Stew Leonard, Jr.: The Innovation Interview

Stew Leonard Jr., President & Chief Executive Officer of Stew Leonard’s shares his thoughts and insights on innovation, technology, customer service.

Stew Leonard’s is a unique family-owned and operated, farm-fresh grocery stores once called the “The Disneyland of Dairy Stores” by The New York Times for its in-store entertainment and costumed characters. Stew Leonard’s is listed in the Guinness Book of World Records for having “the greatest sales per unit area of any single food store in the United States” and was recognized by Ripley’s Believe It or Not! as “World’s Largest Dairy Store.”

Since Stew took over as president and CEO in 1991, the company has grown to include four food stores in Norwalk, Danbury and Newington, Connecticut and Yonkers, New York, and nine wine stores in Norwalk, Danbury and Newington, Connecticut; Yonkers, Farmingdale and Carle Place, New York; and Clifton, Springfield and Paramus, New Jersey. Stew Leonard’s employs more than 2,000 Team Members and has annual sales close to $400 million.

The company is continuously featured in marketing textbooks and business school case studies; 2011 marked its tenth consecutive year on FORTUNE Magazine’s “100 Best Companies to Work For” list, coming in at #18 alongside such notable companies as Google, American Express, and Starbucks. Stew has shared the Stew Leonard’s philosophy on customer service and team member development with companies from all corners of the globe, and he is listed as one of the top 25 speakers from the Washington Speakers’ Bureau.

Stew earned his MBA from UCLA in 1982. He has appeared on numerous national television shows sharing his expertise and store’s business philosophy and has been honored and awarded by many organizations for his leadership and community support. He and his wife Kim have additionally been recognized for their advocacy in supporting children’s water safety.

How do you define innovation and what does it mean to you?

That’s a great question I wonder where innovation comes from and how to foster it. Everyone looks at new ideas, new products, and new concepts to define innovation.

However, to define innovation I do not want to say that it is just sitting in a room and talking about ideas, because everyone wants to talk about taking a trip to the moon someday. I think that innovation is trying to look at things you see every day and think about how you can improve those things.That’s how I would define innovation. And maybe I’d add to that, looking at stuff in a different context and then being able to apply it to your everyday.

What industry needs to embrace innovation and take more risks?

Everybody and every industry. I cannot think of an industry that should not be innovating. Every industry should be innovating and doing more of it.

The food industry has to constantly be embracing change and taking more risks. The same could be said for the auto and wine industries. The hardest thing is to keep pushing yourself to take those risks and to come up with new ideas even if you know those ideas might cannibalize one of your existing product lines.

You have to keep innovating and changing to be successful. As an example, we embraced coffee capsules even though we roast tons of fresh coffee every week and sell it in the store. The question I asked our managers was, should we bring in coffee capsules even though it would cannibalize our existing coffee business a little bit? We decided , if that’s what the customer wants, then let’s bring it in.

The customers love it. Since we brought in coffee capsules our overall coffee sales are up. Our fresh roasted coffee sales have not grown as well as we wanted them to, but our overall coffee sales are up and we are doing millions of dollars in sales of coffee capsules since we embraced the concept and introduced it in the store.

What is the best piece of advice that you have been given and received?

The best advice that I could give everybody is that when you think the chips are down, wake up and put one foot in front of the other and you’ll be amazed at how bright your future will look.

The best piece of advice that I have ever received was from my daughter Ryann. One night we were sitting around the dinner table and she said to me, “Dad, you know one thing I really want to learn how to do is to be comfortable with being uncomfortable.”

What is your greatest achievement and why?

From a business standpoint, beginning the wine business has been very fulfilling to me. It’s one of my biggest achievements.

Our wine business was started in 1999 and one of the things that motivated me was that I have loved wine all my life and even looked at going to college up around the Finger Lakes region of New York.

The wine business idea started one night when I was sitting around the dinner table in late July at my house and I was so proud, because one of our corn farmers had just dropped off a dozen ears of corn that were like butter and one of our ranchers had sent me out beautiful rib eye steaks for everybody and I grilled them.

My sister had baked some great ciabatta bread and I was sitting there and I looked at the table and I said, “You notice the only thing that we don’t sell here is the wine.” And so we decided right at that point why don’t we just look into selling some wine. Soon after we opened up a small little store in 1999 and today we have nine wine stores

Newspapers and Books: Digital or Physical?

I initially switched to digital because I was a book guy and reading books on the Kindle was a convenience. Today I am about 90% digital when it comes to newspapers and books.

Today, the iPad has made life easy when it comes to reading, you basically have access to every magazine, newspaper and article online and at your fingertips.

