"We saw a location that was the heart of Cleveland and we think will be so again," Jeff Heinen said of the Ameritrust complex. "We are a Cleveland company, we live in Cleveland, and to be part of something to help Cleveland grow and thrive, we felt as Clevelanders was a reasonable risk for us to take." Watch video
CLEVELAND, Ohio -- This is the most critical year in 85 years of Heinen's Fine Foods -- the year twin owners Jeff and Tom Heinen discover if the seeds they've planted for two major stores blossom and bear fruit. Each is a multi-year, multimillion-dollar gamble in the future of the family business, as well as a test of whether they can sustain Heinen's unique culture over 20 stores in Ohio and Illinois.
In May, the brothers will hoist their grandfather Joe Heinen's name atop a two-story building in the Chicago suburb of Glenview, an affluent village about 40 minutes away from the Barrington store they opened in 2012.
In October, Heinen's will anchor the former Ameritrust complex at East Ninth Street and Euclid Avenue in downtown Cleveland, symbolizing an ambitious pledge of faith in the rebirth of the grocer's hometown -- even before that downtown has enough residents to support a store that size.
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View full sizeHeinen's third-generation co-presidents and twin brothers Tom, left, and Jeff Heinen, are making an ambitious multimillion-dollar gamble by opening two stores in two very different markets this year."The old story was 'You can't build a grocery store if you don't have enough people,' and 'You can't bring people downtown unless you have a grocery store,' so this is good timing and it's a good solution, and I do think clearly this will help the city bring people downtown," Tom Heinen said.
The safer, more financially secure option would have been to invest in its 18 current stores and cultivate the thousands of customers who are tenaciously loyal to Heinen's, instead of going out and trying to add more shoppers to the flock.
Jeff Heinen said they didn't set out to open the Cleveland store so soon after the one in Glenview, but the invitation to set up shop inside the iconic former Ameritrust Rotunda and play a key role in Cleveland's renaissance was irresistible. "They don't build buildings like that anymore," he said. "We saw a location that was the heart of Cleveland and we think will be so again."
"We are a Cleveland company, we live in Cleveland, and to be part of something to help Cleveland grow and thrive, we felt as Clevelanders was a reasonable risk for us to take."
Tom Heinen agreed: "It's exciting to reinvest in Cleveland, and we'd be less than honest if we didn't say that."
Retail consultant Robert Antall, managing partner of Consumer Centric Consulting LLC in Shaker Heights, said opening a store in downtown Cleveland means Heinen's has faith that the population growth will continue long-term. "There's a need for Heinen's, but they may lose money in the short term," he said. "It's a good gamble, but a gamble nonetheless."
Jennifer Lehner, a marketing and social media consultant and president of The Posner Lehner Group LLC, is unabashedly enthusiastic about Heinen's prospects.
"I couldn't be more thrilled about Heinen's opening up downtown," she said. "Someone had to be the first grocery store, and who better than Heinen's? In spite of the slow growth downtown, I think they will do well, and will spawn growth for the area. Obviously, having somewhere convenient to shop is a consideration for people who may be considering living in that area."
"I don't worry that they'll lose that special 'thing'" by being stretched over too many stores, Lehner said. "If anything, their mojo will increase. I bet there will be an outpouring of love, support, and enthusiasm from downtown Cleveland, and in return, Heinen's will do what it does so well: provide high-quality products and service while employing the friendliest people around."
Catering to millennials:
Although its Chicago customers are very similar to Northeast Ohioans in what they want and how they shop, Heinen's faces new challenges trying to attract a younger, more mobile demographic in a smaller store in downtown Cleveland.
"My girls are 22 and 24, and some of their friends live downtown so I get to talk to them. There are so many people you talk to excited by the possibility of living downtown, and 15 years ago, you couldn't get far enough away from downtown for those people, so it's pretty exciting from that standpoint," Tom Heinen said.
"The Millennials, they're single under 30, some might be married under 30, but it's a very different population than we cater to in the suburbs. We've done a couple focus groups to try to understand how they live and what they want.
"As best we can tell, they do want a supermarket," he said. "They don't want a food store that just has a lot of prepared foods. They want the ability to shop supermarket items. Now clearly, nobody's asking us for the 24-pack of Charmin. But they are asking for the ability to buy ingredients and cook in their homes. They do have the desire and ability to cook and they want good, fresh foods."
