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Weis Markets, Inc.

Weis Markets, Inc.


1000 South Second Street
Sunbury, Pennsylvania 17801-0471
U.S.A.
Telephone: (570) 286-4571
Fax: (570) 286-3286
Web site: http://www.weis.com

Public Company
Incorporated: 1924
Employees: 18,600
Sales: $2.22 billion (2005)
Stock Exchanges: New York
Ticker Symbol: WMK
NAIC: 445110 Supermarkets and Other Grocery (Except Convenience) Stores; 453910 Pet and Pet Supplies Stores

Weis Markets, Inc., is one of the oldest and most profitable supermarket companies in the eastern United States. Based in Sunbury, Pennsylvania, the company operates 157 stores under multiple names. Widely diversified, Weis owns and operates its own dairy, ice cream, and meat processing plants. The company also owns much of its own real estate. In addition to its grocery stores, the company maintains 1.2 million square feet of warehouse space in Milton, Pennsylvania. Weis oversees pet supply distribution across the East Coast for its SuperPetz stores, a chain of pet stores it first purchased in 1993. Fiscally conservative, yet innovative, and with a reputation for creatively exploiting new market trends, Weis Markets continues to grow. One of its most expensive undertakings has been expanding older Weis grocery stores into large supermarkets to meet emerging consumer needs. In 2005 the company employed 18,600 people.

THE EARLY YEARS: 18671933

The Weis dynasty began with a German immigrant named Sigfried Weis, who arrived in New York on March 16, 1867. Records show that Sigfried filed a petition for naturalization in 1874. Although it was not certain how this Weis patriarch supported himself during his first years in America, he eventually settled in Selinsgrove, Pennsylvania, where, according to an obituary citation in the Snyder County Tribune, he opened a small "notions and fancy goods" store that would eventually grow into the largest "mercantile emporium" in the county.

Sigfried Weis had two sons, Harry and Sigmund, both of whom attended Susquehanna University. In 1904, Sigfried's sons became his business partners. However, Harry and Sigmund were not as enchanted with the general store business and soon became interested in branching into other areas. In 1912, they opened their first grocery storeWeis Pure Foodsin Sunbury. By the time they opened a second store in 1915, their father's general store business had ceased operations. During the prosperous decade of the 1920s, the brothers opened more and more stores until, by 1933, they were operating 115 stores in 15 mid-state counties.

Grocery stores all over the country had by this time transformed from largely credit-based operations into cash-and-carry stores. These changes, and others, were not always welcome. Initially, self-service supermarkets were not popular with American customers who were accustomed to corner groceries where they were waited on by clerks. But by the Great Depression, patrons were anxious for ways to save money, and self-service markets began to gain momentum. As the business changed, the brothers' roles became more proscribed, with Harry doing much of the work of setting up new stores, while Sigmund handled the grocery purchasing.

EXPANSION: 193489

The two brothers in turn had sonsSigfried and Robertwho each worked part-time in the Sunbury stores during the 1920s and 1930s. The cousins were both graduates from Yale University and served as officers in the armed forces during World War II. Upon returning to Sunbury, Sigfried and Robert Weis joined the family business. In the 1950s and 1960s, Weis Markets moved out of its traditional territory with new market regions in York and Lancaster. By 1965, when the company went public, the business was profitable enough to make millionaires of the Weis family. Expansion continued in the 1970s and 1980s with new targeted growth areas in Maryland, New York, Virginia, West Virginia, and New Jersey.

Fiscally conservative, the company had the remarkable advantage of being able to finance its growth internally, while remaining debt-free. However, Weis received some criticism from outside investors who were discouraged by the slow rate of growth, which in turn contributed to the lack of progress in the company's stock price. The tendency of the company to only make acquisitions that would pay for themselves in three to five years was considered by some an impediment to Weis's growth progress. The company was also criticized by some for its resistance to unions and for hiring mostly part-time workers.

ACQUISITIONS: 199095

In January 1995, Sigfried Weis retired as co-chairman due to health problems but remained as chairman emeritus until his death in June 1995. Robert Weis took on the positions of chairman and treasurer, while Norman Rich, formerly director of the company's quality control division, was named president. In September 1995, Les Knox was named vice-president of merchandising, a newly created position. Jonathan Weis, son of Robert, also began working at the company in the early 1990s. Groomed to eventually take over the business, Jonathan started out working in the real estate end of the business.

