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Wegmans shows why employee satisfaction counts

BY Alaric DeArment

Supermarket chain Wegmans took the time last week to issue a clarification following local news reports: It would not be ending healthcare benefits for its part-time employees. A story in the Buffalo News had a headline, "Wegmans cuts health benefits for part-time workers," that had been misconstrued.

It’s no secret why Wegmans — which operates 81 stores in New York, New Jersey, Pennsylvania, Virginia, Maryland and Massachusetts — is included in Fortune magazine’s list of the "100 Best Companies to Work For."

Just last month, the chain said it would spend $4.8 million give college tuition assistance to 1,880 employees. It’s not the only company to stand up and invest in its employees. Club retailer Costco Wholesale turned heads in March when it expressed support for a bill in Congress that would raise the federal minimum wage from $7.25 per hour to $10.10, with president and CEO Craig Jelinek saying in a statement on behalf of the nonprofit group Business for a Minimum Wage that the company already paid a starting hourly wage of $11.50.

It turns out there also is science to back these kinds of policies up. According to a 2011 survey conducted online by Harris Interactive on behalf of the American Psychological Association, many workers in the United States reported feeling stressed out and undervalued, with 49% saying that low salary had a significant effect on their stress level at work and 36% experiencing work stress regularly. Much of this was attributed to the economic recession, which by then had already ended, but whose effects had continued to linger.

Not surprisingly, the study found a link between happy workers and productive workers. Those companies that created healthy workplaces had average turnover rates of 11%, compared with the national average of 38% estimated by the Department of Labor. Employees of these companies also reported significantly lower stress and higher satisfaction.

Policies that keep employees happy and turnover low aren’t exactly hurting companies like Wegmans and Costco, either. Wegmans is renowned for the loyalty of its customers, while Costco just reported higher-than-expected sales in for the month of June.

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Loblaw plus Shoppers Drug Mart equals 1-in-5 pharmacies across Canada

BY Michael Johnsen

Loblaw Cos. and Shoppers Drug Mart signed a definitive agreement under which Loblaw will acquire Shoppers Drug Mart. The move follows the acquisition of Safeway Canada by Sobey’s last month and a growing incursion of U.S. retail north of the border, including both Target Canada and Walmart Canada. 

When Loblaw announced last week it would debut a new health-focused format to take on Whole Foods, no one could have expected it would make a deal to become the No. 1 pharmacy retailer in Canada, leapfrogging from No. 8 to that top spot with the stroke of a pen. Together the companies will operate 1,797 pharmacies across a total of 2,348 locations, meaning 1-in-5 Canadian pharmacies now will be operated by the merged company. Shoppers Drug Mart represents $4.9 billion in annual pharmacy sales, representing 47.3% of overall sales and $3.9 million in pharmacy sales on a per store basis. And if Loblaw’s pharmacy sales are brought up to that level, the merged companies will represent $6.8 billion in pharmacy revenue. 

But the time is ripe for consolidation in Canada, because beyond emerging competition from U.S. competition, government reform also is fueling consolidation across the country. "We are seeing this increase in activity in terms of consolidation or in terms of new pharmacy development in Canada because right now it is a very challenging time for the actual pharmacy operator in Canada with the recent changes to generic drug legislation that have been going on since 2010," noted Derek Dley, Canaccord Genuity research analyst, in an interview earlier this year as part of DSN‘s special PoweRx Players report that included special coverage on the "Kings of Canada." 

According to published reports, Domenic Pilla, president and CEO of Shoppers Drug Mart, will manage the pharmacy as a separate unit that will continue to operate under its own brand names. That will bring a level of continuity to the Shoppers Drug pharmacy banner as Pilla improves the pharmacy performance across Loblaw. Shoppers Drug Mart has long held a reputation as a savvy pharmacy operator focused on the consumer experience across HBA. 

Shoppers Drug’s latest BeautyBoutique concept store, opened late last year, encompasses more than 4,000 sq.-ft. — the larger space a testament to the success the company has had with that concept. 

Loblaw is known as an innovator as well. The grocer recently launched a test pilot of a new retail concept called Nutshell Live Life Well, a stand-alone franchise catering to the health-conscious crowd. The first location of the new concept will open in Toronto this fall, according to published reports. 

Billed as bringing Canada’s No. 1 food operator and No. 1 pharmacy operator under one roof, each of the company’s core competencies appear to complement one another. Shoppers Drug has domain across the front end with its beauty and health concepts. Shoppers Drug manages 55 medical clinic pharmacies under the name Shoppers Simply Pharmacy and 62 Home Health Care stores. Shoppers Drug also owns a specialty pharmacy operation and MediSystem Technologies, a provider of pharmaceuticals and services to long-term facilities. 