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View full sizeHeinen's store in Glenview, Ill., its 19th, will open its doors in May.Lessons from Barrington:
Tom Heinen said the brothers have learned a great deal from when they opened their first store outside Northeast Ohio, in Barrington, Ill., on Aug. 22, 2012. Although the store didn't take off as quickly as the brothers hoped it would, "our year-over-year sales are excellent, the increases we're very satisfied with."
"The big thing we've learned is: How do you create brand awareness when you go into a new market? Everything we've learned in Barrington will inevitably, dramatically help us when we open in Glenview," he said. "There are some things we clearly would have done differently, but in general we're very pleased with the momentum of the store."
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View full sizePeggy Blanchard"Chicago has lots of population density, has the demographics our solution appeals best to, so we are still excited," Jeff agreed. "We believe there's been a lot of change in the retail market in Chicago since we first signed the lease a couple of years ago. But we believe strongly that our solution and the shopping experience we provide for our customers is one that will still resonate with customers whether it's in Cleveland or Chicago."
Peggy Blanchard, director of economic and community development for the Village of Barrington, said she has become a regular at Heinen's. "The greatest thing is when I walk through the store and have residents stop me to say what a great addition it is to the community," she said.
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View full sizeMary BakMary Bak, the Village of Glenview's director of planning and economic development, has visited the Barrington store and toured several Cleveland-area stores with Jeff Heinen. "They represent the quality, the commitment to customers" that village officials were looking for when they started shopping around for a new grocer after Dominick's vacated that property in 2006.
In addition to a larger Dominick's in Glenview, Heinen's also faces competition from Jewel-Osco, Trader Joe's, Whole Foods, and Mariano's Fresh Market.
Five stores in 10 years:
Even though Heinen's is launching two stores within six months of each other, the company is really adding four stores in 10 years if you consider the Hudson Village Market they opened in 2005, the Strongsville store they bought from Tops Friendly Markets in 2007, and the Barrington store they opened in 2012, Tom Heinen said. "In retail, sometimes it's all about the opportunity."
He said Heinen's would have to grow much larger before he started to worry about diluting the company's culture or slacking on exacting standards or customer service.
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View full sizeHeinen's opened its first Chicago-area store in the Village of Barrington, Ill, in August 2012.Antall, the retail expert, agreed.
"Opening two stores in one year is not that big a risk," he said. "There are many retailers that open over 100 per year, albeit smaller stores for the most part. Heinen's excellent offering will make up for some minor missteps. This will require more resources and heavy management involvement, but I believe they can pull this off successfully."
"Cleveland needs more people -- and companies -- willing to make a commitment to Cleveland's future," he added.
Jim Lawler, president of Lawler Construction, which has performed construction work on various Heinen's projects for the past 10 years, said the company is exactly as it seems on the outside.
"The experience of working in the stores has allowed us to meet and work with a large number of Heinen's staff over the years and there is one overarching aspect that we see repeated from store to store to the warehouses and to the corporate offices. That theme is quality and quality customer service," he said via email. "That quality is derived from a genuine passion and caring for people, not just the customer in the store but fellow employees and outside vendors as well... It is derived from a deep caring and great love of the food industry and of the principles and values that so many of us harken back to from days past. From the way that the telephones are answered, to how fellow associates interact with one another to how an outside vendor is received and treated there is decency, respect, caring and honesty."
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View full sizeHeinen's jumped at the chance to set up shop beneath the impressive rotunda in the former Ameritrust building on the corner of East 9th Street and Euclid Ave. "Heinen's people do what they say that they are going to do. They follow through on their commitments and they don't make those commitments lightly. This is the hallmark of honor and of integrity. It permeates the Heinen's organization," he said.
"Heinen's faces many new and ongoing challenges within the grocery industry, within the communities that they serve and within the general business industry of our country. They have and continue to work hard to provide a pleasant and rewarding shopping experience, varied and high quality products and affordable prices. Providing all of these things at the same time is frequently very difficult as these items frequently compete for the same resources and tend to push in opposite directions. Yet by maintaining a firm focus on quality and integrity they have managed to keep and grow a loyal customer base and expand an enviable position as a leader, not only in their industry but in the community at large," he added.
Lehner said the brothers should play up the fact that they are gambling on Cleveland's future. "If I were Heinen's, I would use this store opening as an opportunity to foster some goodwill marketing that money can't buy. I would build a whole campaign about this new store being a beacon of faith in the future of our community. I would partner with downtown initiatives and businesses to really make this a downtown movement.
"Even if they take an initial loss on this endeavor, if they continue to make this about Cleveland and our bright future, it will be a win eventually," she added.