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30 Years of Distinction

If it wasn't for the persistence of Nice N Easy Grocery Shoppes President and CEO John MacDougall, 2010 might have been the 30th anniversary of an entirely different upstate New York c-store chain -- perhaps one decked in scotch plaid and named Frugal MacDougall.

"One day I was brainstorming [company names] with my partner and he said, 'If we offer good prices, we ought to call the stores Frugal MacDougall,'" the executive reminisced while sitting down for an exclusive interview with Convenience Store News.
Fortunately, it was MacDougall's suggestion of Nice N Easy that stuck, and along with it MacDougall's belief in focusing on differentiation and people -- both of which remain critical to the company's culture and success.

Recalling when his partner asked him in 1980 if their c-store chain would be different from others, MacDougall said: "I replied, 'I think we should be more competitive in pricing, we should be brighter and more attractive to bring more women to the stores, and we'll offer some groceries.'"

But as with any business venture, building the successful chain of convenience stores didn't come without some headaches.

For instance, there was MacDougall and his partners' first retail location, a 1,200-square-foot country store located in Clinton, N.Y., and called Wayside Market. The store sat on less than an acre, had a five-door walk-in cooler, and limited parking and shelf space.

"My first office was in that building on the second floor, but the problem was, the space from floor to ceiling was only 5-foot, 10 inches, and I'm 6 foot. My first day there, I bumped my head probably 10 times just by standing up in my new office," said MacDougall. "But that's how we operated for a few years -- out of that building as a small mom-and-pop. We did quite well -- the first day we sold $400 in that little store. It has grown dramatically, but the only reason it stays there is it's a relic to Nice N Easy -- that's the starting place."

Thirty years of industry evolution and dozens of store openings later, the chain's c-stores still adhere to the original principles MacDougall cited when naming the chain Nice N Easy. The latest store, opened Sept. 1, is a 5,000-square-foot facility that sits on 3 acres in Clay, N.Y. It is the chain's most eco-friendly store and features a large selection of groceries and frozen foods, 14 cooler doors and a walk-in beer cave, along with a 20-foot open-air case of beverages. In addition, more than 25 percent of the store is dedicated to foodservice, the biggest foodservice footprint of any Nice N Easy store.

"There are many differences, but the same goals and principles we developed over in Clinton are the same things that make us good over in Clay," said MacDougall. "It's the attitude of the people. It's taking care of our customers and taking care of our people. And as dramatically different as they are in physical plants, they are still the same as far as the philosophy of the company, what we want to do, and what we want to offer our customers and our employees."

Growing Up
In the early '80s, Nice N Easy saw "explosive" growth as it juggled acquainting customers with c-stores, and meeting their needs while facing the problems of a recession-wracked economy with 15-plus percent interest rates.

"People were starting to look for coffee, fast foods and 24-hour operations, and then they wanted gasoline," said MacDougall. "In my first five to seven years, we started with a basic goal of having 15 to 20 stores in this general region."

After the fourth Nice N Easy store opened, MacDougall received calls from several small oil distributors who wanted to get into the c-store business, but didn't know how. MacDougall teamed with these companies in a franchise relationship, where Nice N Easy handled the accounting, advertising, buying and merchandising, while the franchisees paid a fee.

"Things just exploded at that point, and as we exploded, we did a lot of new concepts. We did our first food item, called Egg on the Go down in the Hudson Valley," said MacDougall. "We were pretty progressive and did a lot of good things."

One Nice N Easy veteran, Fran Duskiewicz, current senior executive vice president, also joined the chain in the mid-80s. He recalled working at his family's service station near Utica, N.Y., when he learned of Nice N Easy.

"I started noticing within a year 10 or 12 service stations became Nice N Easy stores," he said. "I didn't know what they were, only that these really good service stations suddenly were selling hot dogs and coffee. I could see the writing on the wall in terms of service stations, and I really wanted to get out of the family business."

