2017-08-09 / Featured / Front Page

Before the grocery wars, there was a dominant force – Ukrop’s


A crew of Ukrop's employees pose for a photo in the 1960s. Photo courtesy of The ValentineA crew of Ukrop's employees pose for a photo in the 1960s. Photo courtesy of The ValentineIt was the spark that set off Richmond’s current grocery wars. Before Wegmans and Publix came to town, before Aldi and Lidl began battling Food Lion and Kroger for middle market supremacy – before anyone locally had even heard of Martin’s, there was Ukrop’s.

The company held the largest market share in the region for roughly 20 years, known for its sterling customer service and standard-setting retail concepts. Run by brothers Jim and Bobby Ukrop, the homegrown company was seen as more than a grocery chain – the family was extraordinarily philanthropic and involved in many economic development projects. It could be said that Ukrop’s became emblematic of the values shared by the community it served.

From one tiny 16-by-32-foot store, Ukrop’s would bloom to 29 locations at its peak, employing 6,000 people and holding a reported value of more than half a billion dollars. The business wasn’t just notable for its size; Ukrop’s pioneered retail techniques that were innovative for grocers at the time, offering prepared foods and customer loyalty cards well before they became standard. With a long history of incentives for employees, Ukrop’s was repeatedly named to Fortune’s list of the best 100 companies to work for.

But all that came to a close in 2010 when the grocery empire was sold to Martin’s parent company Ahold USA for $140 million. The sale marked the end of an era, and national and international grocers have smelled blood in the Richmond market ever since.

At the center of East Coast geographically, with a growing population and strong housing trends, the Richmond area is an appealing market to grocers. Additionally, Jon Springer, retail editor for Supermarket News, says the hole left by Ukrop’s – and, as of this month, Martin’s – is also drawing prospectors. “It has become a little bit of an open season for anyone to come out and try to establish themselves,” Springer says. In the recent dogpile of grocers, “there was an element of the fact that the longtime market-leading grocer had been, for better or worse, destabilized.”

Spun off from the sale of the company, the former chain’s prepared foods manufacturing facility, Ukrop’s Homestyle Foods, still wholesales its more iconic items – including rainbow cookies, White House Rolls and Mrs. Marshall’s products. But with the closing of the last Richmond-area Martin’s stores on Aug. 2, almost all of which were former Ukrop’s stores, it feels somewhat more official: The longtime family grocery chain is gone – for good.

The Ukrop legacy, however, is woven into the region’s fabric. As new grocery stores continue to infiltrate the Richmond market, it’s a history worth retelling. 

It all began with Joseph and Jacquelin on Hull Street. The year was 1937, and according to family lore, it was Joseph’s desire to open a grocery store in Manchester called “Joe’s.” But a store by that name already existed nearby, so Joseph decided to use his surname instead. He dubbed the store Ukrop’s.

That May, the Ukrops opened their first store at 3111 Hull St. Located a mile from the Chesterfield line, many of its customers were factory workers who lived in the county. In July of that year, the Ukrops’ first son, Jim, was born.

“[I’m] not sure which they thought was the best thing to happen to them that year, but I’m glad they did open the store,” says Jim with a laugh. “I think I started working for the company when I came out of the cradle.”

Baptists of Slovak descent, Joe and Jacquelin had rules: They didn’t sell alcohol, and Sundays were meant for worship, not business. The family lived next to their store, and when Jim turned 14, he told his father he wanted to get a paper route so he could finally get paid. From then on, Joe paid his son: 50 cents an hour to start.

“I worked there every day after school. Monday was my day off,” Jim recalls. “When I went to college, that was like a four-year holiday.” After graduating with a degree in business administration from The College of William and Mary in 1960, Jim received a job offer from Kroger in southwest Virginia. That’s when his father offered him a higher salary to work as his assistant store manager. When Jim told his father he wanted to run his own store, Ukrop’s opened its second location in 1963, a 10,000-square-foot store near the intersection of Midlothian Turnpike and Buford Road.

Jim’s brother, Bobby, finished his MBA at the University of Virginia in 1972, and the two got to work running the company together. It was a partnership that would last the next 30 years.

If Jim Dunn was initially unaware of the popularity of the Ukrop’s chain when he moved to the area in 1990, he soon found out.

When a group of neighbors came over to welcome him, they had a brand-specific question in mind.

“The first thing they said was ‘Do you know where the nearest Ukrop’s is?’ You don’t expect to hear someone say that,” says Dunn, former president and CEO of the Greater Richmond Chamber. “[Ukrop’s] epitomized customer service. They were the model for basically every business in Richmond.”

