A new generation of leadership

Listen to this article

At 36, Colleen Wegman is president of Wegmans Food Markets Inc., a $4 billion business that ranks among the largest private companies nationwide. She has served in that position since January 2005, helping to lead the company that her grandfather, Robert Wegman (until his death in April 2006) and her father, CEO Danny Wegman, built into one of the most innovative and respected supermarket chains operating anywhere.
After graduating from the University of Colorado in 1994 with a degree in sociology, Colleen Wegman returned to Rochester and went to work as assistant manager of Wegmans brand products. In that position she developed Nature’s Marketplace. From 1998 to 2005, she held several different jobs including director of e-commerce business and senior vice president of merchandising.
She and her husband, Christopher O’Donnell, general partner with Pittsford-based private equity firm Trillium Group, are the parents of two children, ages 3 and 1.
This interview with Rochester Business Journal editor Paul Ericson and reporter Mary Stone was conducted last month. An edited transcript follows; to read the entire interview, go to www.rbjdaily.com.
ROCHESTER BUSINESS JOURNAL: Over the last 18 months, has your new job been what you expected?
COLLEEN WEGMAN: It’s interesting, I don’t view it as a job. It’s something that I love. This company is part of who I am because I grew up in it. So the last 18 months hasn’t been a new assignment, it’s been an evolution of what I’ve done my whole life. It’s been equally exciting, equally challenging and as fun and inspiring because you get access to more and more of the company and the people, and that’s the fun of this business. We’re always working on something new and exciting, so it keeps you very engaged and interested.
RBJ: Is there a part of your day that you enjoy the most?
WEGMAN: Talking to our people, regardless of where they are in the company. We have such amazing people all over, and so you learn from every interaction. You get energy from every interaction, so that inspires you and encourages you to do a better job yourself. So, that’s the most fun of my day.
RBJ: Have there been any surprises? As you say, you have grown up in the company, but as president has anything surprised you?
WEGMAN: What our people will do for each other and the customer continues to surprise me. We have so many amazing stories all over the company. We were just talking about the storm that we had last fall in Buffalo. We were talking to some of our people about their experiences. It can be shocking the lengths to which people will go to deliver incredible service. This one woman was telling me there were two feet of snow in front of her house, it was a state of emergency so people weren’t supposed to go out, but she said, “What are my customers going to do? I have to get to the store.”
So she bundled up and set out, walking to the store-she just had double knee replacement surgery, but she said, “It doesn’t matter. I’m going to get there.” And she did. She fought through the storm. She got there to her customers to deliver great service.
That type of thing is always amazing, and it just surprises you that people would have that much conviction to get there and deliver incredible service. So stories like that are what make this company so special, I think.

