Business & Real Estate

Nugget Markets is growing amid land of giants

A large selection of cheeses is at the Nugget Market in Davis.
A large selection of cheeses is at the Nugget Market in Davis. rbenton@sacbee.com

It’s a busy weekday afternoon at the Nugget Market on East Covell Boulevard in Davis, and administrative assistant Cynthia Vo is heading upstairs to the store’s management office. But first, there’s a matter of some importance to deal with.

A small boy is crying loudly and appears distressed in his shopping cart seat as his harried father browses the produce aisle. Vo turns in her tracks and asks the dad if everything is OK and volunteers to help out in any way.

The weary-looking father assures her that he has it under control. Continuing on her way upstairs, Vo says: “When I see something like that, I try to talk to them and help if I can.”

And that, insists Nugget Markets President and CEO Eric Stille, explains more than anything else how his family-owned, Woodland-based company survives – and prospers – amid grocery-selling giants that include Raley’s, Safeway, Costco, Target and Wal-Mart.

“You can’t fake great service,” says Stille, a fourth-generation grocer, who leads the company started by his grandfather and great-grandfather nearly 90 years ago. That statement might seem like an oversimplification in the brutally competitive Sacramento-region grocery store market, where a crowded field of big players has challenged local companies such as West Sacramento-based Raley’s to maintain market share.

But at least one grocery consultant says Nugget has an edge. Bob Reynolds, a supermarket industry consultant in Moraga, says Nugget stands out “in terms of the quality of service it offers … compared with what most of the others are doing in the marketplace.”

On a growth spurt

But the privately held company appears to be thriving.

Stille projects Nugget’s 2015 revenue will top $300 million, up from $260 million five years ago. For nine consecutive years, Nugget, which employs nearly 1,200, has made Fortune magazine’s national list of the “100 Best Companies to Work For.” Last year, it ranked No. 36. The 2015 list is expected to be issued this week.

In January, the company acquired Paradise Foods and its three Marin County stores, which will be remodeled and rebranded as Nugget Markets. The new stores – in Tiburon, Corte Madera and Novato – will open later this year, adding another 175 employees to Nugget’s payroll.

Stille said future store growth is being considered, but he did not elaborate.

The success of Nugget’s expansion into Marin County remains to be seen, said industry analyst Reynolds. “They’re getting a foot in the door in Marin County, and that could be a challenge for them. Marin County is not Woodland, Fairfield or Sacramento. The Sacramento area is a different kind of marketplace.”

On its home turf, Nugget has been able to hold its own. According to a Scarborough Research survey in 2014, shoppers in four counties – Sacramento, Placer, El Dorado and Yolo – were asked where they’d shopped in the past seven days. Nugget garnered 10.1 percent of shoppers, compared with grocery giants like Raley’s/Bel Air (48.2 percent, combined) and Safeway (40.7 percent). It ranked above specialty market Whole Foods (7.1 percent) and discounter Food Maxx (8.6 percent).

When Stille began overseeing operations in 1996, Nugget had four stores. It now has nine Nugget Markets in the Sacramento Valley, two Food 4 Less stores in Woodland and Vallejo, and one Fork Lift by Nugget Markets store in Cameron Park. The Fork Lift concept was introduced last year, when the company remodeled a Food 4 Less store into a warehouse-style site, featuring discounted items that include chef-prepared foods, bakery goods, fresh produce and local organic offerings.

Stille said the company’s emphasis on customer service “has always been there.” He said the chain looks for thoughtful, service-oriented people in its hiring process. Nugget employees are encouraged to make contact with shoppers and always thank them. Store associates are “empowered” to go the extra mile to make things right with customers, touches that might include sending a card or offering a small bouquet of flowers.

Employee-friendly culture

Nugget’s annual ranking on Fortune magazine’s “100 Best Companies to Work For” involves a labor-intensive application process that includes company evaluations and surveys of hundreds of workers.

Stille maintains the process is important to him, because the employee evaluations amount to “my review.” He said Nugget’s companywide goals boil down to three essentials: “guest satisfaction, constant improvement, world-class employer.”

Vo, a seven-year Nugget employee, said that while other businesses have similar workplace goals, “it really is part of our nature here. It’s like a family.”

The 2014 “100 Best Companies” report said Nugget “makes employee morale a priority – that and having fun. Staffers are enthused about this family-owned grocery chain’s friendly energy and family feeling. They especially appreciate how the company goes out of its way to recognize and celebrate their hard work … While some would like more opportunities to move up into leadership, most find plenty of room and support for growth.”

