Andronico's Market - Company Profile, Information, Business Description, History, Background Information on Andronico's Market

1109 Washington Avenue
Albany, California 94706

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History of Andronico's Market

Andronico's Market is a chain of supermarkets in Northern California. The ten Andronico's outlets serve a mostly upscale clientele in an area that radiates out from San Francisco's Bay 15 miles north to San Anselmo, 35 miles east to Walnut Creek and Danville, and 45 south to Los Altos. Stores average about 40,000 square feet with sales areas of about 29,000 square feet. They are geared toward the gourmet shopper, and each features a wide range of specialty grocery items, out-of-the-ordinary produce and herbs, full-service meat and fish service, fresh flowers, a deli with freshly cooked foods, kitchen gadgets, and tableware.

1929-89: From Neighborhood Market to Chain

Frank Andronicos emigrated to San Francisco from his native Greece in 1906 at the age of 15. After working with his older brothers as a produce buyer, and trying his hand as a railroad laborer and in the hotel and sugar industries, he struck out on his own. His first solo venture, undertaken with his wife, Eva, was a produce stand in Alameda, California. In 1929, he opened F. Andronicos, a full-service market on Solano Avenue in Berkeley, California. (He later dropped the "s.")

"He was always quality-oriented and believed passionately in delivering the best quality to his customers," reflected Bill Andronico, Andronico's grandson, in a 2004 Supermarket News article. The store became a focal point of the community, a place where everyone knew everyone else and where quality customer service was assured. Andronico held a contest to name the store, and customers chose to call it the Park and Shop Market.

The business grew slowly for the first three decades. In 1957, the year in which John Andronico, Frank's son, joined the business, the family opened a second Park and Shop Market in Berkeley. John Andronico had worked in the family store stocking shelves as a child and liked to joke that he had been in the grocery business from before birth. According to Bill Andronico, John's son, in the 2004 Supermarket News article, John brought "the whole notion of good food" to the company. "He loved to buy and sell quality produce, and he also liked eating good food." A third Park and Shop opened in San Francisco in 1959. Two more stores opened in the 1960s but later were closed.

John Andronico became president of the three-store company in 1978, the year in which Frank Andronico died. John's son, Bill, began working for the company in 1975, during his second year of senior high school and continued working while he earned a bachelors degree in economics at the University of California at Berkeley. After graduating with a masters in food industry management from the University of Southern California in the 1980s, Bill Andronico joined the business full time.

In the early 1980s, Park and Shop introduced innovations that became industry standards: refrigerated "waterfall" produce cases with staggered shelves and a built-in misting supply and Metro shelving--metal grocery shelves--that allowed for shelves of variable depth. The company also began installing in-store kitchens in 1984. In 1986, while remodeling its second store, the company changed its name to Andronico's Park and Shop Market "because we thought it was important to differentiate ourselves from other supermarkets that had generic names or less-than-imposing banners," according to Bill Andronico in Supermarket News in 2004. Bill became president of the company in 1988. A year later, prompted by a booming economy, the company began a growth spurt, opening two new stores in Berkeley, one in 1989 and another in 1990.

1989-99: A Decade of Growth in Food Service

In the early 1990s, Andronico's entered the home meal replacement market, introducing prepared meals at several of its locations. The chain's emphasis on service ran against the supermarket industry trend at the time and presented some real challenges. "If you think you can put in a décor package, hire a chef, and it starts and ends there, it isn't going to happen," said Bill Andronico in 1995 Supermarket Business article. The typical home meal replacement, consisting of an entrée and side dishes, cost as much as its restaurant counterpart to prepare, but customers were not willing to pay the same prices for supermarket meals. Andronico's installed commercial kitchens staffed with restaurant people at each of its markets and began to advertise aggressively, billing its stores as providing restaurant-quality foods "for every occasion." Its efforts paid off as many of its customers from dual-income households shopped daily in its foodservice sections.

In 1994, Andronico's remodeled its San Francisco store, in part because it was dissatisfied with the store's leased deli, according to Bill Andronico, John Andronico's successor. To that end, the store's International Food Court, a 100-foot run of prepared foods, introduced high-service features, such as a fresh pasta station, a grilling station, and deli-bakery. The deli displayed 20 to 40 salads and 15 to 20 entrees daily, most of which it sold out. The San Francisco store also had a banquet room with seating for 18 in which it catered for company and community groups.