The competition

RBJ: Wegmans is such a success story and has been for so long, but at the same time, and I suppose this is part of your success, you’re in a fiercely competitive industry. What are the types of risk factors that you have to keep an eye on? What are your biggest challenges competitively?
WEGMAN: Right now we’re facing a market that has very high costs, and we have to struggle and challenge ourselves to make sure that we can provide and maintain our commitment to low prices, so that’s a challenge. We’re constantly challenging ourselves to become as efficient as possible to be able to pass value on to our customers. We need to do that; we have to have low prices to have high-volume stores. That’s part of our model, that’s part of our reason we can have more people in our stores, more labor, than other retailers. And that’s always a challenge for us.
Any new competitor is a challenge because they take business away from us. We’re in so many different businesses today that every retail outlet or restaurant becomes a competitor of ours. We’re constantly looking at what other people offer, not to do the same thing but make sure that we’re continuing to offer something different and maintaining our competitive advantage.
RBJ: Who represents the most significant competition to you of all those formats?
WEGMAN: There’s not one that I would mention because we are in so many different businesses; there’s not one that we’re really trying to go after specifically. But as I said, we look at all outlets as a form of competition because it’s taking away a food dollar from us. So whether it’s a price format or an alternative format Wal-Mart (or) restaurants-those are all things that we keep in mind, and we feel the impact when they come into our market.
RBJ: Wal-Mart and other non-traditional grocers-for a number of years people have been talking about an emergence in the amount of market share that they were taking. Is that beginning to plateau, or do you still see that as a considerable threat?
WEGMAN: Well, they’re running into their challenges. They’ve grown so fast-the thing that’s hard for us to understand is how they can open so many stores in close proximity to each other. I think that’s been a challenge for them, and it’s hurting their own same-store sales. I understand they’re saying they want to slow that down a bit, not open quite as many stores, but they’re still opening hundreds every year, every day even. So, they’re an impressive organization, they’re a very large force. They have close to 25 percent of the food market today, so that’s not insignificant, and it’s certainly not anything we can ignore as an industry.
RBJ: What goes into determining those areas you’re going to expand to and getting the right mix of locations?
WEGMAN: Population growth helps a lot. It’s something that helps anyone’s growth. So we look at markets with high-population areas, people who seem to show an interest in food. We are passionate about it so we look for customers who are going to appreciate what we do. High levels of education help. So we look for demographic areas that are going to be supportive of that.
We have large stores, so we have to be able to find real estate. Our new markets in Virginia, Maryland and Pennsylvania have been really exciting for us for those reasons. People seem to really appreciate what we do, and the amazing part for us is being able to open up a store that far away and still have people familiar with Wegmans. I mean, here we are, very, very small in our industry, and yet when we first went into Virginia and opened our Dulles store, we had people tailgating in the parking lot, actually spending the night and lining up outside the store-all from Rochester. So the amusing thing is we’re finding out where our customers from Rochester are going. They’re going to Virginia.
So that’s been a lot of fun for us. It can be intimidating going into a new market where people don’t know you, when you’re used to your hometown here. But it’s been great for us, and it’s really been driving our growth, which allows us to do better in Rochester as well. It provides more opportunity for our people, helps us learn how to serve a different customer who has a bit of a different lifestyle. What we learn there we can also bring back here.
RBJ: You have a number of stores planned for the surrounding D.C.-Baltimore area. Any thoughts about expanding geographically beyond where you are already?
WEGMAN: We’re looking at options. I mentioned the importance of real estate. That determines a lot of where we can go. We’ve been looking at the East Coast and having a hard time finding sites there, but we think that could be a real attractive market at some point. Right now we have a lot more opportunity where we are in Virginia in particular, and in Maryland and Pennsylvania. So we’re going to stay focused there for now.
We don’t grow very quickly. We only open up a couple stores a year. We invest a lot in our people and a great amount in training. So we like to take our time and do it right. So right now we feel pretty good about where we are.
RBJ: How do those out-of-state locations compare in terms of performance with the Rochester-area stores?
WEGMAN: The out-of-state locations, just because of their population growth, can grow faster than we can grow in Upstate New York. Upstate New York remains a challenge for us, but it’s certainly a priority for us as well. It’s our hometown, it’s our home base. We want to do whatever it takes to do well here. So we’ll continue to invest here because of the success that we’re having in our new markets. We real- ly feel we need both. It’s becoming a larger portion of our sales, with the growth outside of Rochester, but I think the main difference is the population (growth).

Measuring performance

RBJ: What kinds of metrics do you use to measure your performance, store to store, or you against peers? Are there any primary ones: sales per square foot or turnover rates among employees? What are the key numbers that you’re always benchmarking to see how you’re doing?
WEGMAN: We have five: sales; contribution, which is sales minus labor, packaging and any shrink product; retention; diversity; and development of people. So those are five measures that everyone in the company is accountable for regardless of where they work. That’s really what we stay focused on.
RBJ: When you look at your competitors across the board, are you doing better than they are on those metrics? Are there areas you’d like to improve upon?
WEGMAN: We’d always like to improve, so continuous improvement is a priority for us as a company. We feel pretty good about where we are right now as a company. People are most important to us; that’s the basis for our success.
As you can see, we have three people measures and two financial. We hope we’re doing well with that. We know we can get a lot better at that. In particular, we’re focused on diversity right now. We want to do a better job there. That’s why we have it as a key measure, because what you can measure you can improve. What you measure will get done. So, that’s a real key area of focus right now.
Fortunately we have great retention numbers, and we’re focused on development every day. We feel that each one of us needs to learn to grow every day, so we focus on training in a formal sense and an informal sense every day so that our people can continue to develop. We spend a lot of time around food, teaching people how to cook. I think we have almost everyone in our company now that has been trained to pan sear seafood. It’s not just because you’ve done it once. You have to practice that, and we want to be able to bring it to our customers as well. But there are many areas of development that we focus on and continue to.