KEY DATES


1867:
Sigfried Weis emigrates from Germany to New York.
1904:
Sigfried's sons, Harry and Sigmund, join their father's business.
1912:
Weis Pure Foods, the family's first grocery store, opens in Sunbury, Pennsylvania.
1915:
Second grocery store opens.
1924:
Business incorporates in Pennsylvania.
1965:
Weis Markets, Inc., makes its first public offering.
1993:
Weis Markets acquires 80 percent ownership of SuperPetz.
1995:
Sigfried Weis, the chairman and the great grandson of the company's founder, dies. Robert Weis, Sigfried's cousin, becomes chairman and treasurer.
2000:
The company sells its regional company Weis Food Service to the national distributor Reinhart FoodService.
2003:
Weis's web site allows customers to purchase some of its products online.

In the early 1990s, Weis embarked on the most ambitious growth program in its 83-year history. This growth revolved around four major areas: acquisitions, expansion, merchandising/marketing strategies, and new technology. In December 1993, Weis purchased 14 Mr. Z's stores (IGAs at the time), eventually adding five more. This acquisition greatly expanded Weis's market in the northeastern region of Pennsylvania, including the popular Pocono Mountains area, and provided a strong base for expansion into New Jersey. Market analysts estimated that the former IGA stores would bring in an additional $100 million annually. In August 1994, Weis purchased King's Supermarkets, a six-unit operator based in Hamburg, Pennsylvania, with stores in the Allentown/Lehigh Valley region. In addition, Weis opened three Scott's Low-Cost outlets. The impulse behind this acquisition was to protect market share. Regarded by Weis as a good test format for the EDLP ("Everyday-Low-Price") strategy, these stores had a different configuration with less service than traditional retail stores, and were evaluated on an as-needed basis. Finally, at the end of 1993, Weis obtained 80 percent ownership of SuperPetz, a four-unit pet supply store. This acquisition in particular revealed Weis's pattern of taking an emerging trend and making it profitable. Under Weis ownership, the pet superstore format thrived, growing to 30 stores, with an expectation of doubling its units by 1997.

This program was in part a response to company performance during this time. After many years of uninterrupted growth, earnings had begun to dip in the early 1990s, with sales down in 1991 and 1992. Causes cited for this decline included deflationary market conditions, the rise in Pennsylvania's corporate net income tax, and increasing outside competition, which caused the company to lower prices and increase advertising expenditures. By 1993, however, sales were up by 11.8 percent for the year, due in large part to Weis's purchase of 14 IGA Food Mart stores in the Pocono Mountains. These stores added an estimated $42 million to Weis's annual volume.

Same-store sales for 1993 remained low, however, due to strong competition, the absence of price increases at the retail level, and growing pains resulting from the added volume of 14 new stores and store opening expenses. Weis had also opened its first New Jersey store on the first day of the third quarter in 1993. In 1994, Weis had a record $1.55 billion in sales, an increase of 8 percent over the year before. Earnings increased by 4.5 percent to $76.2 million. After the first three quarters of 1995, the company was reporting a sales increase of 8.2 percent and a net earnings increase of 5 percent. Three existing stores were remodeled and seven new stores were under construction. In addition, SuperPetz opened six new stores during the second quarter of 1995. Weis increased its supermarket expansion efforts as well, with 21 new stores and 16 major remodels.

Due to increased competition and encouraging preliminary feedback from initial expansion and enlargement efforts, Weis Markets began a deliberate effort to expand into new market territories, especially in Pennsylvania, Maryland, and New Jersey, where it operated 150 stores. An April 1995 article in Supermarket News indicated that Weis Markets had pledged $105 million in capital expenditure to cover opening eight or nine new stores and remodeling or enlarging an additional ten. These new stores were built in Weis's new "superstore" format, which emphasized customer service, prepared foods, and in many cases utilized Weis's EDLP approach. Later that same year, Supermarket News described Weis's plans to open stores in Laurel and Havre de Grace, Maryland, as well as in the Pennsylvania cities of Lebanon, Mechanicsburg, Wellsboro, Gap, Altoona, and East Stroudsburg. Plans for another four to six undisclosed new locations and eight to 12 expansions were also under way. Although financing for the capital expenditures came from company funds, Weis maintained its "no-debt" status. In 1995, it was estimated that Weis had nearly $457 million in cash and marketable securities, more than half of its $892 million in total assets.

