Longos’ Growth
Posted by Jeff Lefler on September 28, 2010
From Hollie Shaw, Financial Post: The taste of success
The key to running a strong family grocery business, Anthony Longo says, is to nurture strong relationships with everyone you touch: from customers and staff to the bank and the farmers you deal with. That’s a philoshophy embraced by the president and chief executive of the Missisauga, Ont.-based grocery chain, which defied industry odds to embark on an expansion amid the recession. In 1956, his father, Joe, opened a single store with and his brothers Tommy and Gus. Today, Longos is a thriving Toronto-area business that will open its 23rd location on Oct. 6. Financial Post’s Hollie Shaw spoke with Mr. Longo about his philosophy.
Q How did you come to love the family business?
A I always loved going to Ontario food terminal with my father to see the product that had just been picked: lettuce, strawberries, six-quart baskets of peaches … and we are fortunate to still have the same relationships with the same farmers, some of them the second or third generation. I grew up in the stores.
Q How did your responsibilities increase over time?
A I worked part-time forever, and I then went to Humber and studied business administration. In 1982, I joined full-time. We had three stores at the time. Grocery, dairy and deli were the areas I had responsibility for. I began automating the payroll. I bought the first PC [computer] in 1985 and we really put the infrastructure in place during those first 10 years. Before then, we were buying [big-brand items] through a wholesaler. We went from that to buying directly from manufacturers–Kraft, General Mills and Kellogg. We needed to be able to compete to lower our costs; most of our purchases are direct today. We are also part of nationwide buying group United Grocers Inc. For us, what is important is building relationships so that we are being treated equitably in the market; it doesn’t help consumers or manufacturers if businesses like us aren’t around to keep the big guys honest.
Q What are the benefits to having a family-run business? Any interest in taking it public one day?
A The company keeps costs down because it is family-run; [it also] cuts out a lot of head office costs. Our competitors have a certain amount of cost associated with being public, and they have to meet the expectations of the Street. We can decide to take lower profits for a time if we need to, or to [put money into the business] for the long term. We don’t believe we need to go public. We have had a 54-year relationship with the same bank [CIBC], and it’s a very strong one.
Q What is your sense of where the grocery market in Canada is going in the next few months? Has deflation taken as much of a toll on Longo’s as it did on other retailers? A Our internal food-price deflation was 1.6% in the quarter ending in May–so [the effect] is real. We see some inflation coming in the fall with flat to slight inflation in food. I think the Canadian dollar started to have an impact on pricing last September so that will lap the year since that began.