In 1995, with five stores, the independent grocery chain purchased the 70-year-old Guasco's Market, one of the Bay Area's oldest supermarkets, and the 22-year-old Rancho Market in Los Altos, California. Both of these independent markets had fallen victim to big grocery store chains, joining the more than one dozen Bay Area independent supermarkets to close in the early 1990s. Guasco's management cited the cost of health benefits for its unionized labor forces and the need to upgrade to remain competitive as its reasons for closing. Andronico's closed Guasco's in 1996 for extensive remodeling. The cost of upgrading smaller independents to include new food counters and in-store kitchens ran more than $2 million at the time.

Increasingly, Andronico's convenience-oriented philosophy came to be typified by its bakeries and deli express counters. "You can literally come into this store, go straight to the counter, order your coffee drink, grab a self-serve muffin or pastry, do your bagel or buy something our of the service bakery right in front there and get the heck out of Dodge in no time at all ... You don't have to deal with the checkstands whatsoever. It's a store-within-a-store," said Bill Andronico of the remodeled Rancho Market in a 1996 Supermarket Business article. "I think our foodservice philosophy has evolved, and this store is an unveiling of the most developed food service offering that we've gotten together ... We are gearing more to the convenience side, and so we're doing a lot of self-serve, but we're not cutting away from the service aspect."

The reopened Rancho became Andronico's sixth store in Los Altos in 1996 followed by the remodeled Guasco's as the seventh in San Anselmo in 1997. That year, the company changes its name to Andronico's Market, Inc. Each of its stores looked a little different and catered to the needs and flavor of local clientele, in keeping with the original Park and Shop's emphasis on being a neighborhood grocery.

What unified all Andronico's markets was in part their produce sections. "We've always done things a little differently in produce ... We've dealt with and developed programs with a lot of small growers ... "Bill Andronico described his company's Food Labeling and Nutritional Information program in a Supermarket Business article in July 1996. The program had blue shelf talkers to identify local produce, purple shelf talkers to identify IPM produce (produce grown with integrated pest management), and orange shelf talkers to identify organic produce. Customers were encouraged to sample items. "It ties in with our philosophy to take care of the customer in any way we can and make sure that they walk out of the store 100 percent satisfied that they received attention when they wanted it and that we went beyond their expectations," Andronico went on to explain in the article. The special emphasis on produce paid off in 1998 when Andronico's was named Best Grocery Store in the San Francisco Chronicle's Reader's Choice poll.

It fact, it was Andronico's produce section that provided it with a competitive edge against the supermarket giants in the late 1990s. As a small chain, the company was in a better position to capitalize on the factors that make for a signature produce section, such as quality control (buying produce at just the right time from local growers), variety (buying smaller amounts of a large number of items), and selecting items in response to customer demand. Andronico's produce buyers scoured San Francisco's warehouse districts every day to find a variety of top-quality produce.

John Andronico worked in the company until shortly before his death at age 76 in 1999. "He backed away from the business slowly," Bill Andronico recalled in a 2004 Supermarket News article. "He knew his succession plan for me needed to evolve, and so he divested responsibility over several years." Bill Andronico became chairman and chief executive officer of Andronico's in 1999. Connie Andronico, John's daughter, was company vice-president involved with in-store demo programs and special events.

Bill Andronico oversaw the opening of the company's ninth store in Danville in the East Bay in 1999. Also that year, the company installed a web-accessible system to monitor and replenish stock. The elaborate Danville market cost about $3.5 million to build and occupied more than 40,000-square-feet. It featured an extensive supply of wine with a wine-tasting bar, an in-house bakery called Forno di Andronico, a kitchen for hosting cooking classes and private parties; a farmer's market-style produce area, and a housewares department. A full third of the store was devoted to prepared foods sold at the delicatessen, salad bars, and grill area. A state-of-the-art audio system created eight different sound "zones," ranging from rainforest noises in the produce area to Frank Sinatra in the wine bar. The store's industrial kitchen hosted a cooking school, called Ingredients, that featured chefs Bradley Ogden, Alice Medrich, and Nancy Oakes in 2000. Its Living Healthy Center employed a full-time, certified nutritionist.

