The compounding obstacles of supply chain disruptions, inflation driving up the cost of food, and unprecedented worker turnover has made managing a consumer food co-op more challenging as of late. Many food co-op general managers find themselves wading through this mire of uncertainty without having the tools that they need for their workers to succeed. In January of 2022, Columinate Organizational Development Consultant Jeanie Wells launched a four-part remote training program for Ozark Natural Foods in Fayetteville, Ark., to address this gap: specifically, how to manage price image during a volatile period of high food inflation with a relatively new management team.
“Ozark Natural Foods reached out and said that they had an entirely new management team, and that because of COVID they had not had an opportunity to do much in the way of formal training with them. On top of that, there was a huge out-of-stock and pricing issue,” says Wells.
After looking back at some materials that Wells and her colleague Mel Braverman had put together to help Ozark in the past, Mike Anzalone, general manager at Ozark, reached out to Wells for her thoughts.
“With the recent dramatic change in wholesale grocery prices, I watched as our margin was steadily slipping month-over-month,” says Anzalone. “I began discussing margin with some of my retail team to try to understand the sudden loss. After a few discussions, I saw that our team had lost its connection to pricing with purpose and to actively using a pricing strategy.”
Wells says she wanted to take a fresh approach with Ozark Natural Foods, assess the current conditions, and build a training program for them.
What resulted was a full training package, including a four-stage remote learning program that created a solid retail financial understanding foundation, offered tools for success, and built a path forward.
Wells has built a career upon providing services of this sort for food co-ops; however, the challenges that Ozark and many of its contemporaries are grappling with in this moment are unique. “The climate is so much different now,” said Wells.
About the Process
In order to provide Mike Anzalone and his team with what they needed, Wells first met one-on-one with the management team to get a sense of who they were and the dynamics of the group. She wanted to determine where their skills were and if they were already familiar with the concepts that she was planning on introducing. Coming out of those meetings, she devised a process for making sure that everyone in the organization who was participating had the proper training and skills they needed to succeed.
Jeanie’s Four-Part Program:
Financial Management Bootcamp: The introduction to the program includes a back-to-basics instruction on all of the levers retailers utilize to stay profitable. Jeanie hosted skills-building sessions on applied margin, achieved margin, inventory turns, and other factors that determine financial success.
“I had them bring calculators, and I created workbooks. I gave them homework, and we would go over the calculations in class. After that, they would have to go back to their departments and calculate their own key financial metrics, like achieved margin, inventory turns, and sales growth. They would have to track their margin minus labor and sales per labor hour. I tried to make math not scary.”As autonomous and independent retailers, co-ops do not have the luxury of a corporate head office that hands down measures of financial success and dictates how to achieve them. Therefore, it is vitally important that they understand their business better than their competition.
Price Image | The Art: The second stage of the program focuses on price image and perception.
“How do we make sure, as independent grocery stores, that we are shaping the perception of our prices in the way we want? We are all trying to bring good value to our communities during this time of heightened food costs, but do we know what products are most important to our communities?”
Jeanie focused on differentiating those essential products on which it might make sense to take a smaller margin to create a positive price perception, knowing that we can bring the margin up on other products if we plan strategically.
“If we have the right products and the right systems to help determine if we have the right products for your community, then it’s really about how you are presenting them and drawing attention to them: Showcasing good deals. Having customers leaving the store thinking that they can find a good value at the co-op.”
Price Image | The Science: The third stage of the program is all about process and utilizing data and systems to drive price perception and ensure a strategy for handling inflation. Co-ops are not insulated from the volatility of the greater economy, and inflation this past year has rocked retailers and consumers alike. Current inflation is holding at 8.5 percent, the highest rate in over forty years.
“Consumers perceive it being much higher than it actually is. There is definitely this image or this perception that everything costs twice as much as it did before, and that is simply not true.”
Jeanie’s approach to combating rising product costs in this stage is very data-driven. “What is the category makeup (good, better, best)? What are the trends reporting?”
Jeanie notes that food co-ops are very fortunate to have access to an abundance of data through National Co+op Grocers (NCG), and INFRA members and NCG members alike have access to the CoMetrics platform and to SPINS data. We can leverage all of these tools to ensure we are making the most out of the products we carry.
Using the Tools | A Path Forward: In this final stage, Jeanie helps pull together all that you have learned and helps you build a strategy for the future. “What are the tools you need to develop your own pricing strategy? What tools do you already have?”
Co-ops will compile all of the worksheets that they developed throughout the program and build a roadmap for the future, distilling what they have learned in order to set goals. The leaders will be building pricing plans by department, with the understanding that the materials will be incorporated into the onboarding process for anyone taking a buyer or manager position in the co-op in the future
Mike Anzalone, General Manager at Ozark Natural Foods
Anzalone says the experience working with Wells was enlightening for his staff.
“They see their jobs differently now. They see that this part of the job can’t be set on autopilot; rather it must be dynamic, thoughtful, and with an eye toward the competition. Although we are in the very early stages of implementing the change, I can easily imagine that over the next few months margin will normalize, we will better use variable margin, we will have better sales and displays around the store, and we will do a much better job competing on price.”
Though this program was originally designed specifically for Ozark, Jeanie’s plan is to take what she has developed and make it available to others.
“It was customized to them, but the materials would be helpful for a lot of grocery stores right now. Fortunately, I can do most if not all of the work remotely, which helps with the cost.”
The training may look different from store to store, based on the individuals making up the leadership team and their skills; however, the desired outcomes are the same.
“In the end, it’s all about impact,” says Wells. “Whatever impact you are trying to make in your community the road to that impact always goes through strong store performance.”
Learn more about Jeanie Wells and how to work with her by visiting her consultant page.