Wegmans Food Markets, Inc. - Company Profile, Information, Business Description, History, Background Information on Wegmans Food Markets, Inc.

P.O. Box 844
Rochester, New York 14692-0844

History of Wegmans Food Markets, Inc.

Wegmans Food Markets, Inc. is a privately held, family-run corporation that operates 47 supermarkets, 14 Chase-Pitkin Home and Garden stores, and a child development center in upstate New York. With headquarters in Rochester, New York, Wegmans' primary operating area is that city and surrounding Monroe County; it is one of the top five employers in the Rochester area. Wegmans also has four stores in adjoining counties, nine supermarkets in the Syracuse and Auburn area, five in Buffalo, five in the southern tier, and one in Erie, Pennsylvania.

Wegmans was founded as the Rochester Fruit and Vegetable Company in 1916, a small food store run out of the front of the Wegman family's house in Rochester. After six years of selling groceries from home, brothers Walter and Jack Wegman moved their enterprise to a small, full-scale grocery store featuring canned goods, produce, a bakery, and even a cafeteria.

The two brothers became known as innovators in the grocery business, and in the early 1930s, they opened a self-service grocery, a new concept that would revolutionize food shopping. The new store was incorporated in 1931 as Wegmans Food Markets, Inc. The Wegmans store became a successful operation as well as a tourist attraction, featuring self-service and several other innovations, including vaporized water spray for vegetables and fruits, refrigerated food display windows, homemade candy, and a cafeteria that seated 300 people.

In 1950, Robert Wegman, son and nephew of the founders, became president of Wegmans stores, and the company began to invest in businesses that would enhance its central focus. Wegman acquired an egg farm and developed an on-site meat processing center and a central bakery. He also formed Wegmans Enterprises, Inc. to handle real estate development, leasing, and property management for the company. In 1969 he was named chairman and CEO of Wegmans.

In the late 1960s, Wegmans expanded outside of Monroe County, building stores in Syracuse, New York. The 1970s brought new 40,000-square-foot stores that were intended to incorporate the "mall in a store" concept. These new stores included gift cards, floral products, and pharmaceutical departments and were open 24 hours. Wegmans also became the third chain in the country to use electronic cash registers when it installed an optical scanner system in a Rochester store in 1972.

In 1973, Robert Wegman capitalized on the growing demand for do-it-yourself home improvement products, opening his Home Improvement Center next to one of its Rochester groceries. The following year, Wegmans purchased Bilt-Rite Chase-Pitkin, Inc., a retail operation that sold lumber, hardware, millwork, garden and landscape materials, and building supplies. Wegmans soon began expanding this chain and building Chase-Pitkin stores next to existing Wegmans stores. Robert Wegman's son Danny assumed the presidency of Wegmans in 1976.

The company began carrying its own store brand items in 1979, and the line became so popular that by the early 1990s, Wegmans was carrying 1,000 items under its own name, including a line of soda. In 1983 Wegmans became one of the first chains to install automated teller machines connected to local banks. The ATMs were profitable for the store because Wegmans owned the machines and charged fees to the bank for providing all the front-line services including replenishing cash and receipt forms. Other developments included the 1986 establishment of the Wegmans Federal Credit Union for company employees. Four years later, the company opened one of the first child care services offered by a private company with its Wegmans Child Development Center in the town of Greece, New York.

Wegmans prided itself on its contributions to the communities in which it operated, noting its donations of damaged packaged goods and perishables to local food banks as well as its sponsorship of local events, donations of foods to charitable activities, and contributions to community projects. Wegmans has been nationally recognized several times throughout its history. In 1987, Fortune magazine named Wegmans the best U.S. supermarket in terms of customer service. In 1991, Wegmans' work scholarship program was awarded a "Points of Light Award" by President George Bush. The company was also listed in the 1993 publication of The 100 Best Companies to Work for in America.

Wegmans received the American Business Press competition, "Points of Light," for its community service through its Work/Scholarship Connection program. The Wegmans program, started in 1987, helped mostly 14- and 15-year-old children at risk of dropping out of school. The store gave these participating students part-time jobs and assigned a mentor to each of them. The mentor, an adult co-worker, helped the student on the job and with schoolwork. Students who stayed on the job and stayed in school to graduate from high school also won a $5,000 college scholarship to the school of his or her choice.

