West Sacramento-based Raley’s marked its 80th year with a flurry of moves that arguably made 2015 the busiest year in its history.
Significantly, the moves came during a year in which Raley’s became president and CEO Michael Teel’s company, literally.
In May, Jim and Joyce Raley Teel announced that they would transfer majority ownership to their 64-year-old son. With that, the grandson of founder Tom Raley assumed 92 percent ownership of the 12,000-employee company founded in 1935.
During an interview at his homey West Sacramento office, however, Teel stressed that the store closures, store-opening plans, executive hires and new programs announced this year were not overnight considerations, but the results of many months of planning.
Consequently, he says, “we’re well-positioned for the future. … We look forward to it. This is our home.”
Foremost among the 2015 developments, Raley’s announced growth plans after a prolonged period of standing pat.
In August, the grocer said it would build a new Raley’s Supermarket at Howe Avenue and Fair Oaks Boulevard, the longtime site of the former Hubacher Cadillac auto dealership. It was the company’s first new store announcement in six years.
Plans call for a moderate-size, 36,000-square-foot store, with construction set to begin in mid-2016 and a target opening date in the second quarter of 2017.
Within weeks, plans to open two more stores were announced.
In September, Raley’s said it had submitted plans to build a new store on the former Capital Nursery site at 4850 Freeport Blvd. in Sacramento. The new 55,000-square-foot store would replace a 57-year-old Raley’s that has operated just south of the planned location. The company said the new store will have a design and color scheme designed to fit in with the nearby Land Park neighborhood, an open floor plan and abundant use of natural light.
Last month, Raley’s announced that it will open a new 40,000-square-foot grocery store as the anchor tenant of a subdivision being developed at the southwest corner of Sunrise Boulevard and Douglas Road in Rancho Cordova. Construction is set to begin in mid-2016, with a target opening date of May 2017.
Teel noted that “with real estate, there were a lot of pieces of that puzzle. But once we got everything lined up, we were ready to pull the trigger. Our new stores are being designed with the needs of our customers in mind.”
Teel said there are “a couple more” sites the company is looking at, but he did not elaborate.
He acknowledged that the proposed new stores are generally smaller than the jumbo-size supermarkets Raley’s once built. For perspective, back in 1998, Supermarket News said the average Raley’s store was 62,000 square feet, and the average Bel Air store was around 55,000 square feet.
“The future is going to bring smaller stores,” Teel said.
On the other end of spectrum, Raley’s made the call to close four stores in 2015, citing locations that struggled despite company efforts to boost business. The closings included a Raley’s in Winnemucca, Nev.; the Raley’s at 4551 Mack Road in south Sacramento; a Nob Hill Foods store in San Jose; and a Raley’s in Newark.
“These were difficult decisions, and again, we made them after a long, hard look at each store,” Teel said.
Teel acknowledged that Raley’s is positioning itself to better compete in a Northern California/Nevada marketplace that has become increasingly crowded over the past decade, with Safeway, discount grocers and Walmart Neighborhood Market stores cropping up and touting low prices.
Now, Teel says he’s encouraged because “we now know our customers better than ever.” He said that is a direct result of Something Extra, the company’s first-ever customer loyalty and rewards program, launched in September 2012.
Teel said Something Extra has enabled Raley’s to laser in on customer buying habits, simultaneously offering them perks on products they regularly purchase. Teel said the program has provided a wealth of data, everything from shopper demand for healthy snacks to what they want to see at the checkout stand. Correspondingly, Raley’s has added more organic offerings and a variety of other products touted as healthy.
Teel said Something Extra created a major shift within his company: “We’re much more customer-driven now. We’re working to serve them, to do what they want.”
New York-based marketing and branding expert Peter Schaub characterized the Something Extra program as “an absolute must … If you’re not keeping track of your customers’ buying habits in today’s (grocery) industry, you might as well be feeling your way around in the dark. You can’t guess or dictate now. You have to serve customer needs, because they have plenty of other options out there if you’re not.”
Other notable moves by Raley’s in 2015 included:
▪ In February, the company announced that its Raley’s, Bel Air and Nob Hill stores would no longer carry tobacco products, a move the grocer characterized as part of a “continuing effort to raise awareness about health and wellness, and our commitment to infuse life with health and happiness.”
▪ It added to its executive team: Keith Knopf came aboard in midyear as chief operating officer, making the transition from overseeing retail operations at the Kohl’s chain. Raley’s recently hired Deirdre Zimmerman to be senior vice president for marketing. With a strong background in brand development, she came to Raley’s from White House/Black Market, the Florida-based women’s clothing retailer.
“We’re adding talented people from diverse backgrounds, not just (the grocery) industry,” Teel said.
▪ Raley’s made national headlines in July with the launch of its Real Good pilot program, selling “scarred, aesthetically challenged” produce that might otherwise be headed for landfills. Ten stores offered the produce at prices 25 to 30 percent lower than flawlessly shaped, uniformly colored produce. Teel said “we learned some good lessons” with the program and aims to bring it back in 2016 with improvements.
▪ The company launched a new initiative called Hello Savings, featuring multiple ways to save on food staples ranging from milk to produce to meats.
Bob Reynolds, a supermarket industry consultant in Moraga, said that “it has been hard to get a reading on what Raley’s is up to in the past because it’s privately held.”
However, asked about the specific changes introduced by Raley’s in 2015, Reynolds said: “I guess that what I would say about Raley’s is that it’s refreshing to see that they are making some hard decisions … and getting into neighborhood service with some merchandising that should serve them well.”
For his part, Teel said that gaining majority ownership in the company this year worked out well for him: “It has allowed me to step back a little bit, to get out in the community.
“It’s important to me. I want to continue that legacy of giving, providing more-healthy foods to the community, sustainability, supporting the arts … I feel really good about the future and growth, and this community.”
Raley’s by the numbers
- Stores: 122 in Northern California and Nevada under four banners: Raley’s Supermarkets, Bel Air Markets, Nob Hill Foods and Food Source
- Employees: About 12,000
- Family ties: Started in 1935 by Tom Raley; current president, CEO and majority owner Michael Teel is the grandson of founder.
- No. 47: Ranking of Raley’s on Supermarket News’ 2015 Top 75 U.S. & Canadian Food Retailers & Wholesalers
- $3.2 billion: Supermarket News estimate of Raley’s annual sales
- 12,500: Number of turkeys, chickens and hams donated by Raley’s stores this holiday season, which will be distributed to serve 65,000 individuals throughout Northern California and Nevada
Sources: Raley’s, Supermarket News