After years of insisting they weren't interested in expanding outside Ohio, Jeff and Tom Heinen announced last year that they were going to invest more than $10 million to build their 18th store in affluent Barrington, Ill. The store opens on Wednesday.
View full sizeHeinen's Fine Foods will open its 18th store in the village of Barrington outside of Chicago on Wednesday. Process Creative Studios of Ohio City, the project's architect, redesigned the former Staples space with two-story picture windows to bring lots of light into what Heinen's hopes will be the first of several stores in Greater Chicago. BARRINGTON, Ill. -- On Wednesday morning, Heinen's Fine Foods will welcome shoppers to its 18th store, in the village of Barrington, Ill., an affluent Chicago suburb where the company has spent $10 million quietly building its first location outside Ohio.
By all accounts, opening day will be a low-key affair, without the usual fanfare that accompanies most new supermarkets.
No marching bands, prize giveaways or outrageous today-only prices -- maybe not even balloons.
Instead, after a simple ribbon-cutting and some photos, Heinen's Barrington store will open for business the same way its 17 sister stores do in Northeast Ohio.
"That's what we do: We just kind of open the doors," said Jeff Heinen, the soft-spoken co-president of the business his immigrant grandfather started 83 years ago.
Tom Heinen, Jeff's twin brother, said the last thing they wanted was a circuslike first impression where customers feel like "it's a zoo, nobody gets taken care of and they never come back."
"We let the food be the star and our people be the star," he said.
Yet as an unknown retailer trying to break into a new market, Heinen's may need to make a lot more noise to get noticed, local retailing and marketing experts say. Especially for the first several months.
Although the Chicago area is home to well-educated residents with above-average disposable incomes, Heinen's will need to spend quite a bit on advertising and promotions to build the kind of name awareness and recognition it has here, said Mary Pisnar, associate professor in the Business Administration Division at Baldwin Wallace University in Berea.
"Heinen's is a big fish in a little pond in Cleveland but will be a little fish in a much bigger pond in Chicago," she said.
Jeffrey Hyde, managing director of Ideas in Focus in Chagrin Falls, said Heinen's should make sure people know what it brings to Barrington that they don't have now.
"What they need to do is clearly define and communicate who they are, what they stand for and why they do the things the way they do," he said.
"Done properly, they will be able to create a value proposition that people will appreciate and be willing to pay for."
"Overall, I think this is a wonderful opportunity for Heinen's," he said.
"Barrington is much like Chagrin Falls, Hudson and other affluent communities in the Cleveland area. In recent years Barrington has not had a quality grocery option, so Heinen's is definitely filling a void in this market."
Heinen's has sponsored booths at some summer festivals, promoted the local food drive, started a Facebook page and Twitter account, and sent a team of street performers and employees to dance with shopping carts in Barrington's Fourth of July Parade.
But other than that, "there's really nothing else planned," Jeff Heinen said.
"We believe that people are interested enough in having more choices about where to shop that they'll come to check us out. We don't feel like we need to be giving things away to get people to shop here."
View full sizeBrothers Tom, left, and Jeff Heinen of Heinen's Fine Foods said they decided on a low-key strategy for opening their Barrington store because the last thing they wanted was a circuslike first impression that would leave customers feeling like there were too many people and nobody was taking care of them. Instead, they have participated in Barrington's summer events, trying to reinforce the idea that they plan to be active members of the community. Official approached brothers
After years of insisting that they weren't interested in being a multi-store grocer, Tom and Jeff Heinen decided that if they wanted to grow, they were going to have to leave Ohio because Cleveland's population isn't growing.
Greater Chicago, with about 13 million residents, is the largest, most densely populated city within eight hours of their Warrensville Heights headquarters, where they also have their warehouses, bakeries and distribution center.
Barrington, about 35 miles northwest of Chicago, is an affluent community with about 14,000 households within a five-mile radius of the new Heinen's store.
The average household income is $135,629, and the median home value is $673,525.
Peggy Blanchard, Barrington's director of economic and community development who discovered the Hudson store during a trip here in 2007, approached the brothers at about the same time they were seriously considering an invitation from a residents' group in Lake Forest, another Chicago suburb.
