 |
| |
 |
|
|
|
|
RETAIL-
August 2002 by Stephanie Rommel Sidebar- Our Values Headquartered in Bowling Green, Houchens Industries has been quietly humming along, accumulating a portfolio of businesses and just as quietly celebrating its 85th anniversary this year. The foundation of its holdings is 199 Save-A-Lot stores, plus 41 Jr. Food Stores, 31 Houchens Markets, seven Foodland/Piggly Wiggly/IGA stores, 23 Tobacco Shoppes and one The Orchard, for a total of 302 retail stores. This 13-state empire stretches from eastern Texas to western New York state, encompassing Tennessee, Georgia, Virginia, West Virginia, North Carolina, South Carolina, Ohio, Indiana, Illinois, Alabama and Kentucky. (With one exception, the Tobacco Shoppes are located within the Save-A-Lot stores.) To round out their portfolio they’ve added a variety of subsidiaries: Southern Recycling Inc., Houchens Properties, Stewart and Richey Construction Co., Center of Insurance and most recently, Commonwealth Brands, Inc., acquired in August 2001. Commonwealth Brands has its corporate office in Bowling Green with manufacturing facilities in Reidsville, N.C. It manufactures USA Gold, Montclair, Malibu, Natural Blend, Riveria and Sonoma brands of cigarettes distributed throughout the U.S. “Some folks would say my boyhood was hard. But looking back on it, I think it was a wonderful life. For one thing I am proud of growing up unafraid to get my hands dirty, to respect and enjoy work…. And, I learned about making a living.”
So, what is the secret to this “quiet” success story? From the 1917 opening of Ervin Houchens’ first store, a 12’ by 20’ shed in Barren County, the corporation has expanded into a conglomerate with 2001 sales of $903 million and more than 6,000 employees. In fact, it is ranked Number 349 in Forbes Private 500 list of U.S. privately-held companies, but that figure will drop significantly lower next year due to the Commonwealth Brands acquisition. “I’m a firm believer in the good Lord’s will and to just look at the opportunities,” said Jimmie Gipson, Houchens’ CEO and president since 1993. “We serve the customer in a timely fashion and are excited about the opportunity to fulfill that customer’s needs.” While being “Wal-Martized” seems to be a slogan of the Kentucky Grocers Association, Gipson has been quoted as saying the key to their success is “remaining flexible and expanding where the opportunities fit into our geographical territory.” Location and convenience both play an important part in Houchens’ strategy, but being a niche player is also key. Acquiring recycling, insurance, construction, tobacco and real estate companies “gives us some diversification outside our grocery stores and will round out our company,” Gipson added. “Kentucky has a culture that supports niche marketing and a flavor where there’s loyalty.” “When I
hear people say you can’t make a living in this country, I have
no patience with them at all. Because I know one thing – out of
that whole family of brothers and sisters, there was not one of them
who didn’t learn to fend for themselves…I remember we were
specialized farmers – we specialized in survival.” According to Mark Iverson, Houchens’ chief financial officer, the biggest part of their successful strategy came after Gipson realized in the late ’80s and early ’90s what Wal-Mart was doing and exactly what it would take from a capitol standpoint to compete. “Since we couldn’t compete head–to-head, that’s when he discovered the concept of the Save-A-Lot stores.” “The accumulation of other subsidiaries, just like a mutual fund, help diversify our holdings to the benefit of our employees’ ESOPs,” Iverson stated. “They are a part of a family of businesses that support our ESOP stock price. When we make acquisitions, it is the intent of our management group to have the previous owners stay five years or longer. We want them to help grow that business in which they were so successful. “We still have to work out battles within each of those industries as well as fight the Wal-Mart battles. But, we can sustain ourselves better because we have that niche market. And, our stores are conveniently located in neighborhoods so people are comfortable shopping there.” The company likes to say they operate stores for shoppers more interested in supper than super. “We’re not going to be the big box operator, but we’re looking at things that fit our market,” Iverson remarked. “People are calling us all the time to look at acquiring them. But, we have a generalized criteria of what we’re looking for and what will benefit our employee/owners’ portfolio. We’re looking forward to future acquisitions.” “My Dad
said to me, ‘I want you to promise me that when you make a debt
or obligation to anybody, figure out how you are going to pay it before
you make it.’ He thought a man who wouldn’t pay his debts…was
nothing, he was no-account.” Gipson commented that people outside of Kentucky have expressed interest and feel we have a good labor force. “I find that gratifying. When the state dealt with the workers’ comp issue a few years ago, that was a big step forward.” It’s been quite a long road from the start of the Houchens chain as it expanded in 1931 to three stores in Glasgow. Ervin Houchen weathered not only a warehouse fire and a flooded packing house, but also afternoon tea at the White House with President and Mrs. Jimmy Carter. And perhaps most importantly, came the creation of the Houchens Foundation, established in 1954. Over the years it has given literally millions of dollars to churches, educational institutions and youth organizations. Today, Ervin Houchens’ only child, Covella Houchens Biggers, along with granddaughter, Lynne Martin, and assistant, Lou Beckner handle the requests for donations and gifts. “We want to make gifts that help large groups of people rather than just one or two individuals at a time,” Beckner explained. Donations and community involvement are an important component of their business. “We make loans and gifts to non-profit entities within the area that Houchens Industries operates,” said Cecil Martin, chairman of the Foundation’s board. “When he started the Foundation, it was Ervin Houchens’ genius to make interest-free loans to country churches. That made those congregations extremely loyal.” Houchens Industries Inc. is truly one of those rare businesses: a company that takes care of its employees and makes them owners, that acts upon its commitment to the communities and people it serves, and that, above all else, values its customers. “I think
maybe the key to my success can be summed up in one word – loyalty.
I couldn’t have made it without the loyalty of my customers who
have been buying their groceries from me all their lives….If you
take care of your customers, they will always take care of you.” Stephanie Rommel
is a staff writer for The Lane Report. |
|
|
Copyright 1996-2001, by Kentucky Business Online. All rights reserved. Editorial
content is copyright 2001, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
Does
it strike anyone else that we haven’t seen a written set of “values”
for a company in a very long while? Mission statements we’ve seen,
but values? These values belong to Houchens Industries Inc., the fourth
largest retail grocery store conglomerate in Kentucky with a 5.20 percent
market share, as of 2001, right behind Winn-Dixie, Wal-Mart and Kroger.
It’s also 100 percent owned by its employees and is one of the
largest ESOPs in the country.