Primarily interested in growth contiguous to existing markets, Weis traditionally located stores within a day's round-trip time of its distribution facilities. To pave the way for expansion, the company often bought store sites where residential development was slated to occur, then held onto those sites, for as long as five years in some cases, in order to see what transpired in the area demographically.

GIANT COMPETITION: 199699

In Pennsylvania, Weis considered itself a market leader, although it faced heavy competition from Giant Food Stores, a Carlisle-based chain. A June 25, 1995, Harrisburg Patriot-News article reported that Giant had another strong year, putting it within one percentage point and spitting distance of Weis. On a per-store basis, Giant had outpaced Weis by $18.4 million compared to Weis's $12.1 million. Together, Giant and Weis accounted for more than half of central Pennsylvania's supermarket business. While Giant's strategy seemed to emphasize new or replacement sites, Weis focused instead on modernization and remodeling of what it already owned. The slow pace of Weis's expansion, especially relative to its incredible cash reserves, stemmed in part from the fact that the population in many of the company's markets was not growing and that each new grocery store required a lot of time and effort to launch successfully. In addition, it took longer to obtain construction approvals. Giant's momentum in 1995 seemed to indicate that it would surpass Weis in sales volume in central Pennsylvania for that year.

Through the years, the Weis family demonstrated a knack for monopolizing on emerging trends, from cash-only stores in the early 1900s to self-service shopping during the Depression. One old, but consistently viable, profit-building strategy they exploited to good end was private labeling. Sigmund and Harry Weis first started selling private-label products in the 1920s. They roasted their own coffee, produced their own mayonnaise and salad dressings, and started a line of canned goods. By the mid-1990s, Weis was offering more than 2,000 private-label products, ranging from frozen vegetables to breakfast cereals, and accounting for nearly 25 percent of its total sales volume. Paper tags were posted beside the items, noting the price differences between Weis brands and brand-name items. Private labeling accomplished three things for Weis: it created a low-price image for the chain without hurting its margins; it convinced customers that they could buy products at Weis that they could not get anywhere else; and it ultimately bolstered the bottom line. The company had a premium brand (Weis Choice); a national brand equivalent (Weis Quality); and an economy brand (Big Top). This cornerstone of Weis's merchandising program was integral to maintaining its competitive edge, but the company made a deliberate effort not to compromise on quality, establishing a quality-control lab in 1964 to test products manufactured for them.

In the mid-1990s, Weis became much more aggressive in its price-comparison advertising, responding to the increasingly heated regional competition with lower prices and strong promotional activity. Whereas before Weis had confined price comparison to internal merchandising, in 1995, partly in response to an aggressive television and radio campaign initiated by Giant Food Stores that targeted Wal-Mart, Weis began directing its price comparison advertising outside the store in hopes of remaining competitive in the tough central Pennsylvania region and to pump up its northeastern market.

A second Weis strategy was to shore up its one-stop shopping program. In addition to the traditional bakery, deli, and pharmacy, Weis made a concerted effort to get more and more banks into the stores and introduced floral shops and natural food centers to its units. Nontraditional items such as greeting cards, books, and take-out foods, ranging from rotisserie chicken to cappuccino, were introduced with the goal of capturing a much greater percentage of grocery customer business.

Weis's Lewisburg, Pennsylvania, store, which opened in 1995, was representative of Weis's new store format, which included some 3,000 additional stockkeeping units. New store features included a bakery showcasing Weis's first bagel program, capable of producing 12 different kinds of bagels. The new deli, three times larger than traditional Weis delis, included a hot pizza program and cappuccino/espresso service. The produce section offered organic fruits and vegetables, and all departments were enlarged to allow for greater selection and variety.

2000 AND BEYOND

Discord in the Weis family garnered media attention in late 1999 when Janet Weis, the widow of Sigfried Weis, accused her husband's successor and cousin of neglecting shareholder value. She publicly suggested that a new board of directors should be elected or the company should be sold to a more competent management team. Her complaint gained momentum in April 2000 after a disagreement amongst the board of directors. Weis announced that it would sell its foodservice division, Weis FoodService, to Reinhart FoodService, one of America's largest foodservice distributors.