"Their interest in us came at exactly the time we decided we needed to grow outside of Ohio," Jeff Heinen said of the Lake Forest group.
"We thought it would be a good place for us to do business, but the site they had in mind wasn't large enough for our needs. It was 16,000 or 17,000 square feet -- with no parking."
In Barrington, they found a fairly prominent 38,000-square-foot anchor space being vacated by Staples in The Shops at Flint Creek, at 500 N. Hough St., in the Lake County half of the village.
Nearby grocers include Jewel-Osco, Dominick's, Trader Joe's, Whole Foods and another family-owned store called Mariano's Fresh Market.
"We've had one grocery store in the town for a very long time and I think people are excited about having another place to shop," said Karen Darch, Barrington Village President and a 25-year resident.
"It looks like Heinen's will offer different things as more of a specialty grocer, and Jewel has stepped it up in anticipation of this. They've remodeled inside."
Pauline Karwowski, a Cleveland mother of three who recently moved to Chicago and can't wait for her favorite grocer to open there, said she hasn't heard anything online or in the news about the new store.
"Chicago doesn't have anything like it," she said, adding that the produce and service at Jewel and Dominick's are "subpar."
She has been telling her new neighbors that Heinen's is "a high-end grocery store with impeccable service, it's family-owned with fabulous produce and fantastic store-label products."
Mark Hamstra, editor of Supermarket News, the leading trade publication that covers food retailing, said Jewel has the biggest market share in Chicago, with a long history, a strong reputation and competitive prices.
"It's tough for a small chain to promote one market and build a presence," without a tremendous and expensive marketing push, he said.
"If they can build a strong word-of-mouth reputation and they have a good, visible location that's convenient for people, especially young families who buy groceries more often, they might be able to compete."
Tom Heinen said they aren't daunted by the prospect of so many rival grocers because they've dug in for the long haul.
"It'd be nice to have high volume right away, but there are very few supermarkets that make money the first year they open. The industry doesn't work that way," he said.
"We're not coming into Barrington believing we can't be successful; we're coming into Barrington believing we'll absolutely be successful."
Jeff Heinen added: "As a company who thinks long-term, we're interested in the kind of business we're going to do two years from now, five years from now -- not just on how we're going to do two weeks from now."
Clevelanders help in launch
In addition to the 80 people the brothers have hired locally, about 10 Cleveland-area Heinen's employees volunteered to move to Chicago to launch the new store, including General Manager Neal Farren.
"We told them that if it doesn't work out, they'll have jobs back in Cleveland," Jeff Heinen said. "But we believe that we've sent a team up there that will be successful."
They spent months teaching employees about Heinen's culture and approach to customer service, including field trips to Cleveland to tour stores and talk to customers here.
Pisnar said Heinen's also needs to spend time educating its customer base about who it is and why it's unique.
"The Heinen's story needs to be told in its entirety: Where did the company values come from? Why is this grocer different? What kind of experience will the customer have?"
Savvy customers spend a considerable amount of time researching products and services, and Heinen's needs to invest in the technology to reach these consumers, she said.
"Build on Heinen's Tasteful Rewards [loyalty] Program. Give new customers a reason to make repeat visits. Create brand advocates within the community."
Rosemary Breehl, a certified branding strategist and founding partner of BTZ Brand in Cleveland, said Heinen's needs to enter Barrington with a big splash.
"The Heinen's brand is a claim of distinction but it must be supported by the evidence of performance," she said.
"People delivering the promise build the brand, not marketing. That is precisely why Heinen's has been so successful in northeast Ohio - they deliver on their promise of providing world-class customer service while offering the freshest, highest quality foods everyday."
Robert Antall, a retail consultant and managing partner of Consumer Centric Consulting in Shaker Heights, said: "They need to create a 'buzz' in the community by doing special events in the stores and having dynamite promotions initially.
"The word will spread quickly if they have some extraordinary 'deals' in the first few months. The trick is to get people to experience the Heinen's brand once. Since Heinen's does such a great job in the store, the people will then come back," he said.
