family business as a unique grocery destination. A decade ago, Inc. magazine called Green Hills the “Best Little Grocery Store in America.” Retailing has changed considerably since then, but that label for the 22,000-square-foot store still fits.

Nurturing its family-farm roots, the Syracuse, N.Y.-based retailer forged a reputation as source of locally grown perishables and artisan breads.

The grocer also pioneered the frequent shopper card and put the data it collected to work to earn customers’ loyalty. It most recently became a ground-breaking testing lab for sophisticated technologies that engage shoppers and analyze their behavior.

Along the way, Hawkins wrote two books on loyalty marketing and advised other retailers and manufacturers about its best practices. He arguably had become one of the industry’s most savvy grocers in terms of shopper technology.

For all of these reasons, Grocery Headquarters has selected Gary Hawkins as its 2011 Retail Executive of the Year.

“Winning in this marketplace with its shrinking population and stagnant economy can be defined as simply surviving, especially for independents,” Hawkins says.

It is no wonder, considering the competition from regional grocery powerhouses (Wegmans and Price Chopper), club stores (Sam’s Club and BJ’s), major big box retailers (Walmart and Target) and even national drug chains (Walgreens, CVS/pharmacy and Rite Aid).

Hawkins made sure his store not only survived but thrived by deploying a strategy based on differentiating Green Hills from competitors. The retailer focused on locally grown produce, food advocacy, food education for shoppers and a commitment to high-quality fresh foods such as Creekstone Farms Black Angus Beef and handcrafted artisan breads.

Over the past few years, Green Hills expanded the focus on local goods beyond produce to include locally produced fresh and packaged foods, many from small producers.

In the kitchen

Green Hills developed a relationship with COMTEK, the Syracuse Community Test Kitchen associated with Syracuse University, to help support small local “foodpreneurs.” Hawkins worked to get their products in front of shoppers by promoting them in ads and sampling in store.

This go-to-market strategy, supported by an ambitious use of customer data combined with technology, resulted in a customer retention rate of about 80% and weekly sales per square foot well in excess of industry averages.

“We leveraged old tools and new to pursue this vision: old tools like word-of-mouth generated by participating in several regional markets each week and new tools like our personalized marketing system and social media. Bringing all this together with traditional marketing and advertising, Green Hills was creating a brand and market position that was growing sales and customers while competing with some of the strongest regional and national chains,” he says.

But being recognized as Retail Executive of the Year is bittersweet for Hawkins recently separated from the family business to work full time on the technology initiative he launched in the store and consulting with companies across the retail supply chain.

“Green Hills is a family business,” he says, adding that it started as a summer farm stand by his great grandmother in 1934. “It is not immune from the challenges faced as the business passes through the generations. Other family members wish to take the company in a different direction.”

Nevertheless, he is quick to add, as a shareholder he has a vested interest in the continued success of Green Hills, which still represents industry issues in microcosm.

“There are those retailers—from both small and large companies—who continue to believe that success is driven by a focus on price and promotions,” he explains. “This mindset is increasingly challenged in today’s world in which retailers have become sophisticated marketers, leveraging customer data, social media, and technology together with a deep understanding of branding. The complexity and sophistication of retail today is vast, requiring new skill sets and knowledge ßthroughout every level of an organization.

Going forward, Hawkins will be employing his knowledge of the challenges and opportunities across the industry’s supply chain, along with his technology relationships, to develop innovative programs for retailers.

Much of this work will be conducted according to the principles of Retail 3.0, a term he coined to label the current stage of the industry

“Retail 3.0 is the shifting of power in the supply chain to the individual shopper, enabled by technology and an increasingly sophisticated understanding of each individual customer’s lifetime value to the retailer and the brand,” he explains.

Hawkins established Green Hills as a live store environment for new technology and applications. Two years ago he formalized this work and created the Center for Advancing Retail & Technology (CART), which has blossomed over the past year

“I think the rapid success that CART has enjoyed proves the need for this type of entity in the retail industry,” Hawkins says. “CART was unique in bringing together disparate elements like new, innovative technologies and solutions deployed in a live store, with leading educational institutions, industry media partners, and global brand manufacturers—all united by the Retail 3.0 vision. The CART concept has been well proven and has laid the foundation for future initiatives.”