The company's president and longtime executive, Norman Rich, justified the sale of Weis FoodService in PR Newswire: "In recent years, we have been strongly focused on the growth of our core businessthe retail food business. Increasingly, our supermarket and food-service divisions have evolved into two very different businesses with different distribution, marketing and operational requirements. This is the principal reason for our decision to sell Weis FoodService."

Two Weis directors, Joseph I. Goldstein and Michael M. Apfelbaum, however, believed that the sale was bad for business. Three days after the sale of Weis FoodService was announced, the two directors cowrote a letter that expressed their concern for Weis management's "absence of a more pro-active strategy" to improve shareholder value. Details of the letter were made public in the company's filing with the U.S. Securities and Exchange Commission. Not including Goldstein and Apfelbaum, the rest of the board, which included the chairman Robert Weis, his son Jonathan, and Norman Rich, remained resolute in their strategy of focusing on retail instead of distribution. In public response to its internal dissent, the remaining Weis management simply responded that there were not any plans to sell the company or reelect board members.

Instead Weis spent $400 million improving its stores in 2000 alone. It opened nine superstores and retrofitted six others. The next year Weis opened six more super-stores and remodeled at least eighteen between 2001 and 2002. The unhappy Weis family members who sided with Janet Weis eventually sold their company stocka 35 percent stake in the company. Afterward Robert Weis owned almost 47 percent of the company.

Net sales continued to climb for Weis in the new millennium. In 2003 the company's upgraded web site allowed customers to purchase groceries that were either delivered to customers' homes or picked up later at Weis locations. In 2004 Weis experimented with a new store design that it would eventually use to design future stores. The new blueprint featured superstores with full-service delis, pizza kitchens, produce sections with a large variety of organic foods, full-service bakeries, full-service pharmacies, full-service seafood departments, multiple gas pumps, and multiple self-scan lanes.

Weis believed this improved store format was helping its bottom-line. Revenues increased from $2.042 billion in 2003 to $2.098 billion in 2004. Despite the concerns of Janet Weis in years prior, the strategy seemed to be working. As quoted in an April 2005 article in Just-Food, Norman Rich boasted, "2004 was a year of growth and progress for our company. Despite intensifying competition and continued economic underperformance in many of our markets, our company continued to move forward. For our company and our associates, it was a busy and productive year."

Besides a marketing campaign in 2006 titled "Where Freshness Matters," Weis's primary strategy was to increase expenditures for larger superstores and upgrade older stores. It was announced the same year that Weis would spend $90.6 million on store expansiondesigning new stores based on the new store template conceived in 2004. The $90.6 million also went towards improving the company's technology, distribution and manufacturing projects.

Lynda D. Schrecengost

Updated, Kevin Teague

PRINCIPAL SUBSIDIARIES

Albany Public Markets Inc.; Dutch Valley Food Company Inc.; King's Supermarkets Inc.; Martin's Farm Market Inc.; Shamrock Wholesale Distributors Inc.; SuperPetz LLC; Weis Transportation Inc.; WMK Financing Inc.

PRINCIPAL COMPETITORS

Albertson's, Inc.; Brookshire Brothers, Ltd.; CVS Corporation; Fiesta Mart Inc.; Giant Food Stores, LLC; Minyard Food Stores, Inc.; PETCO Animal Supplies Inc.; PetSmart, Inc.; Rite Aid Corporation; Safeway Inc.; Sam's Club; Supervalu Inc.; The Kroger Co.; Wal-Mart Stores, Inc.; Whole Foods Market, Inc.; Winn-Dixie Stores, Inc.

FURTHER READING

Beauge, John, "Weis Markets Launches New Multi-Media Campaign," Northeast Pennsylvania Business Journal, March 1, 2006, p. 29.

Beres, Glen A., "Growing Weis," Supermarket News, November 6, 1995, p. 1.

Blumenau, Kurt, "Weis Markets Unveils Cyber-Shopping for Specialty Items Not Found in Stores," Knight-Ridder/Tribune Business News, August 8, 2003.

Croghan, Lore, "What the Hare Told the Tortoise," Financial World, April 25, 1995, p. 33.

DeKok, David, "The Weis Dynasty," Harrisburg Patriot-News, February 20, 1994, p. F1.