Loblaw also will benefit from Shoppers Drug’s robust loyalty card program, which boasts 98% consumer awareness and more than 10 million active Shoppers Optimum cardholders. Loblaw earlier this year had made customer acquisition a key goal, having earmarked 65% of its capex towards retail initiatives, up from 45% in 2012, according to Credit Suisse research analyst David Hartley.  

And Loblaw’s operation features a well-oiled supply chain. It’s that supply chain, and Loblaw’s expertise as a food operator, that will be able to beef up Shoppers Drug’s food offerings. Shoppers Drug had already been mirroring U.S. trends in that regard, increasing the selection of food products in many stores. 

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What are the top 10 characteristics of leading ‘dark horse’ companies?

BY Dan Mack

Everyone loves a dark horse — the come-from-behind winner that no one expects. We cheer for them, marvel at their tenacity and hope for their victory over stronger, better-known competitors.

But why do dark horses win? They aren’t favored to win, and often for good reason. They usually don’t have big money invested in them; they have no history of winning, and not many people have heard of them. The usual formula for winning the race just isn’t there.

What are the winning characteristics of dark horse companies that sneak up on everybody? Here is a hint: “They re-set the rules of engagement and often times change the economics of a category.

Yet they win. And it’s not a fluke.

Bigger, better-known competitors often don’t pay any or enough attention to dark horses until it’s too late and the dark horses streak past. Surprise is indeed the reaction of spectators — competitors, their investors, and the marketplace at large — when dark horses win.

I have personally evaluated, interviewed, or consulted with well over a hundred emerging companies that, by all accounts, were outmatched by competition — yet they were winning. Not only that, these dark horse companies seemed to be having more fun during the trip towards the finish line than the larger companies they competed against!

Winning organizations know that business is not transactional: It’s personal. They set their own rules of engagement, and their corporate values are shared by everyone across the organization. Expectations are clear; employees are encouraged to find and use new resources. Fear of failure is discouraged, and power is shared. Sound too utopian?

We have also found that some of the best companies are also somewhat messy at times. Even though they have clearly defined the sandbox they play in, they are always evaluating, innovating, and tinkering around the edges of their business. Nothing is perfect — and they like it that way.

Speed-to-market is another characteristic of successful dark horses. As one customer shared with me, “the best companies move from prototype to end product quicker than competitors, and have learned to deal with the messiness.” Winning companies are constantly in the process of re-invigorating their business, leaving competitors in their wake. They ask a lot of questions and never assume they are done understanding the industry or their business.

Co-creating your next line of product innovations with your best customer(s) is a powerful idea that fuels growth. Risky? Sure, but as one executive told me, “you can’t afford the risk of not co-creating products with your top customers.”

Some of the most successful companies that co-create with customers have found that professionally facilitated discovery meetings can help unlock an innovation stalemate and create competitive advantage. Winners walk out of those meetings with customized, exclusive products for their top customers.

Dark horse organizations are good at flying under the radar. This can give them an advantage in sneaking up on the competition, but can also result in them being marginalized or flat-out ignored. However, the stronger its sense of purpose, the more likely a dark horse organization will leave its imprint on the business landscape. They can even go so far as to become the catalysts for dramatic innovation and sometimes even larger societal or cultural shifts. Think Steve Jobs and the Apple revolution.

The leaders of dark horse companies, and the companies themselves, share a number of characteristics:

  1. Their business is personal; their identity and purpose are about more than profit.
  2. They listen well and diagnose, staying in alignment with top customers.
  3. They use their organization’s hidden assets to create differentiating value.
  4. They create a clear, vibrant business blueprint and share it openly with employees.
  5. They carefully and wisely pick their customers and their partners.
  6. They co-create innovation with customers.
  7. They move quickly to meet consumer shifts to create new experiences.
  8. They influence the influencers who help build their brand.
  9. Everybody in the company takes a role selling and marketing the brand.
  10. Corporate culture operates with a spirit of honor, unleashing the skills of the team.

It is difficult to know if a dark horse will overtake you, but we do know that dark horse competitors do leave clues. Take the time to reflect on and to question your own corporate culture, your leadership style, and your strategies for engaging customers and your overall sales strategy. Think about the ideas outlined in this article, let them marinate, and then act decisively.


Dan Mack is founder of the Mack Elevation Forum and a partner in The Swanson Group. To learn more go to www.mackelevationforum.com.

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