Retail 3.0 and CART are a long way from Hawkins’ early loyalty programs in Green Hills nearly 20 years ago. He remembers many sleepless nights spent poring through the data Green Hills was gathering. Actual customer shopping behavior over time provided another dimension of the business that was hidden before.

“It was exciting to be at the forefront of the whole loyalty movement and helping discover those early insights such as 30% of customers generating 80% or more of annual sales, and even more of profits,” he recalls. “I was learning about the waste and inefficiency of traditional ad flyers and mass promotions and how traditional retail marketing and promotion actually promoted what friend and colleague Brian Woolf called ‘shopper promiscuity’—shoppers going store to store in search of the best deals.”

Over the past two decades Green Hills expanded its repertoire of key performance indicators to include customer-based metrics such as the number of customer households shopping each week (not just transactions), customer retention, department and category penetration by customer tiers, and so on.

Green Hills recently had embarked on moving and resetting many of the grocery product categories throughout the store. In addition to looking at traditional measures like sales and unit movement by item and category, Hawkins developed measures showing those by customer segment, and then further developing segment penetration measures to assist in making more appropriate decisions with regard to what products get discontinued, which categories should be given more or less space and so forth.

Loyalty leader

“I absolutely believe one of the reasons Green Hills has been able to survive in such a harsh environment has been the understanding and use of customer data gathered through its loyalty program,” he flatly states.

It was an understanding of that data and combining it with technology that led to the development of SmartShop to create further marketplace differentiation for Green Hills. Through this program, the retailer would create a pool of promotions each week that would then be scored against each customer’s historical purchasing. SmartShop would communicate the most relevant promotions to each customer. For example, if one customer was loyal to Coke and another to Pepsi, they would each see savings on the product they preferred.

Since the program went live in 2006, each week thousands of Green Hills’ shoppers would activate their promotions by opening their email and signing into their SmartShop web page, or using the kiosks or their web-enabled smartphones in the store.

“There are many advantages that SmartShop provided customers, Green Hills, and brand manufacturers. It’s a true win-win-win initiative,” Hawkins says.

Customers would receive savings on the products they liked to purchase, helping to ensure they shopped at Green Hills and not a competitor. They were able to see their promotions when and how they chose—by email, web any time and place, kiosk in the store, etc. Inevitably, customers participating in SmartShop would spend more, shop more frequently, and were better retained over time. Also, the store gained from being able to reduce and redirect some portion of historical mass markdown expense (thus helping margins) by being able to direct the right promotion to the right shopper. It also reduced the cost of traditional ad flyers as the store communicated digitally with more and more shoppers. Brand manufacturers benefited by offering smarter price promotions and reducing subsidized purchasing.

Social media has played an increasingly important role over the past year as Green Hills pursued its vision and focus on locally produced food products and food education and advocacy. Green Hills has built a following of more than 1,700 people on Facebook.

“The discussions and interest around different products and food education was simply amazing,” he enthuses. “We experimented with many of the new digital tools such as FourSquare and others, but Facebook remained the most important.”

He says conducting social media successfully calls for having the right person driving it. He gives credit to Andrea Reynolds, Green Hills’ marketing director. “As a true member of Generation Y, she lives and thrives in this new digital world,” he says.
What is the secret to serving digitally enabled shoppers who are on the Internet a lot, are equipped with a smartphone, and are active on social media? Is retail success more difficult to achieve than before the digital revolution?

“The job of serving digitally savvy customers today is not so much more difficult as it is transparent,” Hawkins says. “It is this transparency that is so difficult for many traditional retailers and retail executives to deal with. There are two related challenges: the first is ensuring that your messaging is consistent across all these channels, from websites to email, from Facebook to Twitter, and to the printed ad. The second is delivering on that messaging, ensuring that the products and qualities promised are indeed delivered in the store when the customer is shopping.

“We are proud of what we have accomplished over the past 20 years and our role in helping launch the era of retail customer intelligence,” he says.

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