Stille periodically arranges special events to recognize employees “or just have some fun.” Past efforts include renting Alcatraz Island for a company concert, Nugget executives washing employees’ cars during a worker-appreciation event and hosting the entire company on a series of whitewater rafting trips on the American River. For jobs well done, employees can receive tickets to San Francisco Giants, Oakland A’s or Sacramento Kings games.

Small details count

In its stores, Nugget has established a reputation for visual flair and shopper-friendly details.

Cheeses, meats, fresh fish and produce are displayed in neat, geometric patterns, with colorful fruits and vegetables typically catching the eye at store entrances. Long aisles of wines and salad dressings are arranged precisely, with no single bottle protruding even a quarter-inch out of place.

“Whoever stocks these shelves has a real eye for details,” said 45-year-old Elk Grove homemaker Joanie Taylor, roaming the aisles of the Nugget Market on Elk Grove Boulevard. “It’s one of the nicest things about coming here. Everything looks so clean and fresh and new. It’s a great atmosphere to shop for food.”

Nugget also has been an innovator, introducing products and trends that later become industry norms.

In the 1990s, Nugget developed a European market-style format, with homemade meal offerings, artisan breads and made-from-scratch desserts openly displayed. In-house cheese and wine specialists have been helping shoppers make choices since the mid-1990s. Nugget was an early adopter of gluten-free products and stocking the beers of regional craft brewers. It has long had relationships with local growers and suppliers, well before “farm to fork” became a regional catch phrase.

“We always try to educate ourselves as fast as possible to be in tune with trends,” Stille said.

Another advantage – especially when introducing specialty products – is Nugget’s comparatively small size, said supermarket analyst Reynolds. “There is an advantage to being small to medium size in that regard, such as introducing craft beers. The big boys have trouble on that scale. They have to bring in enough to fill the shelves in all stores, and there might not be enough annual volume from those operations to fill the shelves.”

Reynolds added that “a lot of Whole Foods products are found in Nugget Markets. Some of (Nugget’s) take-home dinners and higher grade products are not found in other stores.”

At the Nugget Market store in West Sacramento, Bonita Julie Jones, a Sacramento office assistant, says the diversity of food offerings is a plus: “I have one of those families with carnivore kids, but my partner and I are vegetarians who watch what we eat. I can get what I want in one stop, instead of going all over town.”

Jones, 39, said she has a friend from Los Angeles who “can’t believe it when she comes here to visit. She’s always asking me when (Nugget) is going to come down there.”

Call The Bee’s Mark Glover, (916) 321-1184.

NUGGET MARKETS AT A GLANCE

Origins: In 1926, the father-son team of William and Mack Stille opened the first Nugget Market in Woodland. Fourth-generation Nugget exec Eric Stille is the current president and CEO.

Current: The privately held grocer operates nine Nugget Markets in the greater Sacramento are, two Food 4 Less stores in Woodland and Vallejo, and one Fork Lift by Nugget Markets store in Cameron Park.

New stores: In January, the company acquired Paradise Foods and its three Marin County stores, which will be remodeled and rebranded as Nugget Markets. They open later this year.

Number of employees: About 1,150. Another 175 will be added when the former Paradise Foods stores open.

Revenues: Projected to top $300 million in 2015, up from $260 million five years ago.

Accolades: Nugget made Fortune magazine’s list of the nation’s “100 Best Companies to Work For” for nine consecutive years. It ranked No. 36 on the 2014 list.

Giving back: Nugget Markets supports more than 350 nonprofit, youth education and religious organizations with more than $10,000 in monthly donations. Its free “Scrip Card” program enables shoppers to donate up to 4 percent of their monthly purchases among four local nonprofits.

Where shoppers shop

In a 12-month survey of shoppers in Sacramento, Placer, El Dorado and Yolo counties, Nugget was positioned between larger grocery chains and smaller, specialty or discount chains. Shoppers in the 2013-2014 survey by Scarborough Research were asked to state where they’d shopped in the previous seven days. Respondents typically shopped multiple stores in a given week.

Bel Air/Raley’s combined: 48.2 percent

Safeway: 40.7 percent

Nugget: 10.1 percent

Food Maxx: 8.6 percent

Whole Foods: 7.1 percent

Sources: Nugget Markets, Bee research

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