The Wegmans entry in The 100 Best Companies to Work For in America cited the company's child and development center, medical and vacation benefits for part-time workers, scholarship program and Work-Scholarship Connection, job security, and opportunities for promotion. Wegman's was one of only two supermarket businesses included in the 100 Best Companies listing.

Benefits for employees of Wegmans included medical and life insurance and prescription plans for full-time employees after 90 days of service and for part-time employees after one year, profit-sharing for full-timers after one year, tuition scholarships up to $1,500 for both full and part time employees, a 401K plan, and paid vacations. Full-time cashiers, as of January 1993 were paid $6.70 per hour and part-timers $4.50 per hour. Department managers earned annual salaries of between $30,000 and $40,000, while store managers earned $50,000 to $80,000 a year.

Nevertheless, Wegmans had its share of controversy and critics. The company came under attack from consumer groups as well as the New York State Attorney General's office for its alleged refusal to adhere to the state's item pricing laws. Wegmans' stores violations of state item pricing laws dated back to 1986, but the company argued that item pricing increased consumer costs because of the expense of pricing each item. Wegmans continued to stand by its electronic scanner pricing, claiming it was more accurate than price stickers and refused to pay fines levied against it for violations of the unit pricing regulations. Wegmans won the Attorney General's lawsuit, and the item pricing law in question subsequently expired in 1991.

Wegmans also faced protests from environmental groups when it launched a campaign to decrease paper bag use in favor of plastic. Environmentalists claimed that Wegmans was misleading the public with its claim that plastic bags were better for the environment than paper bags. The critics argued that for Wegmans the main issue was cost: paper bags cost $41 per 1,000 while plastic cost $18.50 per thousand. According to Wegmans, however, paper bags did not disintegrate in modern dumps any more quickly than plastic, and production of plastic was more energy and resource efficient. Wegmans finally responded to protests by letting each customer decide how he or she wanted purchases bagged. Furthermore, the company established bins for customers to deposit plastic bags for recycling, as part of a trial program with Mobil Chemical Company for recycling plastic. Wegmans also began using paper bags made from recycled paper.

Wegmans also felt criticism commonly directed at companies that experience periods of growth and operation expansion. The needs of the company, it was felt, in some cases conflicted with the needs and interests of local residents when Wegmans sought to enlarge existing stores, requiring the purchase of surrounding properties and development of new traffic control patterns.

By 1993, the largest Wegmans stores were 120,000 square feet, three times the size of the "mall-in-a-store" facilities established 20 years earlier. New Wegmans superstores included cafes with Chinese food, pizza and pasta bars, as well as cappucino and coffee bars. Wegmans promoted itself as a strong advocate of health and nutrition, launching series of bulletins called "Strive for Five," prepared by a registered dietician and featuring information and recipes for fruits and vegetables. Furthermore, in the early 1990s, Wegmans launched a line of diet foods, called "Just Help Yourself," featuring frozen, prepackaged meals comparable to those offered by diet centers.

In 1993, Wegmans employed more than 18,000 people and continued to grow as it expanded many of its existing stores, opened its first store outside of New York State, in Erie, Pennsylvania, and contemplated building other stores in Pennsylvania. That year, its Chase-Pitkin chain had ten locations in Rochester, one in Canandaigua, one in Buffalo, and two in Syracuse. In 1993, Wegmans Enterprises, the company's real estate division, owned most of the property on which its stores were situated. About 1.1 million of the division's 4.6 million square feet of shopping plaza retail space was leased to tenants, including small shops as well as major department store facilities.

Additional Details

Further Reference

Khermouch, Gerry, "Wegmans Builds its Local Base with Private Label," Brandweek, March 8, 1993, p. 23.Uttal, Bro, Bill Saporito, and Monci Jo Williams, "Companies That Serve You Best," Fortune, December 7, 1987, p. 98."Wegmans Community Scrapbook," Rochester, NY: Wegmans Food Markets, Inc., 1993."A Winning Day at the White House," Supermarket Business, November 1991, p. 9.

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