Dochat, Tom, "New Family Fight in Store for Weis?" Harrisburg Patriot-News, April 13, 2000, p. B11.

Elson, Joel, "Weis Markets to Open 4th Scott's Low Cost," Supermarket News, May 10, 1993, p. 48.

Nayyar, Seema, "Ralston Unit Alienates Retailers," Brandweek, August 10, 1992, p. 1.

"Net Income, Volume Rise at Weis Markets," Supermarket News, August 14, 1995, p. 9.

Redman, Russell, "ShopRite, Insalaco Targeted by Weis's Price Comparisons," Supermarket News, September 18, 1995, p. 36.

Southall, Brooke, "Giant and Weis Together Dominate Local Market," Central Penn Business Journal, June 23, 1995, p. 3.

Tibbitts, Lisa A., "Weis Sets $105 Million Outlay," Supermarket News, April 17, 1995, p. 5.

Tosh, Mark, "Weis Buys 14 Pennsylvania IGAs," Supermarket News, January 11, 1993, p. 4.

Weigel, George, "Supermarket Sweepstakes: Giant Poised to Take Over No. 1 Spot," Harrisburg Patriot-News, June 25, 1995, p. D1.

"Weis Earnings Decline 7% in 1991," Supermarket News, March 2, 1992, p. 13.

"Weis Markets Adds VP Slot," Supermarket News, September 11, 1995, p. 6.

"Weis Markets Announces $90.6 Million Capital Expenditure Program," Display & Design Ideas, April 6, 2006.

"Weis Markets' Gas Bucks," York Daily Record, May 7, 2006, p. 1.

"Weis Markets Outlines '04 Growth Plans," Drug Store News, May 17, 2004, p. 6.

"Weis Markets Profits, Sales Up," Supermarket News, March 20, 1995, p. 12.

"Weis Profit, Sales Increase," Supermarket News, May 15, 1995, p. 8.

"Weis to Install Vision Terminal," Supermarket News, November 2, 1992, p. 17.

"Weis to Purchase Independent," Supermarket News, June 27, 1994, p. 50.

Zwiebach, Elliot, "Weis Sales, Earnings Down in Quarter, Year," Supermarket News, February 15, 1993, p.8.

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Weis Markets, Inc.

Weis Markets, Inc.

1000 South Second Street
Sunbury, Pennsylvania 17108
U.S.A.
(717) 286-4571
Fax: (717) 286-3692

Public Company
Incorporated:
1924
Employees: 16,500
Sales: $1.56 billion
Stock Exchanges: New York
SICs: 5411 Grocery Store Chain

Weis Markets, Inc. is one of the oldest and most profitable supermarket companies in the eastern United States. Based in Sunbury, Pennsylvania, the company operates 150 stores in six states. Widely diversified, Weis owns and operates its own dairy, ice cream, and meat processing plants, its own fleet of trucks, and much of its own real estate, as well as Weis Food Service, a restaurant and institutional food supplier based in Northumberland, Pennsylvania. In addition, in 1993 Weis purchased an 80 percent share of SuperPetz, a pet supply company with 14 stores, with the expectation that the number would double by 1997. Fiscally conservative, yet innovative, and with a reputation for creatively exploiting new market trends, Weis Markets prospered, often ranking number one in profitability among U.S. supermarket chains in the mid-1990s.

The 122-year-old Weis dynasty began with a German immigrant named Sigfried Weis, who arrived in New York on March 16, 1867. Records show that Sigfried filed a petition for naturalization in 1874. Although it is not certain how this Weis patriarch supported himself during his first years in America, he eventually settled in Selinsgrove, Pennsylvania, where, according to an obituary citation in the Snyder County Tribune, he opened a small notions and fancy goods store that would eventually grow into the largest mercantile emporium in the county.

Sigfried Weis had two sonsHarry and Sigmundboth of whom attended Susquehanna University. In 1904, Sigfrieds sons became his business partners. However, Harry and Sigmund were not as enchanted with the general store business and soon became interested in branching into other areas. In 1912, they opened their first grocery storeWeis Pure Foods in Sunbury. By the time they opened a second store in 1915, their fathers general store business had ceased operations. During the prosperous decade of the 1920s, the brothers opened more and more stores until, by 1933, they were operating 115 stores in 15 mid-state counties.

