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Nick D'Agostino assesses new age of grocery retailing

As the supermarket industry conforms to business culture in the 21st century, it is forced to adjust to contemporary ways of doing business, encounter unique forms of competition, face never-before-known challenges and initiate new, sometimes stringent, regulations. And no companies are more aware of the changing landscape of food retailing than organizations that have existed for decades.

When brothers Nicholas (Nick) Sr. and Pasquale (Patsy) D'Agostino opened the first D'Agostino's grocery store in New York City in 1932, how they organized, operated and oversaw their business was undoubtedly a lot different than if they were embarking on the endeavor today. It's easy to visualize the men sitting at their desks late into the night, pencils in hand, tallying up the day's receipts and expenses, paying bills and planning the next day's chores. They might have been at the wholesale market during early morning hours gently squeezing tomatoes to check their ripeness and smelling bins of pears and apples to ensure the fruit emitted smells that would fill their store with only the freshest scents of the season. They probably participated in the arrangement of displays showcasing beautiful product of irresistible eye-appeal to customers. And they probably even swept floors, stocked dry goods and cashiered as part of their normal daily routines.

With unrelenting determination and noses pressed firmly to the grindstone, the siblings, teaming with staff members, product and service suppliers, and supported by their customers, engaged in a mutual relationship that contributed to the company developing into what is today a 20-unit chain of high-end grocery stores in New York City and adjacent areas.

Nick D'Agostino III, president and chief executive officer of D'Agostino Supermarkets Inc., spoke with The Produce News recently, responding to questions about how the industry has changed, how the company views its 75th anniversary year in the retail industry and how he anticipates the retail food industry will change in the future.

TPN: What made the first store such a stronghold for so many more to come?

ND: The original store, at 83rd and Lexington on the Upper East Side, was unique in that it included a bakery and groceries under one roof -- which were commonly sold in separate, specialty establishments at that time. It also provided home delivery for either phoned-in or on-site orders. It was the first store of its kind in Manhattan, and as it expanded to include fresh meat and other items, the name and reputation spread across the city. We still have a store in a different building on that block.

TPN: How has the company expanded since then?

ND: We now operate 20 stores in Manhattan, Brooklyn and Westchester County, north of the city. Today the stores are fully stocked supermarkets with deli, floral, seafood and meat counters, and a full line of fresh produce, including organics.

Besides name-brand items, we also use the 'D'Agostino' brand on a wide variety of products in many categories. We also developed the 'Earth Goods' product line for environmental- and health-conscious consumers. The organics category is having a tremendous impact on produce departments today.

TPN: In what ways are organics changing produce sales?

ND: It has created a challenge for many. Customers typically want someone else to make decisions for them and consequently make their choices easy, rather than doing their own research and exploration. For example, consumers will read magazines and newspaper articles, speak to their friends and co-workers, and their ultimate knowledge about organics becomes a culmination of that information. A person who goes to a dietician and claims he doesn't know why he isn't losing weight when he only eats organic products is a prime example of consumer misinformation. Just because an item is labeled 'organic' or is sold in a store that is known as a health-food retailer does not mean that the product is higher quality or is lower in calories than its conventional counterpart. We recognize that many consumers do not know what an organic product means in its truest sense.

Our practice is to offer organics when the product is higher in quality and the price is not dramatically different. We are strongly represented in the organics category and are fortunate to have strong supplier relationships that help guide us continually in which products -- organic or conventional -- are the highest quality at the best value at all times. If an item has a 50 percent price difference, there is a good chance the customer will choose the non-organic alternative.

We are excited about living organic products. One of our suppliers was producing pet grass and soon added microgreens to its line. The customer just clips off the tops of the plant as they need it, and the product continues to grow. From the customers' prospective, it is better than field-grown produce that is consumed completely.

TPN: You mentioned that service is an integral part of the company's future strategy. In what ways do you plan to affect changes?

ND: We have been a service-oriented company since we began in business, but as people's lifestyles change, we have altered our business practices in order to provide what they want and need most.

TPN: What type of promotions does D'Agostino's run on produce items?

ND: Our stores have ongoing, regularly scheduled promotional activities, including flyers, print ads and demonstrations. Most suppliers offer great participation for demos. I have made a change in this regard, however. I now insist that my own staff oversee and operate the demonstrations rather than suppliers sending in representatives. This helps to educate workers about the product, and at the same time, they form stronger relationships with our customers by speaking with them directly. It also gives us the ability to cross- merchandise in the demos with products that we choose, especially those that carry the 'D'Agostino' label.

TPN: How do your produce buyers, managers and staff members stay abreast of the many new fruit and vegetable products continually introduced to the market?

ND: We are very aware of the challenge in keeping our staff updated on product information. For this reason, we built a demonstration kitchen in our Rye Brook, New York, location. We ask suppliers to come in and demonstrate products, including handling, usage and preparation details.

TPN: What are your procurement practices? Are store purchases made by one primary buyer or by individual produce managers?

ND: All produce purchases are made through our director of produce, John Vasapoli. But his purchasing decisions reflect the computerized information that is fed to him from each store. He can see what the actual sales are for each product, guiding him in procurement decisions. Produce department managers also interact with his office to discuss customer requests and buying trends in individual stores. It is a very effective system in that all the information and feedback is compiled in one place where it is constantly monitored.

TPN: What types of suppliers does D'Agostino's utilize?

ND: C&S Associates, headquartered in Keene, New Hampshire, is our primary produce supplier. And R-Best Produce, in Bronx, New York, is our secondary supplier. C&S Associates serve some of the largest supermarket chains in the nation. R-Best imports and distributes organic fresh produce. It is the largest company of its type in the northeastern region. The efficiencies these suppliers provide -- and the special deals they bring to us -- enable John to put time and energy into searching out local growers, which is also important to us. Other than a few labels such as 'Andy Boy' and 'Red Jacket,' we do not get involved in many branded products.

TPN: How has management changed over the years, and how has it affected how business is done today?

ND: The primary change is in technological advances. Today's managers need educations that include technology. But it is also important that our managers focus even more on knowing and appreciating product and in servicing customers in consistently better ways.

We are currently putting a lot of effort into teaching our staff how to educate customers on new produce items. The demand for Latin items is increasing, but people of other cultures need to know how to handle and use these products. We offer recipes in the stores and on our web site, as well as product information sheets. We are particularly fond of signage that provides unique and unusual facts about an item, such as how much guacamole is consumed during the Super Bowl. P-o-p materials that educate customers increase product sales.

Items that make it easy for people to prepare food items at home such as salad kits are also important today. We are looking for more of this type of product, such as a guacamole kit.

TPN: Your strategies include an attempt to capture a larger portion of Manhattan's $2.2 billion grocery business. What are your plans to achieve this goal?

ND: New York City is a densely populated large island. In earlier years, we never considered expanding further north than 100th Street, but that is no longer true. Future expansions will take these developing neighborhoods into consideration. We now have a store at 110th and Broadway, which performs very well.

New customer service initiatives are also a big part of our growth strategies. Although we have always offered home delivery, we are now making a big push in online ordering and delivery. Unlike other online grocery stores, however, we want our Internet sites to be a reflection of our stores. We also want to offer services like bottle returns, which others do not. Our web site directs the orders to the stores closest to the customer so that a relationship can be formed. If the customer needs a product replaced or if they realize they forgot something at the last minute, they don't have to wait for a 'scheduled' delivery day to get it. We'll be at their doorstep instantly to service them.

We are also pushing our catering services. Our delis offer a wide variety of high-quality prepared meals, and catering fits perfectly into this aspect of our business.