Ukrop’s Homestyle Foods continues to supply local grocery stores with Ukrop’s famed prepared foods. From left to right, Scott Aronson, Ukrop’s vice president of business development, Chief Executive Bobby Ukrop and Chris Kantner, vice president of production. 
ASH DANIEL Ukrop’s Homestyle Foods continues to supply local grocery stores with Ukrop’s famed prepared foods. From left to right, Scott Aronson, Ukrop’s vice president of business development, Chief Executive Bobby Ukrop and Chris Kantner, vice president of production. ASH DANIEL Stories of the company’s customer service worked their way into Richmond lore: If a customer’s car got a flat tire in a Ukrop’s parking lot, an employee would change it. If a customer left their checkbook at home, they could take their groceries and return to pay later.

Going the extra mile for customers was embedded in the company’s culture, Jim says. “People expect to get through the lines and checked out accurately,” Jim says. “You don’t get credit for that; that’s expected.”

Jeff Metzger, publisher of trade publications Food World and Food Trade News, says the chain had a strong connection with the community it served.

“They were known for highly successful retailing for many, many years,” Metzger says. “Tremendous personal integrity by the family, active-to-this-day involvement in community and philanthropic events. They’re from Richmond, they stayed in Richmond. They’re local.”

Springer says Ukrop’s had a desirable reputation among grocers.

“They were a regional grocery chain that had a particularly strong local feeling among shoppers,” Springer says. “The way they went about things was admired by people in the industry. I think they had an enviable closeness with their shoppers. I think they were looked at as exemplary for customer service.”

The grocery chain’s innovations also set it apart, aided by the Coca-Cola Research Council-sponsored Food Marketing Institute. The organization supported research and led to partnerships that helped regional and local grocers compete with national and international ones.

It was because of the organization that Ukrop’s became one of the first grocers in the country to transition from price labels to barcode scanners, cutting the time it took shoppers to get through checkout lines. Ukrop’s and California grocer Vons were also the first to employ customer loyalty cards in 1987.

The latter was hugely advantageous to Ukrop’s, allowing the grocer to keep track of an individual shopper’s buying habits. Now standard among most national retailers, at the time it was a novel concept. The loyalty cards enabled Ukrop’s to send targeted coupons to a customer, or know to keep stocking a product with a small but loyal fanbase. Ukrop’s also had a longstanding policy of donating 10 percent of its pre-tax profits; the loyalty cards allowed customers to direct the proceeds from their purchases to the charity of their choosing.

In 1984, the chain was one of the first in the region to offer salad and soup bars. The salad bars in particular were a big hit, with 17 percent of customers taking advantage of them.

The Food Marketing Institute also led to the Ukrops traveling to different places around the globe to see how grocers operated. While visiting England, the Ukrops were able to see how fresh prepared foods with a short shelf life could be successfully sold by grocery chains. Using the logistics Ukrop’s had already developed for its bakery and kitchen, the company began distributing fresh prepared foods from its manufacturing kitchen in 1989.

“We learned to make it today, ship it tonight and sell it tomorrow,” Bobby says.

Ukrop’s was also known for treating its employees well, investing in professional development and a profit-sharing retirement plan, spending more on employees than marketing.

In 1997, the company also ventured into banking, partnering with Memphis-based National Commerce Bancorporation to create First Market Bank. Previously, banks had approached Ukrop’s about putting branches in their stores, but the family worried about alienating the customers of other banks. The new bank idea turned out well for all parties.

“We were able to start a new bank without any money,” says Jim, who later became chairman. “We gave them space, and they gave us 51 percent of the company, the collateral being stock in the new bank.”

Around the same time – and separately from the company – the Ukrop brothers created Ukrop’s Dress Express, an apparel company that specializes in company uniforms. Now called Ukrop’s Threads, the company clothes more than one million people a year, including employees at Wegmans, Harris Teeter, Hannaford and Kings Dominion. 

But not all was sunny in the land of Ukrop.

“We were pioneers on a number of things, and as you know, pioneers always didn’t [make it],” Bobby says. “They got arrows in their back. … Some of those things, we were too far ahead of [our] time.”

Two such pioneering moves were the creation of Ukrop’s Fresh Express in downtown Richmond and Joe’s Market near Libbie and Grove. Ukrop’s Fresh Express – which opened in 1993 – offered full, freshly prepared dinners to take home. While Fresh Express did well for breakfast and lunch, customers on their way home from work weren’t as keen to pick up prepared and ready-to-cook dinners after the workday. It closed in 1999.

“We thought people would stop in there and get dinner on the way home,” Bobby says. “The customers actually liked it, but making money was a challenge.”
The Ukrop’s on Hull Street, circa 1963. The Ukrop’s on Hull Street, circa 1963.