Grocery stores all over the country had by this time transformed from largely credit-based operations into cash-and-carry stores. This change, and others, were not always welcome. Initially, self-service supermarkets were not popular with American customers who were accustomed to corner groceries where they were waited on by clerks. But by the Depression, patrons were anxious for ways to save money, and self-service markets began to gain momentum. As the business changed, the brothers roles became more proscribed, with Harry doing much of the work of setting up new stores, while Sigmund handled the grocery purchasing.

The two brothers in turn had sonsSigfried and Robert who each worked part-time in the Sunbury stores during the 1920s and 1930s. The cousins were both graduated from Yale University and served as officers in the armed forces during World War II. Upon returning to Sunbury, Sigfried and Robert Weis joined the family business. In the 1950s and 1960s, Weis Markets moved out of its traditional territory with new market regions in York and Lancaster. By 1965, when the company went public, the business was profitable enough to make millionaires of the Weis family. Expansion continued in the 1970s and 1980s with new targeted growth areas in Maryland, New York, Virginia, West Virginia, and New Jersey.

Fiscally conservative, the company had the remarkable advantage of being able to finance its growth internally, while remaining debt-free. But Weis received some criticism from outside investors who were discouraged by the slow rate of growth, which in turn contributed to the lack of progress in the companys stock price. The tendency of the company to only make acquisitions that paid for themselves in three to five years was considered by some an impediment to Weis growth progress. The company was also criticized by some for its resistance to unions and for hiring mostly part-time workers.

In January 1995, Sigfried Weis retired as co-chairman due to health problems but remained as chairman emeritus until his death in June 1995. Robert F. Weis took on the positions of chairman and treasurer, while Norman S. Rich, formerly director of the companys quality control division, was named president. In September 1995, Les Knox was named vice-president of merchandising, a newly created position. Jonathan Weis, son of Robert, also began working at the company in the early 1990s. Groomed to eventually take over the business, Jonathan started out working in the real-estate end of the business.

In the early 1990s, Weis embarked on the most ambitious growth program in its 83-year history. This growth revolved around four major areas: acquisitions, expansion, merchandising/marketing strategies, and new technology. In December 1993, Weis purchased 14 Mr. Zs stores (IGAs at the time), eventually adding five more. This acquisition greatly expanded Weis market in the northeastern region of Pennsylvania, including the popular Pocono Mountain area, and provided a strong base for expansion into New Jersey. Market analysts estimated that the former IGA stores would bring in an additional $100 million annually. In August 1994, Weis purchased Kings Supermarkets, a six-unit operator based in Hamburg, Pennsylvania, with stores in the Allentown/Lehigh Valley region. In addition, Weis opened three Scotts Low-Cost outlets. The impulse behind this acquisition was to protect market share. Regarded by Weis as a good test format for the EDLP (Everyday-Low-Price) strategy, these stores had a different configuration with less service than traditional retail stores, and were evaluated on an as-needed basis. Finally, at the end of 1993, Weis obtained 80 percent ownership of SuperPetz, a four-unit pet supply store. This acquisition in particular revealed Weis pattern of taking an emerging trend and making it profitable. Under Weis ownership, the pet superstore format thrived, growing to 30 stores, with an expectation of doubling its units by 1997.

This program was in part a response to company performance during this time. After many years of uninterrupted growth, earnings had begun to dip in the early 1990s, with sales down in 1991 and 1992. Causes cited for this decline included deflationary market conditions, the rise in Pennsylvanias corporate net income tax, and increasing outside competition, which caused the company to lower prices and increase advertising expenditures. But by 1993, however, sales were up by 11.8 percent for the year, due in large part to Weis purchase of 14 IGA Food Mart stores in the Pocono mountains. These 14 stores added an estimated $42 million to Weis annual volume.

Same-store sales for 1993 remained low, however, due to strong competition, the absence of price increases at the retail level, and growing pains resulting from the added volume of 14 new stores and store opening expenses. Weis had also opened its first New Jersey store on the first day of the third quarter in 1993. In 1994, Weis had a record $1.55 billion in sales, an increase of eight percent over the year before. Earnings increased by 4.5 percent to $76.2 million. After the first three quarters of 1995, the company was reporting a sales increase of 8.2 percent and a net earnings increase of five percent. Three existing stores were remodeled and seven new stores were under construction. In addition, SuperPetz opened six new stores during the second quarter of 1995. Weis increased its supermarket expansion efforts as well, with 21 new stores and 16 major remodels.