Grandfather’s legacy

RBJ: In many of the articles written about Robert Wegman, I came across words like brilliant and pugnacious talking about your grandfather. How would you describe him?
WEGMAN: That would be fitting. Oh my gosh, he is one of the most wonderful people I’m sure I’ll ever come across. I can’t say enough about the person he was and the legacy he left behind.
RBJ: What are one or two things you learned from him in terms of the business or maybe just in terms of life? What kinds of things did he hand down to you?
WEGMAN: The most important were his values. He handed that down to my dad. He brought my dad up that way and then in turn my parents brought me up that way. They’re values as a family, but they’re also values that are important in our business. So it’s become seamless. We often say that we’re an extended family at Wegmans because of our values.
We have five core values that originated with my grandfather and were actually written down for the first time by my dad in 2001 when he had to give a talk in Syracuse. Since that time that they were written down, it helped us connect to them, or connect to each other, I should say.
They’re the most important lessons, and part of my grandfather’s legacy that exists today, and they keep getting stronger in honor of him and what he left for us as a company and because it’s really enabling us to be successful as an organization as we grow. That was always intimidating to us: How do we maintain that family feel as we grow? And I think it’s really those values that have helped us do that and are the root of our success.
They begin with caring. He believed when he first started with this company that people had to be treated well and cared for and able to care for their families. So the first thing he did was raise salaries and offer health care. That was really rooted in truly caring about his people and making a difference in their lives. That extended to the community in how generous he was. That’s a real big part of what we have today.
He certainly had high standards in everything, so that’s certainly important to our company as well. Our company is rooted in service and as I sit here, I can picture him like it was yesterday. If we had ever had a line on the front end, when he was younger he would jump in and open a line to make sure that he could get rid of any waiting for our customers. It wasn’t acceptable, and as he went on he would just stand there with his arms crossed and a look on his face that you really weren’t interested in seeing very often. Those images remain in your mind forever, and it’s important to tell those stories really for those people who didn’t get a chance to see it because high standards need to be a way of life in everything we do.
That’s an example of who he was. He was just a wonderful person.
RBJ: What about your dad? Is there anything specific that you’ve learned from him?
WEGMAN: There are many things that I learn from him every day, and I am so appreciative of being able to work so close to him. It’s an unbelievable opportunity really to be able to work with family, and I think we work really well together. We have a wonderful partnership. He has been an amazing supporter of my whole life and of my sister (Nicole). He’s always there to encourage us, just as the way he always is there to encourage everyone in our company to be the best that they can be. He has a unique way of bringing that out in people-(the ability to) recognize people’s strengths and want to highlight them.
He is the values of our company; he is who we are, really. So he’s got every one of those values through and through: the caring, the high standards, the making a difference and respect. He’s very respectful of me as (a partner in the) family business. The way he describes it, you have to be more respectful of your family members because you think you know what they’re thinking, and you can assume things that aren’t necessarily the case. So it’s important to listen to each other. He’s always done that with my sister and me, and it’s helped us as an organization embrace diversity of thought, gender, race, age.
We had three generations of family members working together up until last year. Now we have three generations of Wegmans members working together because we employ people of all ages, and we love that opportunity. What my dad brings is respect for what every single individual in the company brings. He helps all of us with that.