Stew Leonard’s is well known for its passionate approach to customer service as each and every customer is reminded of this when they enter a store and read the “Rule #1 The Customer is Always Right”; Rule #2 If the Customer is Ever Wrong, Re-Read Rule #1″ upon a granite rock when they enter a store. How do you ensure that every team member strives to provide the highest level of customer service each and every day?

Well, first of all, it’s one of the biggest challenges that we have and we have to keep it as a top priority all the time. We keep it a top priority through a lot of communication and keep reinforcing customer service, because sometimes the Team Members at the store don’t realize how important it is to the customer. You have to keep on communicating the fact that how important it is that we want to be nice and we want to treat all the customers nicely at the store.

The other aspect is that you have to appreciate all of the hard work that the team members put into their jobs everyday by listening. This is why we recognize our team members regularly at appreciation dinners, manager’s meetings and communication meetings. All the while we are trying to constantly reinforce the rock and reinforce customer service. It has to be a top of the mind situation.

One of the great innovations of Stew Leonard’s is the design of the stores which start with the bakery and end with ice cream all in which foot traffic flows in one direction and select items are placed in strategic locations. How was this concept developed and what have you learned from the spending habits of customers based on the location of items?

The whole concept has evolved as Stew Leonard’s started as a very small store that has had over twenty additions put onto it over the years. As the store grew, that one aisle just started getting a little bit longer. There really wasn’t any analysis that went into designing the flow of the store.

It was just basically, how do you get a lot of individuals into the store and keep the traffic moving? It’s very similar to a one-way street in a town; on a one-way street, more traffic can travel down the street. So that’s really where the idea came, it really came from the growth of the store and expanding the one aisle that we originally started with.

As far product placement goes, one of the things we’ve found especially today is that consumers are shopping by meals. Consumers are thinking,what am I going to have for breakfast? What am I am going to have for lunch? What am I am going to have for dinner? It was based on those trends that we found if you could put more products around a meal solution, they will sell better.

For instance, if you put parmesan cheese not only in your cheese area but also if you put parmesan cheese near the romaine lettuce, you will sell a lot of cheese because people are thinking of making a salad.

We create product placements around not only the meal but also events, seasons and holidays.

Are you currently experimenting with ways to integrate Google Glass into the overall Stew Leonard’s experience? Perhaps developing an app that consumers can utilize to pay for their goods or learn more about your products?

This is something that we are not presently looking into at this time, but Google Glass is something that we are paying attention to. We want to better understand how wearable technology will evolve.

Is Stew Leonard’s currently experimenting with any new technologies that we might soon see within the store that will enhance the customer’s experience?

One of the newest things we are developing are more cashless kiosks. Consumers could pay for their products right where they picked up the product without having to wait in line. For instance, if a customer were walking through the store and wanted to open a fresh squeezed juice, they could pay for the juice right there without having to wait in line at a checkout.

Your father Stew Leonard, Sr. created a truly great shopping experience for the whole family which the New York Times has dubbed the “Disneyland of Dairy Stores”. How do you improve and enhance this experience year after year while adapting to new technologies and innovations?

This gets back to the original question about innovation and how do you keep innovating every year and coming up with new ideas. At Stew Leonard’s, we have what we call an Idea Cow, which is basically a cow constantly eating different things we are talking about, new ideas and what we have done today.

For example, when we read about a new great store we feed the idea to the “Idea Cow” and we schedule a visit to the store. We recently just visited the new Whole Foods in Brooklyn.

Another thing the Idea Cow will eat is all of the trade magazines and periodicals and industry news that are going on. The cow is digesting all of the digital information that’s out there from what’s hot to what’s happening. Basically anything that could give us ideas.

We also listen to our customers’ feedback and ideas. A customer perhaps could have traveled to a different country and saw something that could possibly work at Stew Leonards and they recommend it to us. Our team members are constantly feeding new ideas into the cow.

The Idea Cow is absorbing all of these ideas all the time to help us constantly innovate. When we go through all of the data and ideas, we start to formulate the ideas and ask the following questions: How much does it cost? Will there be a payback? Does it fit our image?

Once we identify the idea and decided to implement it in the store, we walk through the whole process and then develop the signage and publicity, all while creating excitement in the store for the customer.

Another part of the Idea Cow is that we encourage our Team Members to come up with new products that would appeal to our customers. One example of this would be the Crogel. The Crogel was created by baker Tania Portela at our Norwalk, CT store. We loved the idea and the Crogel was delicious, so we encouraged her to make it for our customers and we launched to it great success. The Crogel was recently featured in USA Today.