Duskiewicz' fuel supplier, who was also Nice N Easy's first franchisee, referred him to MacDougall, and they "just clicked," he said. "We both had a lot of business experience, but it was the way we interacted with people that drove our success."

The experience is similar for Peter Tamburro, current senior executive vice president of franchise, who joined the corporate office 16 years ago, but was a franchisee of the company since 1984, working with a company that operated 10 Nice N Easy stores.

"When I was working for Valley Oil Co., it was the early onset of many gas stations converting over to convenience stores. They were so well-accepted by the communities, and there was such a need, that I quickly realized a personal opportunity for me was to stay in the retail side of the business."

So when Tamburro's company was sold and he was given the opportunity to work for Nice N Easy, he took it.

In the late '80s, Nice N Easy faced one of its largest challenges -- Native Americans getting into the gas and cigarette business -- something that to this day still plagues c-stores in upstate New York. Native American retailers don't pay state taxes, and as a result, can sell products such as gas and cigarettes cheaper than other retailers, explained MacDougall.

Instead of waving the white flag, Nice N Easy turned the challenge into an opportunity, and began a new path of differentiation focused on foodservice.

"In sitting down and discussing how to go forward, with the Indians being our competition, we determined we had to find places to get margin," said MacDougall. "Margin would come from foodservice. We knew we were going to lose margin on cigarettes and gasoline."

But getting into foodservice presented a new set of hurdles.

"We dabbled in it. We thought: 'How hard can this be?'" he said. "We even tried those one-hit wonders, where you'd buy the [frozen] product, put it in the machine, press a button, and the food would fall into a hopper and a vat of grease. And when it came out you'd have a hot burrito or some damn thing," MacDougall jokingly recalled. "We tried a lot of those things, and we became very good at hot dogs and everything else, but it didn't satisfy what the customer was looking for. We came to the conclusion that we didn't know enough about the foodservice business to make a difference."

So the chain sought out Glenn White, current senior director of foodservice, who at the time had worked for Burger King for 20 years, and brought him in to develop its foodservice category. Today, foodservice is now approximately 30 percent of the chain's overall volume and more than 40 percent of its margin dollars.

MacDougall credits this approach of hiring experts to expand Nice N Easy's skill sets as one of the best decisions made in the retailer's history.

"We say: 'Don't try to do this on your own. Just go out and find people who are experts in that business and bring them in,'" he said, citing Jack Cushman, executive vice president of foodservice, as an example of this approach.

Nice People, Nice Results
While the chain hunts for specialists to add to its team, Nice N Easy's magnetism as an employer also draws in many prospects. Matt Paduano, vice president of information, joined the retailer 15 years ago from a competing c-store chain, while Jennifer Warner worked for a company run by a Native American reservation before coming to the company as its director of marketing in early 2009.

And many employees who enter the chain at the store level stay with the company and work their way up the ladder, such as Jared Sturtevant, who began as a store employee in 1996 and is now director of category management. Evidence of this is the chain's low employee turnover, which stands at a third of the industry's average.

"We've been very fortunate to attract a lot of good people because they see the value and the culture of Nice N Easy, and want to be part of it," MacDougall said.

Paduano cited the Nice N Easy's open door policy as why employees become loyal to the chain. "The president and owner is down the hall and his door is always open to anyone who wants to see him, whether you are a third shift clerk at a distant store or in management, you have access to the boss," he said.

Nice N Easy also operates on the principles of servant leadership, Tamburo said.

"Store managers have the toughest responsibilities and the most responsibilities, and everyone here, myself included, is support for those people in the stores," he said. "That's how we run our business and it's what has made us successful for 30 years."

To make sure store staffers are as effective as possible, Nice N Easy embarked on a time management study last year, the results of which are still being compiled and analyzed, with the hopes to have a program in place during the second quarter. (Nice N Easy's time management study was first reported exclusively by CSNews in the October 19, 2009 feature, "More Than a Labor of Love.")

