Quality control
There was a time when buyers from all the local chains jostled for the best fresh fruits and vegetables at the Northern Ohio Food Terminal in Cleveland. But consolidation and mergers in the grocery industry have left Heinen’s as the last chain that still buys locally.
"Food companies are focused on the system and how to be profitable," says Heinen. "They have chosen not to really differentiate themselves in product quality and differences. We try to get local products. The reason they don’t do it is it isn’t efficient. They buy truckloads of produce.
"We’re in six days a week buying 60 percent of what we need on the market every day. If it’s not good enough, we don’t carry it. We buy trucks, too, but (the competition) are not putting the same attention into quality."
Another example is Plainville Farms Turkeys, a smaller producer that has complete on-site control of its production process to make sure its birds are of a consistent quality.
"Much like we are, they are a smaller guy in the industry," says Heinen. "If you can find some of those type of people, you get a better product and a better commitment. They also treat us like important customers. We cultivate a lot of relationships like that. For our beef and pork, we partner with the ranchers so we know everything that happens to our product — it’s scripted. It allows us to control quality and costs.
"These programs cost slightly more. Like most things, if you want them done well, it’s going to cost you more."
The controls Heinenn’s has on its meat, for instance, mean that it doesn’t have to worry about mad cow disease. The disease starts in cows that are at least 30 months old; Heinen’s beef is slaughtered at an average age of 18 to 19 months and no later than 24 months.
"We do everything we can to be sure we are delivering the best product," says Heinen.
In some cases, the quality standards may mean higher prices, but that’s the difference between the Heinen’s customer and the average grocery store customer: The Heinen’s customer appreciates the quality and is willing to pay slightly more for it.
If you want to get Tom Heinen riled up, just tell him his stores are expensive.
"If there is one misnomer that exists today, it’s that we are expensive," says Heinen, who in his blue Heinen’s shirt and black zip-up Heinen’s sweater vest looks ready to step out of the corporate office and back behind the store counter at a moment’s notice. "It is no secret in our industry where we are priced. Anybody can run five items out of 40,000 on sale. Those items don’t determine anybody’s food bill. We are very comfortable — and even today, on the heels of a perceived price war by our competitors — that if you shop our store, you will save 5 to 10 percent.
"I remember asking my dad as to why everyone thinks we have high prices. He said that when you have great quality and clean stores, people don’t want to believe they are not paying for it. If there is one challenge we have, it is to drive home the fact that we are not more expensive, it’s that we are actually less expensive. If you pay more at Heinen’s, then there is a value proposition as to why you are paying more. You are getting something better."
Without the demographic that understands that proposition, Heinen’s would not be successful. But reaching that demographic can be challenging.
"One of the major drawbacks of a company of our size is the inability to mass market anything that we are doing," says Heinen. "It’s a function of an economy of size. But do they deliver on what they promote? If they get the message across but are doing nothing to support it, what good is it?
"We typically see our market share return. We are seeing it return now after the perceived price war. Customers can leave, but if someone isn’t doing something to keep them and truly delivering a different value proposition to them, then they won’t be back."
