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Business Observer Friday, Nov. 21, 2014 3 years ago

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The family that owns Johnsonville Sausage opened its first retail store in Naples, taking special care not to compete with the grocery stores that carry its famous brats.
by: Jean Gruss Contributing Writer

Executive Summary
Company. Johnsonville Sausage Industry. Food Key. Be mindful of existing customers when starting a new venture.

How does the largest privately held sausage maker in the U.S. open a retail store?

Very carefully, it turns out.

Johnsonville Sausage, famous for its bratwurst sausages, sells its products in 50 states and 30 countries through grocery giants such as Walmart and Publix. It recently opened its first small shop in the heart of Naples.

“We don't want to be in competition with our partners,” says Ralph Stayer, who owns the privately held Sheboygan Falls, Wis.-based company with his wife, Shelly Stayer. The couple moved to Naples five years ago and live here most of the year.

This was Shelly's idea. She prodded Ralph for several years until he finally relented. “Just let me open one retail store and let's see how it goes,” Shelly Stayer says she repeatedly told her husband.
Shelly Stayer says she got the idea to open a store when strangers in Naples asked her to ship them sausages and other goods from Wisconsin. Now, she can direct them to the store in the heart of Naples, near Kohl's and Dick's Sporting Goods on Naples Boulevard off Pine Ridge and Airport Pulling roads.

By early indications, Shelly Stayer's instincts are right on target because Naples is home to a large population of Midwesterners who flock there in the winter. A steady stream of customers knocked on the doors of the 1,500-square-foot store a few days before it was scheduled to open, eager to look around and chat up the Stayers even as workers were busy stocking the shelves.

The company's roots and inspiration for the store are from the Stayer family's original small butcher shop. In fact, Ralph gobbles his food fast today because he learned to eat quickly during his shifts as a teenager in his dad's shop.

But today, 1,600 employees now make and distribute more than 40 products, from bratwurst to mustard. The Stayers decline to cite revenues, but published reports estimate more than $800 million in annual sales, and Forbes recently estimated the family's net worth at $1.2 billion. Johnsonville Sausage says it is now the largest privately held sausage company in the country.

Ralph Stayer is well known for his hands-off style and was management guru Tom Peters' CEO of the Year in 1988. Empowering employees to make decisions gives Stayer time to spend eight months of the year in Naples. “They make better decisions than I do,” he shrugs.

Indeed, the company has a cult-like following, and Midwesterners crave their meats when they winter in Florida. The company's Facebook page has nearly 350,000 followers, for example. “We're almost as popular as Kim Kardashian,” Shelly Stayer laughs.

Besides, Shelly Stayer says she looks forward to working in the store herself: “Nobody makes fun of my accent.”

'Our little deal'
Because of their partnerships with grocery stores, the Stayers are careful to avoid any appearance that they'll compete with them. “It's one store in Naples,” Ralph Stayer says. “We don't have dreams of opening hundreds of them.”

Still, Shelly Stayer says if the Naples store is successful, they might consider opening others where Johnsonville Sausage isn't well known. California might be one such area. “Find a void and fill it,” Shelly Stayer echoes her husband's counsel.

Ralph Stayer says the family has invested less than $500,000 in the new store. “This is our little deal,” he says, pointing back and forth to Shelly.

For example, the new Johnsonville store will carry items customers aren't likely to find in their grocery store. That includes cheeses and root beer made in Wisconsin. “We have a wonderful working relationship with Walmart and Publix,” Ralph Stayer says. But, he adds, “They don't carry everything that we make.”

Plus, the store will be used to test new products. For example, the company recently launched a line of four flavors of mustards, the top condiment people put on sausages. “We just introduced fully cooked breakfast links,” Shelly Stayer adds.

The company already has a test kitchen in downtown Chicago, where it employs 10 people. “We test new products all the time,” says Ralph Stayer.

Still, there won't be any seating or restaurant inside the store despite customer requests. “We don't want to get that complicated,” says Ralph Stayer, who is such a popular man in Wisconsin that he'll have his own tent set up outside the Naples store during the grand opening to greet people.

Tempered expectations
For a company that tests its products for years and collects data on shopping habits so intensively, the store is a surprisingly untested idea. “We have no clue what sales are going to be,” says Ralph Stayer.

The company didn't hire any retail experts to advise it and the Stayers picked the store's location by driving around themselves. Shelly Stayer is decorating the store herself, picking everything from the tin ceiling to the butcher blocks. “I'm going to make Ralph work,” she laughs.

The opening of the store is in contrast to the extensive research Johnsonville Sausage does for its grocery store customers. The company even tracks how many seconds shoppers look at a label. “We're in the grocery stores all the time,” says Ralph Stayer. “We have to walk in our customers' moccasins.”

The idea is to make the store feel like an original butcher shop in Wisconsin. “I'm trying to spend all my money to make it look old,” Shelly Stayer jokes.

Still, the store will sell Johnsonville's premade products. “This is not a butcher shop, no Kobe beef,” Ralph Stayer says. For that, customers should shop at Jimmy P's Butcher Shop nearby, he suggests.

A big map at the entrance to the store will show shoppers where each product originates. “People want to know where their food is coming from,” Shelly Stayer says. “Folks want authentic.”

 

Letting workers lead
Ralph Stayer's article on managing people in the November 1990 issue of the Harvard Business Review is still one of the publication's best-read articles. Here's an excerpt from How I Learned to Let My Workers Lead (you can read the full version at HBR.org):

“Early in the change process, for example, I was told that workers in one plant disliked working weekends, which they often had to do to meet deliveries. Suspecting that the weekends weren't really necessary, I pressed plant managers to use the problem as an opportunity. I asked them if they had measured production efficiency, for instance, and if they had tried to get their workers to take responsibility for the overtime problem. The first thing everyone discovered was that machine downtime hovered between 30% and 40%. Then they started coming to terms with the fact that all that downtime had its causes — lateness, absences, sloppy maintenance, slow shift startups. Once the workers began to see that they themselves were the problem, they realized that they could do away with weekend work. In three weeks, they cut downtime to less than 10% and had Saturdays and Sundays off.”

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