Andronico's new flagship store won Supermarket Business's Award of Excellence in 1999, although Andronico, preoccupied with kaizen, the Japanese term for continuous improvement, aimed for ever better. In 1998, he and key people in the company had taken a cross-country trip to visit 87 grocery stores in 15 cities and 11 states. He also belonged to a "share group" whose members, including John Zagara of Zagara's in New Jersey and John Campbell of HEB's Central Market, aimed to stay abreast of and to anticipate industry trends.

2000 and Beyond: A Focus on Continued Improvement

Andronico implemented a variety of leadership training initiatives to create connections within the company and with shoppers and their communities. These included a program called "400 percent," which measured results in the form of sales and profits, leadership, and communication and honesty among employees. "The key to it all is that we go high tech so that we can be high touch," explained Bill Andronico in a 1999 Supermarket Business article. "We collect appropriate data and bring it into report form so that we can go out there and touch the people. ..." There was an employee mentoring program and an Employee Appreciation Day. A team-building course for meat managers included duck hunting and hot coal walking. Wine stewards were taken on regular jaunts to Napa Valley wineries.

The company's aggressive expansion mode continued in 2000 with the addition of a new, smaller format, New York-style store in a former warehouse building in Emeryville, the company's ninth. Part supermarket, part convenience store, part café, and part New York deli, the Emeryville Central Market bucked the industry trend toward larger stores, which in 1998 averaged 40,000 square feet, by occupying fewer than 10,000 square feet. There was also an adjacent 15,000-square-foot warehouse and room for the company's headquarters. Central Market had food preparation stations at the center of the store--including a sushi bar, noodle bowl station, grill station, assorted hot foods, service salads, pannini and pizza stations, bakery, and espresso bar--and outdoor seating. Located in a neighborhood that was a mix of residential lofts and apartments and small businesses and corporations, Central Market was more food service center than retail store. However, the biggest part of the Emeryville project was its backroom production and distribution center with high-tech, high-speed preparation equipment. Emeryville's state-of-the art bakery and kitchen offered Andronico's the possibility of reducing its dependence upon deli vendors throughout its stores.

In 2002, Andronico's opened its 11th store, a large-format, 40,000-square-foot store, with 28,000 square feet of retail space in downtown Walnut Creek. As with Emeryville, the emphasis in this store was on perishables and prepared foods from its large working kitchen. The store as a whole was distinguished by floor to ceiling windows on two of its sides, and windows opened onto the food preparation area.

Neither of these two new stores fared well, however. The Emeryville store fell victim to the burst bubble. Evening sales had never met expectations for this store, and with the departure of the neighborhood's lunch-time crowd, Andronico's could not afford to keep the store open. The Emeryville store closed in 2004, while the Walnut Creek store, continued to operate below expectations.

Andronico's also had to contend with the fact that its sales figures did not grow much between 2000 and 2003, remaining at approximately $250 million annually. Meanwhile, soaring health care and workers' compensation insurance costs led the company to fire 100 of its workers. However, despite such setbacks, the company continued to gain recognition and to invest in its growth. In 2003, Andronico's was chosen as the National Association for the Specialty Food Trade's retailer of the year. That same year, the San Francisco store underwent a remodeling that allotted 800 square feet of its selling area to housewares, which included the company's own brand. The Palo Alto store also expanded its housewares section to 10,000 square feet in 2003. In 2004, the San Francisco store won Gourmet News magazine's Retail Leadership Award for superior cross-merchandising of its housewares.

Andronico's would need to take time to take stock of recent market trends and in-store developments, as Bill Andronico announced in a 2004 East Bay Business Times article. According to Andronico, the business had "a great brand that could easily be successful in other parts of the Bay Area, including the ... wine country, and even in nearby markets like Sacramento, which doesn't really have anything like out store today ..." The decision to come was whether to grow organically or to seek outside investment to fuel the construction of new stores or to acquire independent grocers or smaller chains.

Principal Competitors: Albertson's Inc.; Raley's Inc., Safeway Inc., Trader Joe's Company, Inc., Whole Foods Market Inc.


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