Meijer makes 'Hot 100' list with deliberate growth plan

Posted on September 21, 2012

Superstore chain Meijer Inc. is the only Michigan company this year to make the country’s “Hot 100 Retailers,” a sign that the Grand Rapids company has adapted to national competitors with steady growth while attracting national attention.

The family-owned firm placed No. 88 on the list by a National Retail Federation publication based on sales growth from 2010 to 2011 and domestic sales of more than $300 million. The honor came as Meijer prepares to open its first store in Detroit early next summer and its first outlet in Wisconsin in 2014.

“We didn’t notice that we were on this list,” said Hank Meijer, 60, the co-owner of the 50-year-old company with 60,000 employees. “What we are conscious of is a responsibility as a company of Michigan to serve the people of Michigan, to see that we are taking care of our customers’ every day needs.”

But STORES magazine did take note, estimating that Meijer had $16.5 billion in retail sales in 2011. The chain operates 199 stores in five states — including Ohio, Indiana, Illinois and Kentucky — with Wisconsin scheduled to join the list in two years.

“Meijer carries the ball well. They stay front and center of everything they do without overextending and overstretching themselves,” said Michael Bernacchi, marketing professor at the University of Detroit Mercy. “They have enough class to hold their own ground without going after other niches. You see strategically managed growth, never explosive.”

The top executives agree they stick to a Midwestern strategy.

“We look at growth as an important ingredient in a dynamic company. Growth helps you gain greater efficiencies, but growth for its own sake does not motivate us,” Hank Meijer said. “You won’t see us jumping to some other part of the country.”

But it is diving into Detroit, where its store will anchor the Gateway Marketplace under construction near Eight Mile and Woodward Avenue. Meijer also has bought the old Redford High School location in the city, where the building is being demolished, but no opening date has been set.

Although more than half of the company stores are in Michigan, the dynamic is changing.

“We currently have three sites under contract in Wisconsin. We couldn’t consider this market until we settled in Illinois,” Hank Meijer said. “Meijer supplies its own stores with its own distribution facilities. That is the core element of who we are — we make daily deliveries with fresh products and replenish quickly.”

The company might have met the fate of the now-deceased Borders Group of Ann Arbor and Highland Appliance if it hadn’t adapted to the threat of big box retailers in the late 1990s and kept refreshing its game plan.

“We were challenged by the world’s largest retailer as they began to build up super centers,” Hank Meijer said, referring to Wal-Mart Stores Inc. “We had pioneered the idea of one-stop shopping in a super center, and now we faced our toughest competitor coming at us with economies of scale that could dim our halo of price perception.”

As a privately held company, Meijer could completely focus on its customers “without having to worry about pleasing outside shareholders,” Co-Chairman Doug Meijer said. The company could think long term and do what it thought best to cut costs, streamline delivery processes and beef up departments.

“Every one of our departments had a big-box store selling the same things and a lot more,” Hank Meijer said. “We looked at the frequent needs of our customers. We stopped selling golf bags and continued to stock golf balls. We sell a handful of computer printers and a far wider selection of ink cartridges and paper.”

“All of us are striving to have low prices every day with special values and sales, as well. No one matches up identically all the time. We live with profit margins lower than national competitors.”

But with the net profit it does generate, Meijer donates more than 6 percent of it to the communities it serves through a variety of charitable partnerships.

Innovation keeps Meijer competitive, a retail expert said.

“Meijer did a lot of things right this year,” said Shari Petras, CEO of the CFI Group, an international retail consulting firm in Ann Arbor. “They established themselves early on as a leader of technology with the first optical scanners in Michigan. They have a lot of products available online for the Web market and a strong commitment to fresh and organic produce.”

In fact, Meijer executives just purchased a milk processing plant in Holland Township from Bareman Dairy and plan to use the facility to launch Purple Cow Creamery, in honor of the Purple Cow ice cream cones the store sold when the late Fred Meijer ran the company.

Meijer could be joined in the “Hot 100 Retailers” in the future by other Michigan companies, said Paul Bensman, president of Bensman Biz Consulting and Coaching in Southfield. Gordon Food Service — a Grand Rapids-based retailer and wholesaler with 150 locations — and Warren-based Art Van Furniture are both expanding, he said.

Meijer expects to stay in the top 100 by avoiding complacency and tweaking the business plan with the third generation of Meijer family members at the helm.

“We need to get sharper. … We are looking to improve our general merchandise,” Hank Meijer said. “We continue to have an advantage over national retailers because we know our markets. We are Midwesterners.”

Hot 100 retailers

Grand Rapids-based Meijer Inc. made a list of the 100 top firms based on growth from 2010 to 2011:
1.Sprouts Farmers Market71.9%
2. Verizon Wireless68.8%
3.Michael Kors Holdings65.4%
4.Lululemon Athletica64.9%
5.Under Armour62.7%
61.Kroger Co.9.1%
88.Meijer Inc.7.1%

Maureen McDonald, The Detroit News