"Heinen's management knows their business and understands their customers' needs and desires quite well. They have a compelling format offering quality service and products that differentiates Heinen's from most other grocers. So I expect Heinen's will find its niche and succeed in Chicago, although it may take more time than they anticipate."
Distance may be challenge
Having one store based 400 miles from the company's Warrensville Heights distribution center presents a logistical challenge, because it adds shipping costs and lead times to the cost of operating in Barrington, Hyde said.
That's a downside for a smaller grocer operating in an industry that operates on razor-thin margins. If the company were launching several stores at once, it could spread out those costs among them.
Jeff Heinen said it's not unusual to test the waters with a single store. That's what Fresh Market, Whole Foods and Trader Joe's did when each came to Northeast Ohio.
Hyde said that having one store also means Heinen's needs to be smarter about making sure that what it stocks is what the Barrington shopper is used to buying.
"If the shopper finds that they cannot get everything they want in one trip to Heinen's, they may feel forced to choose between them and another grocer, even if that other grocer is of lower quality.
"Consumers, especially busy parents, crave convenience, and they may not be willing to make multiple stops to do their grocery shopping if Heinen's does not get their product mix right."
The Barrington store will feature nearly everything the company's Ohio stores do, but it won't offer parcel pick-up service and it won't sell pet food, for example.
What it will carry are many of the Ohio and other local names Clevelanders are used to, plus hundreds of Heinen's All-Natural and Organic private-label foods.
Jeff Heinen said the company is also looking for Illinois vendors to offer things to supplement what it carries in all its stores and has already begun selling two Chicago products in Ohio: Vito and Nick's II Frozen Pizza and Donkey Authentic Tortilla Chips.
Food prices may be issue
Another potential obstacle: This isn't exactly the best time to open a grocery store.
Last month, the U.S. Department of Agriculture warned consumers that this summer's record heat and widespread drought could push food prices up by 3 percent to 5 percent next year, nearly twice the normal rate.
Soaring prices for corn, soybeans and other animal feed could send prices up 5 percent for beef, 4.5 percent for dairy, 4 percent for eggs and poultry, and 3.5 percent for pork.
Terry Romp, Heinen's chief produce buyer, expects to see record prices for apples, apple cider and other apple products this fall.
"There's never a good time to open a new store," Jeff Heinen said.
"We face the same rising food prices that every food retailer does, but we think we operate more efficiently. What most people want is a good value for their money, and we think we deliver on that with better pricing and better service.
"Beef that doesn't have antibiotics or hormones costs more. Some people will value that, and some people won't," he said.
"Produce that is fresher and keeps longer is a better value, but some people may not see the value in produce that keeps longer. It's not so much price as it is value.
"We know that it will take time [for Barrington shoppers] to appreciate all the things that we do, but our experience proves that people will come to appreciate it. We believe that we can do enough in terms of the retail experience that people will come back."
Only 2 stores ever closed
Tom Heinen points out that in the company's 83 years, it has closed only two stores, and neither one was because of poor sales.
The first, at the northeast quadrant of Cleveland's Shaker Square, was a two-story, 8,000-square-foot structure that didn't quite meet their needs. The family closed the store in 1983.
The second, in Cleveland Heights, was a 16,000-square-foot store that was heavily damaged in a fire and that the family sold in 1986 instead of rebuilding.
"We closed two stores that were very, very small and had challenges in terms of their infrastructure," Jeff Heinen said. "Everything else we've ever opened is still around."
When he and Tom took over the business from their father, Jack, in 1989, Heinen's had 11 stores throughout Northeast Ohio.
In the 23 years since, the brothers have added only seven stores -- a number they're completely happy with.
After Tops Friendly Markets left Ohio with 46 stores, the two visited several sites but bought only the Strongsville store.
The Heinen brothers see Greater Chicago, with 13 million people versus the 2 million to 3 million here, as a market ripe for the kinds of stores they operate here.
"We're a slow-growth company," Jeff Heinen said. "We're about being better, not bigger.
"It took us 83 years to get to 17 stores here, and if it takes us 83 years to get 17 stores there, we're OK with that.
"We have not given up on Cleveland," he added. "We'd still like to add two to three stores in Cleveland -- although I won't tell you where."
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