With Joe’s Market, Bobby says they tried to do too many things in the small store. The store, which opened in 2001, offered natural and organic foods, a pharmacy and a bank. The Ukrops sold the store to two employees in 2010, who converted it into Libbie Market.

Delicious by Design, a line of healthy, chilled prepared items Ukrop’s debuted in 2000, met the same fate. While the idea might have worked today – a recent study by market researchers NDP Group concluded that purchases of prepared foods from grocers has risen nearly 30 percent since 2008, driven largely by millennial buying habits – it didn’t take hold 17 years ago.

“There’s always been an entrepreneurial spirit to what we do,” Bobby says. “We’ve made some mistakes along the way. You learn from them.”

And though Ukrop’s held the largest market share in the region for two decades, both Ukrops say in hindsight that they had too many stores. Every time they opened a new store, they seemed to pull half of the customers away from an existing location.

But perhaps what critics of the chain most frequently mention is the fact that Ukrop’s didn’t sell alcohol and was closed on Sundays, one of the two biggest retail days of the week. While Jim acknowledges that changing both of those things would have helped business, he’s unsure it would have helped in the long run.

“[Older, loyal customers] died and the fact that we were not open on Sundays and the fact that we did not sell beer and wine had a big impact on our ability to grow the business,” Jim says. “[But] with what’s going on now, I think if we waited five years to sell our stores, I don’t think they would be worth very much.”

In 2010, at the time the Ukrops decided to sell, Metzger says the market had already started to evolve, with Kroger ramping up its game, adding and remodeling stores. Non-traditional grocers like convenience and dollar stores had also begun expanding grocery options.

In the transition from Ukrop’s to Martin’s, Metzger says the Dutch-owned company lost previous shoppers by getting rid of the customer service elements that made Ukrop’s successful.

“Clearly some of the service-oriented, feel-good, TLC, value-added things that Ukrop’s did either went away or became diluted,” Metzger says. “It was a different model, and I don’t think customers embraced it in a warm and fuzzy way.”

While the Ukrop’s sale attracted attention in the grocery industry, Metzger says the unsuccessful transition to Martin’s is likely what spawned the current feeding frenzy.

“[The Ukrop’s sale] sort of gave people the thought that the door might be open a bit, and then they watched Martin’s lack of success in the takeover,” Metzger says.

Martin’s failures spurred Kroger to be even more aggressive, and convinced other grocers like Publix that they might have success in the market.

With the continual shakeups and new players entering the market, Jim says he’s glad he’s no longer in the grocery business.

“The best news is we’re not in that business anymore,” Jim says. “There’s always been too many grocery stores in Richmond, but now it’s like the Civil War with Publix meeting Wegmans here in Richmond.”

Last year, New York grocer Wegmans opened stores in Midlothian and Short Pump that are both upward of 100,000 square feet. This past month, Florida-based Publix opened two of the 12 stores it’s announced plans for. German grocer Aldi recently opened 10 stores in the Richmond area, and Lidl has opened four. Perhaps feeling the pressure, Kroger has scrapped plans to build new stores in Colonial Heights and Mechanicsville.

Noting that both Aldi and Lidl offer a different model of store that is extremely cost efficient, Springer says things will only get more competitive.

“The two of them are going to exert a lot of influence on the market,” Springer says. “There’s more disruption to come.”

For grocers, Metzger says things will only get harder in the coming year as more stores come online.

“If you’re a retailer, Richmond is a really challenging market because of the number of stores, the variety of options,” Metzger says. “It’s emerging, it’s changing rapidly, and it’s very crowded currently. The mercury isn’t quite shooting out of the gauge yet. But we’re close.”

The Ukrop’s grocery chain may be no more, but the Ukrop family is still around. Bobby is CEO of Ukrop’s Homestyle Foods, manufacturing prepared foods from its facility near Chesterfield Towne Center and its bakery in the city. Ukrop’s items can still be purchased from Kroger, Wegmans, Harris Teeter and Publix.

Jim is co-founder and managing director of NRV, a Richmond-based venture capital firm that invests in promising startup businesses.

“I’m having the time of my life,” Jim says. “It’s exciting.”

Jim’s son Ted and his wife Katie built and now operate Quirk Hotel in downtown Richmond. The boutique hotel has been written about in numerous national publications, including The New York Times, Travel and Leisure and The Wall Street Journal.

As for their legacy, the Ukrops are proud that they never strayed from their parents’ founding principles.

“I think people trusted us,” Bobby says. “[Our parents] were hard-working, God-fearing people who lived the golden rule. … They taught us what it was to love people, and when you work as a team, you get a lot of things done.” ¦

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