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RBJ 75: Wegmans grows by refusing to rest on its success

Over the past few years, Wegmans Food Markets Inc. has been opening new stores at a rate of two or three a year, headlined by the long-awaited opening of the new East Avenue store in May.
The food retailer’s expansion has made it a major force not just in Rochester but on a national level as well.
"Wegmans is a company that understands its customers very well, which I think has been important to its growth," said Neil Stern, a Chicago-based food industry analyst. "You have this family-owned company that has now built an impressive national presence that rivals larger retailers.
"The competition certainly remains from Wal-Mart, Trader Joe’s, Whole Foods and Target," he added. "But Wegmans has a reputation that is as good as any retailer out there. The company is extremely popular in Upstate New York, of course, but in all the new markets it enters as well."
Wegmans in recent years has expanded by building stores in Pennsylvania, Maryland, Virginia and Massachusetts. Still, the company’s most high-profile opening may have been here.
Hundreds of customers lined up during the early hours of Sunday, May 19, to be the first shoppers inside the new East Avenue Wegmans. Jo Natale, director of media relations for Wegmans, said it was likely the most anticipated opening of a Wegmans location since the chain overhauled its Pittsford store more than 15 years ago.
The new East Avenue store had been a long time coming. The project had been in the works since 1996, when Wegmans purchased a single property behind the original store.
Wegmans continued to accumulate nearby properties over the next several years, including three properties behind the old store that housed several retail shops. The company went on to purchase the M&T Bank building at 1820 East Ave. and the headquarters of security company Doyle Group Inc. at 1806 East Ave.
In 2010, Wegmans reached an agreement to acquire the last property in the way of its expansion plans. A year later, the company received final approval for the project from the city zoning board.
The result is an 89,600-square-foot store that is more than twice the size of the previous store. The parking lot was expanded from 270 spaces to 472, while the new store increased its number of employees to 625, up from 475.
The new East Avenue store is a smaller version of the Pittsford Wegmans, with a Market Café, a larger bakery, a vegetable market, a prepared foods section, an expanded pharmacy and more checkout lanes. The East Avenue store also houses the company’s first-ever Italian restaurant, Amore Italian Restaurant and Wine Bar.
"The reaction has been great at the new store," Natale said. "Customers have waited a long time for this and have expressed their excitement for the new store’s new amenities and features."
In the 17 years it took for the East Avenue store to come to fruition, Wegmans has become almost as popular in other markets as it is in Rochester. Jack Doyle, a Rochester native who has lived in Virginia since 2006, said the Wegmans phenomenon has been present in the Washington, D.C., area for quite some time.
"In Rochester, Wegmans was always a big deal," Doyle said. "I didn’t expect it to have the big following that it has in the Virginia and D.C. areas.
"Going to a store in Virginia is a lot like going to the Pittsford Wegmans. It’s often packed full of people who are in no hurry to leave. The stores in Virginia have certainly become destination shopping spots for people."
Wegmans currently operates 81 stores in six states, including 15 in Pennsylvania, seven in New Jersey and six in Virginia.
Some of the biggest recent growth has been in Maryland, where Wegmans has opened six stores over the past three years.
The company currently has a single store in Massachusetts, in the town of Northborough. However, Wegmans has plans to open more in the state in towns like Burlington, where it broke ground on a store last October.
"Wegmans’ growth has been impressive, but it goes beyond that," said Stern, a senior partner for retail consultancy firm McMillanDoolittle LLP. "What has truly set the company apart is the overwhelming response from customers in these new markets.
"When you have hundreds of people waiting in line for your store to open, you must be doing something right."
When a Wegmans opened in Columbia, Md., in June 2012, the scene was even crazier than that at the new East Avenue store. Local news reports in Columbia estimated that 2,000 people lined up in anticipation of the store’s opening.
The same thing happened in October when a Wegmans opened in Gambrills, Md. Hundreds of customers stood in line, a number made even more impressive by the fact that Hurricane Sandy was set to arrive less than two days after the store’s opening.
More recently, news has surfaced that Wegmans may be set to enter its biggest market yet. In March, Boston Mayor Thomas Menino announced plans for a Wegmans store in Boston’s Fenway neighborhood.
The announcement may have been premature. Wegmans officials said the company has yet to finalize a deal. However, a buzz already appears to be building in Boston.
"People have been talking about it since the mayor made the announcement," said Stephanie Nikolaou, a Gates native who lives in the Boston area. "I was surprised by how many people in Boston had already heard of Wegmans. If and when a store does come here, it will be a major event."
Wegmans also has plans to open three stores before mid-2014 in Germantown, Md., Montgomeryville, Pa., and Newton, Mass. The company said the three new stores will employ some 1,500 people, adding to its nationwide workforce of more than 40,000.
In January, Wegmans was named to Fortune’s list of the 100 Best Companies to Work For, placing fifth, one spot down from 2012. It is the 16th consecutive year Wegmans has earned a place on the list.
"Wegmans is a company that doesn’t rest on its success," Stern said. "It continues to look at new ways to build on customer service and the quality of its products. Over the next few years, I suspect, we’ll keep hearing about the company’s expansion into more markets."

7/26/13: RBJ 75 Special Supplement (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected].


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