Family business

RBJ: Can you give us an idea of how the two of you share management responsibilities? What are the types of things he handles; what do you handle?
WEGMAN: Well, I think that it begins with our passion. My dad right now is pretty passionate about the restaurant business so he’s working hard on ways that we can help bring better food to people. So Tastings has been a real key priority for him.
So we’ve been very excited about that and what it has taught us as a company. We’re actually going to build a new Tastings restaurant so that we can continue to grow and evolve.
RBJ: Where’s that going to be?
WEGMAN: We hope it will be free standing in the parking lot (at the Pittsford store). It will take us a year to figure it out and get it built, but we think we need to continue to evolve there and do better.
He has a friendship with a chef in New York named David Bouley who has helped influence our cooking techniques and some of the recipes that we offer to our customers. He’s also influencing us in the restaurant. He’ll actually be writing the menu for our new restaurant. I think he has a wonderful partnership with all of our chefs today. We use him as a reference point for what we do.
The important thing for my dad and me is that we remain on the same page for the whole company and focusing on the same key priorities. So we spend a lot of time making sure that we’re doing that and staying in sync and taking into account everyone’s thinking.
With such great experience in the business, I want to make sure he knows and has influence in everything that we do.
RBJ: Because of that feeling of added respect because you’re a family, does that ever get in the way when you need to be critical of each other?
WEGMAN: I wouldn’t say that, no. (Laughter) We feel very free to express ourselves. We think that it’s important to have good, open discussions. It’s not only important for us, it’s important for everyone at Wegmans. We want to make sure that we continue to have an environment where open discussion is welcome and that it’s an environment of trust and mutual respect. We need to hear all points of view if we’re going to get to the best outcome.

Wegmans in the city

RBJ: You talked a little bit about the company’s commitment not just to the employees but the communities you’re in. It would take quite a while to list the financial and other types of contributions that the company has made. But one of the things in Rochester that of course you’re well aware of is the shrinking presence of Wegmans in the city itself. I think you’re down, now with the closing of the Driving Park store, to one store within the city, if I’m correct. I understand the challenges of that, but are there any plans to try to rebuild the presence in the city, in Rochester itself?
WEGMAN: The way we feel we’re in the city is through employees. We have numerous employees who live in the city and work at our stores. I just went to the Hillside (Work Scholarship Connection) graduation last night. There were 174 students who graduated from that program this year. I don’t know if you’re familiar with that. It’s one of the most important programs I think we have in Rochester because it’s working to help young people graduate, and I think the key to the city of Rochester is graduation.
The most exciting part for us right now as a city is that people are coming together around a common goal, and I really credit Maggie Brooks and Bob Duffy for the partnership that they have formed and for the collaboration that they are fostering throughout the whole community. What they’re helping us to focus on is graduation. I don’t look at it like we’re not operating in the city because we have so many city people as part of our family. We had 40 students, in the graduating class last night, who work at Wegmans, all of whom are receiving scholarships to college. We feel we’re really making a difference in people’s lives, and they’re making a difference in ours. There was a young gentleman there last night who had helped me with the United Way program three years ago, and here he was graduating from high school in the Hillside program and accomplishing a very important goal of his, which he mentioned three years ago in that United Way video.
That’s what we feel we can do best in the city right now to do our part to help young people. We have a real responsibility for that because we employ so many young people. We’re the first jobs of many people, 16-year-olds. I think that’s a really important thing. People are gathering around a common goal of graduation all over the community.
Our graduation rate (in the city) is obviously very low, it’s in the 30s, and Hillside doubles that. Half of these kids wouldn’t have graduated had this program not been in place. That’s what we’re most excited about for the city right now.
RBJ: Are there any circumstances that you might see in downtown, where a store could work and be beneficial for you, maybe a different type of store? One thing that we hear often is, “Imagine if we had a Wegmans at Midtown,” or nearby. There has been quite a bit of residential development there, so it’s a very frequent comment that’s made around there.
WEGMAN: Well, that’s great to hear. We appreciate the interest. We’re not close-minded to that. We’d have to have the resources, time and attention to figure out how to do it. Right now we have a model that’s working, and we’re doing everything to ensure that our current model works. That’s why we’re so committed to it. We haven’t figured out how to run a small store and be profitable. So it’s very dangerous to go in this direction when you don’t know how to do it. But we’re open to it. We know that we have to continue to evolve and change as we grow. So maybe someday it could work, but right now we’re not in a position to do that.