Due to increased competition and encouraging preliminary feedback from initial expansion and enlargement efforts, Weis Markets began a deliberate effort to expand into new market territories, especially in Pennsylvania, Maryland, and New Jersey, where it already operated 150 stores. An April 17, 1995 article in Supermarket News indicated that Weis Markets had pledged $105 million in capital expenditure to cover opening eight or nine new stores and remodeling or enlarging an additional ten. These new stores were built in Weis new superstore format, which emphasized customer service, prepared foods, and in many cases utilized Weis EDLP approach. Later that same year, Supermarket News described Weis plans to open stores in Laurel and Havre de Grace, Maryland, as well as in Lebanon, Mechanicsburg, Wellsboro, Gap, Altoona, and East Stroudsburg, Pennsylvania. Plans for another four to six undisclosed new locations and eight to 12 expansions were also under way. Although financing for the capital expenditures came from company funds, Weis maintained its no-debt status. (In 1995, it was estimated that Weis had nearly $457 million in cash and marketable securities, more than half of its $892 million in total assets.)

Primarily interested in growth contiguous to existing markets, Weis traditionally located stores within a days round-trip time of its distribution facilities. To pave the way for expansion, the company often bought store sites where residential development was slated to occur, then held onto those sites, for as long as five years in some cases, in order to see what transpired in the area demographically.

In Pennsylvania, Weis considered itself a market leader, although it faced heavy competition from Giant Food Stores, a Carlisle-based chain. A June 25, 1995 Harrisburg Patriot-News article reported that Giant had another strong year, putting it within one percentage point and spitting distance of Weis. On a per-store basis, Giant had outpaced Weis by $18.4 million per store compared to Weis $12.1 million per store. Together, Giant and Weis accounted for more than half of central Pennsylvanias supermarket business. While Giants strategy seemed to emphasize new or replacement sites, Weis focused instead on modernization and remodeling of what it already owned. The slow pace of Weis expansion, especially relative to its incredible cash reserves, stemmed in part from the fact that the population in many of the companys markets wasnt growing and that each new grocery store required a lot of time and effort to launch successfully. In addition, it took longer to obtain construction approvals. Giants momentum in 1995 seemed to indicate, however, that it would surpass Weis in sales volume in central Pennsylvania for that year.

Through the years, the Weis family demonstrated a knack for monopolizing on emerging trends, from cash-only stores in the early 1900s to self-service shopping during the Depression. One old, but consistently viable, profit-building strategy they exploited to good end was private labeling. Sigmund and Harry Weis first started selling private-label products in the 1920s. They roasted their own coffee, produced their own mayonnaise and salad dressings, and started a line of canned goods. By the mid-1990s, Weis was offering more than 2,000 products, ranging from frozen vegetables to breakfast cereals, and accounting for nearly 25 percent of its total sales volume. Paper tags were posted beside the items, noting the price differences between Weis brands and brand-name items. Private labeling accomplished three things for Weis: it created a low-price image for the chain without hurting its margins; it convinced customers that they could buy products at Weis that they couldnt get anywhere else; and it ultimately bolstered the bottom line. The company had a premium brand (Weis Choice); a national brand equivalent (Weis Quality); and an economy brand (Big Top). This cornerstone of Weis merchandising program was integral to maintaining its competitive edge, but the company made a deliberate effort not to compromise on quality, establishing a quality-control lab in 1964 to test products manufactured for them.

In the mid-1990s, Weis became much more aggressive in its price-comparison advertising, responding to the increasingly heated regional competition with lower prices and strong promotional activity. Whereas before Weis had confined price comparison to internal merchandising, in 1995, partly in response to an aggressive television and radio campaign initiated by Giant Food Stores that targeted Wal-mart, Weis began directing its price comparison advertising outside the store in hopes of remaining competitive in the tough central Pennsylvania region and to pump up its northeastern market.

