Milking It: An Interview with Stew Leonard, Jr.

Part Disney, part dairy, Stew Leonard’s is unlike any other grocery store in the area. As customers walk through the aisles, they find more than soup displays and a long line at the deli counter. There are employees dressed up in costumes; animatronics such as Twinkie the Kid, Chiquita banana and Clover the cow; a petting zoo; and food and beverage samples along almost every aisle.

The decidedly un-supermarket-like atmosphere in each of the four Stew Leonard’s locations is not the only element that distinguishes them from D’Agostino or ShopRite. The stores emphasize fresh foods. Each Stew Leonard’s store carries only 2,000 items (compared to the average grocery store, which sells approximately 45,000 items), including dairy, meat and produce, and 80% of the products sold are fresh — that is, brought in daily or prepared in-store.

In 1969, Stew Leonard, Sr., opened a retail dairy on his father’s dairy farm in Norwalk, Conn. He realized that the advent of highways and supermarkets would soon eliminate the demand for milk delivery services. Leonard Sr. had seven employees working in a 17,000-square-foot store. They sold just eight items. That first store steadily grew to 103,000 square feet and 657 employees today. And customers can still watch cows being milked on the premises.

In 1987, Leonard’s son Stew Jr. took over as president and CEO and expanded the business based on his father’s principles: Rule No. 1, the customer is always right; Rule No. 2, if the customer is ever wrong, reread Rule 1. Under Stew Jr.’s leadership, the company opened an additional three locations (Yonkers, N.Y., and Danbury and Newington, Conn). In 1992, Stew Leonard’s earned an entry into The Guinness Book of World Records for having “the greatest sales per unit area of any single food store in the United States.” He also started Stew Leonard’s Wines, which has grown to seven locations. NY REPORT editor-in-chief Robert Levin sat down with Stew Jr. and discussed steering a family business in a new direction, the benefits of public speaking and the importance of fresh corn.

RL: How would you describe what Stew Leonard’s is about?

SL: I look at it as a really fun experience relating to food and wine. You see [food] being made. There’re nice people here. There’re costumed characters. There’s entertainment, demonstrations, tasting. You walk through the store and think, “Whoa. Wow, that was cool. I tasted something I’ve never had” or maybe “I tasted something I hadn’t had in a while.” Our real satisfaction comes when a family sits around the dinner table and everybody says, “Wow, is this steak good!” Or “That fish, where did you get that fish?” That’s like the standing ovation at the end of the experience.

RL: So, you want the customer’s experience to keep going after he or she leaves the store?

SL: Yeah. That really solidifies what you’ve done, that the customers have had a great experience. And then maybe someone will say to everybody at the dinner table, “Hey, let’s go over to Stew’s.” We get a lot of visitors around the holidays when relatives come to visit.

RL: Your prices are lower and your food is fresher than other supermarkets. How do you guys make money?

SL: One of the things I learned from my father is, when you start selling a new product, start charging the price you will be able to buy the product for after you do a lot of volume. You literally earn your profit through volume. Since my father didn’t know how to price, he just sort of took the raw cost and just marked it up, probably not even enough to cover a lot of his expenses. But he did a lot volume.

To make this pricing work, our vendors have to take the same approach we do. We’re asking them, “Don’t charge us this high price right now, because we’re going to do a lot of marketing. We’ll put big displays in the store. We’ll demo the product. We have our own sign departments, which makes really nice signs. If you want to promote your brand, participate.” And we don’t charge these vendors big slotting fees. If you go into some of the big chains, they’ll say, “OK, 10 grand, 20 grand, 30 grand,” to get shelf space. We don’t do that. But we do ask them to help us with the marketing. And we got some real home run items that started in the store.

Some people say, “I’m successful. I don’t need Stew Leonard’s.” We say, “OK, have a nice day.” But other vendors appreciate a shot at going onstage down in the store. Some will work their butts off, come in and demo the product on the weekends, when the store is busiest, and give free products. They may be small businesses. In fact, we’ve had people leave early so they could go make more product. Bare Naked is a perfect example. They’d spend all day here because we were the first big retailer to pick them up. Then they’d run home and make more.

Healthy Competition