Great ideas

RBJ: The recognition the company has had for being the best company to work for year after year is remarkable. I think one of the things that Fortune has noted when they’ve talked about you is the ability of employees to have ideas heard and sometimes adopted. Can you think of a great idea that came from one of your employees?
WEGMAN: There are so many. Have you had Maria’s cookies? They are probably the best cookies I’ve ever had, but part of it is because the person behind it has so much passion for what she does. The way that story went is she was an employee in the old store, and actually she’s been here, I think, for 25 years. She used to be at the East Avenue store where she met her husband. She was making cookies for people for their birthdays or special occasions-people she worked with. People said, “Gee Maria, you should really sell these. They’re unbelievable.” So Bill Congdon, her manager here, said, “Go ahead. Give it a try.”
And she did, and they’ve grown to be the best cookie in the company. She makes every one of those by hand with love and passion, and it comes out in her cookies. So we’re very excited because she recently agreed to-it’s her recipe, not Wegmans’-she just recently agreed to share it so we can sell it at every store. (Pittsford now) is the only store in the company where you can get those cookies.
The chocolate cake is a really fun one too. We wanted to have the best chocolate cake we could so we had a contest with all our employees, and one of the employees from the Syracuse division in the bakery won the recipe. But there were thousands of entrants for this cake contest, and the recipes were phenomenal. It was quite an experience going to each area tasting the different cakes that people came up with. That was a tough part of our job, but we had to do it, and we came up with Libby McGinely’s recipe for the winner. So our chocolate cake is Libby’s recipe, which is Wegmans’ family recipe.
There are tons of examples. The broom story: We had a new sesame seed we were using in the bakery on our breads, and our regular brooms weren’t picking them up off the floor, so one of our people said, “This isn’t working. We need new brooms.” So we said, “Here’s a whole bunch of them, choose the one you like.” And she did, and that’s rolled out at every one of our bakeries, and it’s doing a better job because of her.
I could go on and on with these stories. That’s how we learn. We learn from people all over our company.
Looking ahead

RBJ: Ten years from now, how do you think Wegmans might be different? Do you do scenario planning, thinking ahead over that kind of time frame?
WEGMAN: We do. We have to because we have more ideas than we can execute on today. So we keep pushing things out, and it does end up being 10 years out in some cases. But given the trends today, as people are busier they’re looking for products that save them time. They’re looking for more food that’s prepared or partially prepared-convenience items. And so we’re going to be more and more focused on that.
People are more focused on healthy items, which is an exciting trend for us because we believe strongly in that, whether it’s natural foods or more fruits and vegetables, which are key parts of our business. So we see ourselves moving in a direction helping people more with their health and wellness overall.
Those are two key trends for us. As we look ahead to our business, we hope we can help people with family meals also. We see an important trend of people wanting to sit down for dinner together. It’s an important tradition. It’s been lost in our society because of how busy everyone has gotten. I try to do it my own family. It’s hard with a 1- and a 3-year-old at times. Even if we can make it for 10 minutes, I’m happy.
We want to make that whole meal occasion easier and more enjoyable for people. So we will focus on that as well.
RBJ: I know you probably get asked this question periodically, but do you ever envision Wegmans going public?
WEGMAN: No. It’s that 1- and 3-year-old that I’m working hard on. I’m trying to be an open-minded mom and let them do whatever they want-so long as it’s within Wegmans. (Laughter)
RBJ: Can you ever imagine the company being sold? As you know, there’s an awful lot of private equity money floating around looking for good companies.
WEGMAN: There’s no reason for it. We don’t need any more money to grow. We grow at a controlled rate. Everything that we make goes right back into the business. That’s because we’re not in business to make money; we’re in business to make a difference in people’s lives. We believe in what we do; we love what we do.
So I don’t see any reason for that to change. We just hope that everyone at Wegmans gets up passionate about what they do, and right now we feel that we have an organization of 35,000 people doing that. Getting up and wanting to deliver incredible service every day. Why would you want to do anything different?