A second Weis strategy was to shore up its one-stop shopping program. In addition to the traditional bakery, deli, and pharmacy, Weis made a concerted effort to get more and more banks into the stores, and introduced floral shops and natural food centers to its units. Non-traditional items such as greeting cards, books, and take-out foods, ranging from rotisserie chicken to cappuccino, were introduced with the goal of capturing a much greater percentage of customer business.

In 1995, Weis introduced a direct store delivery program that was implemented chain-wide. This meant that 25 to 30 percent of all grocery products were delivered directly to individual units, leading to significant cost savings. Other technological additions included the installation of VISION, an electronic marketing and financial services program, in 1992. Eventually phased out, VISION was replaced with ACT-MEDIA, an in-store coupon dispenser located where products were sold, and the CATALINA system, a coupon dispensing system that provided coupons at point-of-sale.

Weis Lewisburg, Pennsylvania, store, which opened in 1995, could serve as the blueprint for Weis new store format, which included some 3,000 additional stock-keeping units. New store features included a bakery showcasing Weis first bagel program, capable of producing 12 different kinds of bagels. The new deli, three times larger than traditional Weis delis, included a hot pizza program and cappuccino/espresso service. The produce section offered organic fruits and vegetables, and all departments were enlarged to allow for greater selection and variety.

A sizable health foods area, an ethnic foods area, and an extensive ice cream department, much of the ice cream manufactured by Weis itself, lent the store a distinctive, more promotionally savvy look. The new format reflects the overriding philosophy that has characterized Weis Markets over the years conservative adaptability. In the words of Jonathan Weis, the fourth generation of Weises to lead the company, as quoted in the Harrisburg Patriot News: I think our fundamentals would do well to stay the same. But were always changing.

Principal Subsidiaries

Albany Public Markets, Inc.; Dutch Valley Food Co., Inc.; Martins Farm Market, Inc.; Shamrock Wholesale Distributors Inc.; Weis Food Service; Mr. Zs Supermarkets, Inc.; Kings Supermarkets, Inc.; SuperPetz (80%).

Further Reading

Beres, Glen A., Growing Weis. Supermarket News, November 6, 1995. p. 1.

Croghan, Lore, What the Hare Told the Tortoise, Financial World, April 25, 1995, p. 33.

DeKok, David, The Weis Dynasty, Harrisburg Patriot-News, February 20, 1994, p. Fl.

Elson, Joel, Weis Markets to Open 4th Scotts Low Cost, Supermarket News, May 10, 1993, p. 48.

Nayyar, Seema, Ralston Unit Alienates Retailers, Brandweek, August 10, 1992, p. 1.

Net Income, Volume Rise at Weis Markets, Supermarket News, August 14, 1995, p. 9.

Redman, Russell, ShopRite, Insalaco Targeted By Weis Price Comparisons, Supermarket News, September 18, 1995, p. 36.

Sales, Net Rise at Weis in Quarter, Supermarket News, April 25, 1994. p. 4.

Saxton, Lisa, Weis, Superpetz Link Stirs Industry Interest, Supermarket News, May 30. 1994, p. 29.

Southall, Brooke, Giant and Weis Together Dominate Local Market, Central Penn Business Journal, June 23, 1995, p. 3.

Tibbitts, Lisa A., Weis Sets $105 Million Outlay, Supermarket News, April 17, 1995, p. 5.

Tosh, Mark, Weis Buys 14 Pennsylvania IGAs, Supermarket News, January 11, 1993, p. 4.

Weigel. George, Supermarket Sweepstakes: Giant Poised to Take Over No. 1 Spot. Harrisburg Patriot-News, June 25, 1995, p. Dl.

Weis Earnings Decline 7% in 1991, Supermarket News, March 2, 1992, p. 13.

Weis Markets Adds VP Slot, Supermarket News, September 11, 1995, p. 6.

Weis Markets Profits, Sales Up, Supermarket News, March 20, 1995, p. 12.

Weis Profit, Sales Increase, Supermarket News, May 15, 1995, p. 8.

Weis to Install Vision Terminal, Supermarket News, November 2, 1992, p. 17.

Weis to Purchase Independent, Supermarket News, June 27, 1994, p. 50.

Zwiebach, Elliot, Weis Sales, Earnings Down in Quarter, Year, Supermarket News, February 15, 1993. p.8.

_____, Weis to Construct 10 New Stores, Supermarket News, April 25, 1994, p. 4.

Lynda D. Schrecengost

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