"This was not designed to cut labor. It was designed to help us schedule better, to put people where they need to be, and to be more efficient," explained Duskiewicz, adding some Nice N Easy stores are given a labor budget of close to 1,000 hours per week, which is derived from productivity metrics for that type of store and its history of efficiency.

"But the truth is you are handing over a lot of hours to a store management team without a rationalization process of how to put it to use," he noted.

On top of that, stores generate gross margin dollars in various ways -- some get margin from cigarette sales, which don't have a major labor component, while others make margin on foodservice, requiring significantly more labor to accomplish.

"Is it fair to apply fixed productivity metrics against different stores, even if they generate the same amount of margin dollars, but the way they get there is very different?" asked Duskiewicz.

Although the study was not complete, insights were already apparent as of press time.

"We learned what an operational headache some of these big, open-faced coolers are. They are gorgeous, but not until we got out there and interviewed our people did we see what a song and dance it was to stock that thing," he said. "We learned we needed to blow up this idea of separate store hours and food hours. Our staffs in the stores didn't want a separation of people who were called retail and those called foodservice. They wanted to come together as a team, and to help each other out when needed."

Paduano noted another benefit of the study: stores will also be able to track foodservice department sales by food category hour and use the time study to schedule accordingly, following the completion of a point-of-sale (POS) update underway in January.

"We know foodservice does $1,000 per day in the store, but we don't know when the products are selling," he explained. "We know how much coffee we sell per day, but we don't currently know how much of it is sold between 8 and 9 a.m." Once its POS software is updated, the chain will be able to track that information and schedule labor for those areas based on when each product is sold.

Ultimately, the time study will allow store staff to provide the best customer service with an improved store appearance, said Ron Rowland, vice president of retail operations.

"Our people will be better planners -- they'll know what is expected in detail, how often it has to be done and that it needs to be planned into the days and weeks," he said.

Growing Out
In line with its core principle of differentiation, Nice N Easy is focusing on the store itself with an initiative to expand offerings and services, in an effort to gain customers.

"The typical convenience store today is losing customers on an annual basis," explained MacDougall, adding these customers are increasingly turning to big box retailers, discounters and others. "One of the basic principles of Nice N Easy is that we want to be different. We want to differentiate ourselves in as many ways as possible, so we're looking at services, store size and product offers."

Helping the retailer with this effort is a study being conducted with Nielsen Claritas that will determine undiscovered opportunities for a raze-and-rebuild store in Brewerton, N.Y. The Claritas data will tell the chain what the opportunities are for additional sales in the market in terms of product selection. (Ed. Note: CSNews is also a Nielsen company.)

"If we're going to follow the Claritas plan, [we need to determine] how big of a store that would require and what it should store look like," said MacDougall. "Are we going to grow from a 5,000-square-foot store up to 8,000 square feet, and how do we justify that?" Citing small-format grocers including Tesco's Fresh & Easy on the West Coast and Trader Joe's, MacDougall said those are the models the company would like to head toward. "I don't know if we'd want to be a full Trader Joe's, but I think we want to take the best of it and incorporate that into the new Nice N Easy."

Once the Claritas project is complete in Brewerton, the chain would like to adapt the data to current stores to upgrade their offerings, and implement it into future store locations, to "take advantage of missed opportunities we don't know about," MacDougall said.

Along these lines, the retailer will focus on maximizing its existing assets. "The best dirt we have we already own, and we learned from our new stores that some of this property is not maximized to its best potential," said Duskiewicz. "Our best opportunities are not new locations, but raze and rebuilds of current locations, where we can build a bigger store and maybe triple our business."

And for the foreseeable future, expect MacDougall to lead the efforts of Nice N Easy as it evolves down its path of differentiation.

"I enjoy what I'm doing. It keeps me active. It bothers me a lot to see people I knew and loved [pass away] just because they [retired] and didn't pick up doing something else to keep themselves active. I don't want to let that happen to me," said MacDougall, 69. "Some of the most successful people are very active in business today, and are 70 and 80 years old. Maybe I'm one of those guys."
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