Her own path

RBJ: You mentioned your children. Was there ever a time growing up when you thought about what career you might have done if you weren’t here?
WEGMAN: I think you always have to think that way. You have to have a plan B. I was very influenced by where I went to school out in Colorado. I got exposed to a way of life that was promoting health and wellness. It’s easier there. There’s sunshine 365 days a year; people are very active and concerned about their health and the environment. That influences you as a young person. I believed strongly and still do in natural foods and wanted to be in that business at the time.
Wegmans wasn’t necessarily in that business at the time. My dad gave me the challenge of being able to incorporate that business into what we do at Wegmans. So that was a really exciting opportunity. That was my first job at the company-to look at our Wegmans brand and see how we could make it healthier: How we could take out any artificial ingredients that were unnecessary and maintain quality and a reasonable cost. So that was a good challenge for me but also our suppliers. Fortunately, we have great supplier partners who partnered with us on that. That was something that I thought maybe I’d do on my own, but my dad turned that into an opportunity within Wegmans. It’s continued to grow.
We have thousands of items today under the Foods You Feel Good About label. It means that there are no artificial ingredients, no artificial flavors, colors or preservatives. We also have natural food departments in every one of our stores, and they continue to grow. You can see that’s important to our customers. Organic produce continues to emerge and is a larger and larger part of our department.
That’s been a wonderful opportunity to take a personal interest, to see how it can merge with customers’ interests and Wegmans as well.
One more thing in regards to health: We have something that we run with our employees called Eat Well Live Well. What’s happened in this community is that RBA got behind it, and they brought Eat Well Live Well to 90 companies this year. There are 90 companies currently in Rochester participating in the Eat Well Live Well challenge, which is to eat as many fruits and vegetables, striving for five, but as many fruits and vegetables that you can during the day and to get 10,000 steps. It runs for eight weeks. Those 90 companies have close to 100,000 employees, and whenever you do something it impacts your family, so if that’s 2.5 members, that’s 250,000 people in our community right now that are getting healthier as a result of what the RBA has done and the support around the community.
If you look at Rochester, that’s a really exciting thing for us. We could be one of the healthiest communities in the country if you think about it, with such a large portion of population focused on that. So I think that’s a real important indication that people care in Rochester and want to help each other and get healthier as a community and are interested in these types of things.
RBJ: You and your husband are in the demographic that we hear a lot about. Local leaders say we have to keep these people in Rochester. You’re one of those young people who left, for Colorado in your case. What do you think about that? Can we do more to attract and retain people who are in their 30s and 40s?
WEGMAN: It comes down to jobs and economic development. That’s a real clear priority for the community today. My husband, working at Trillium, it’s a clear priority for him and his company. GRE and the efforts that they’re working on, I think it’s very exciting for the future of the community; and RBA. You see great focus on that from the universities, from all the leaders in the community; (they’re) really focused on economic development and how it’s got to be a priority for our community.
The way to keep young people here is to have employment. I see that coming. I think the fact that we’re holding steady is remarkable, with what’s happening with the larger organizations and the layoffs that they’ve had to have. I think our job count has remained steady, at the same level, because of the emergence of small and new businesses, and so I think that’s very exciting for us and gives us hope for the future.
Boy, I don’t think there’s any better place to live in the country than Rochester, really. When you look at the beauty of the seasons, the natural resources that we have and the friendly community. People smile every day, and that’s a great thing. There’s no traffic.
We went into our new markets. We thought they were going to be the best places in the world, and they’re great for what they have. They’re certainly different, but the traffic is really shocking. We’re so blessed here not to have to deal with that.
I think for a family, Rochester is one of the best places to live. We hope that more young people come to appreciate that.
[email protected] / 585-546-8303

7/20/2007 (C) Rochester Business Journal