Market Wisdom

(Photo left: my grandfather, Giuseppe, 1977, coming to work every day at age 79.)

In retrospect, after many years of formal education, climbing the grad school mountain, years of public and private company experience, working for business owners and senior executives, starting, growing and fixing companies, I still draw every day from common sense business lessons assimilated from age 10 and beyond, in my family's supermarket in Providence, Rhode Island.

Working alongside my father, grandfather and brothers, I learned early on that business is battle.  Battle for market share, battle for customers, battle for profit, battle for survival. But, in order to stay in business for half a century, you need to be wise, and value your relationships.  I believe that “market wisdom” and common sense has served me well, and has benefited the companies I’ve worked for, managed, and fixed.  I've learned that for many much larger and complex organizations, public, private, institutional and governmental, often common sense and grassroots, bootstrapping wisdom is often in short supply.

We had a simple business plan: plan to be in business, plan to stay in business, plan to take care of our customers, plan to take care of ourselves.

Take Care of the Customer

When my grandfather took a gamble and started his own business in the 1940’s it was still a relatively unstable world, not unlike now.  What he knew in his heart was that given the time, effort and care he put into forging strong relationships with customers, it was likely that some, even, most of them, would follow him.  That same care, concern and genuine interest in the personal lives of customers would serve the business well over three generations. 

(photo left: L-R, My uncle, Bruno Giordano; employee Fred Durant; My father, Emil, and Grandfather, Giuseppe: November, 1958 celebrating the installation of the Hussmann toplit temperature control showcase, an innovation at the time. The men that worked in the store were required to be clean shaven and wear neckties and dress shirt and pants.)

Customers looked forward to being called by name and to the conversations about family, life, current events, community issues and of course, food.  Vast quantities of food; my mother and father made enormous antipasto platters for customers' parties (these things were bigger than most backyard trampolines.)

Long before it was called “organic,” “farm to table” or “Tuscan”, our family procured and sold all natural foods the old fashioned way, picking meats, poultry and fish in person, and selecting only the best fruits and vegetables at the farmers’ markets in Providence, and the best imported Italian groceries from wholesalers in Providence and Boston.  I vividly remember the scent of spices in the warm warehouses of Lucio D'Arezzo and M. DeRobbio & Sons.

My grandfather was born in Prato, in the heart of Tuscany, and with entrepreneurial opportunities there sparse, he came here in 1921 to build a better life and pursue his dream of establishing a market built around the food of his childhood and of his homeland. It took him a few years to establish himself, but he went to school at night to master the English language, learned accounting and the fundamentals of business, and eventually after learning the food business he and his two brothers, Palmiro and Ezio, opened markets in Connecticut and Rhode Island.

(Photo below: Ancestral Prato)

Our store had the “go-to” suppliers, trade allies, critical vendors, whose names often ended in –man. There was the veal-man, the chicken-man, the fish-man, the freezer repair-man, the compressor-man, the banana-man, the milk-man, the Hood-man, the Armour-man, the Sunbeam-man, e.g. You get the idea. From Cola-Cola to Parmigiano-Reggiano, It was the food store equivalent of the Super Heroes or the Hall of Justice.

And every vendor was paid, 100%, on time, all the time.

Nurture Relationships

My father instilled in us a deep appreciation for the people whose very existence was intertwined with ours. Vendor relationships are but one spoke of the stakeholder wheel.  Having solid relationships with suppliers and vendors is a critical lifeline to business.  Secondary vendors, such as the insurance rep, the benefits person, industrial suppliers, equipment service people (those freezers always break down on the hottest summer day!) ensure that your business’ logistics don’t suffer.  And most importantly, the customer relationships are the “bread and butter” that pay the bills and put food on your own table.

(Photo left: My father in 1994 with Prosciutto Di Parma)

Be Honest

In the summer of my 10th birthday I joined the family workforce and as part of our training program I was put in charge of such managerial initiatives as emptying buckets, cleaning trays with bleach, breaking down hundreds of cardboard boxes, trimming and bagging iceberg lettuce, pushing a shopping cart around Providence delivering heavy groceries to widows, always on the third floor of tiny tenement houses with creaky stairs, e.g.  (Understand that child labor laws didn't apply in the family business and I still haven't collected my pension or 401k. Oh yes, I almost forgot, there isn't one!)

In the mornings we'd go to the produce market and purchase what was needed for the day.  I remember the guy at the produce market dock “pit” who controlled the flow of outgoing crates and cartons of fruits and vegetables and I had the vibe he was a scoundrel. One day he offered my father the opportunity to have a few extra cases in exchange for a “stipend.”  That day, my dad taught me a lifelong lesson.  Never one to pass up the chance to teach his boys a lesson, my father got in the guy’s face and told him “maybe you’re a thief, but I’m not. I always pay my way.  They’ll catch up with you.”  When we got into the front seat of the wagon, he said to me, “Do you understand what that guy is doing? He’s on the take. Always be honest – there are no shortcuts.”  I never forgot that.  Later that summer, that pit guy was found out to be a thief and was fired.  (It came back to me when Hal Holbrook uttered a similar piece of advice to Charlie Sheen’s “Bud Fox” character in Wall Street.) We worked too hard in business to throw it away for an extra case of apples or pears.

(The Glo-Dial clock from 1944 which hung in the market window, which we still have, and still works.)

Work Hard

We’ve all heard the old saying, “if you work hard eight to ten hours a day, someday you’ll be boss and get to work twelve hours a day.”  Well, if you own it, you might strive for fourteen or more.  One summer day when I was about twelve, I told him I’d completed all the work he’d assigned me, early, and I told him I was done with my chores.  He gave me a bucket, a mop, sponge and brush, and a bottle of “Mr. Clean” floor cleaner and I was asked to wash all the floors and clean the bathroom.  To this day, the scent of washing floors is a reminder of his saying, “in business there’s always work to be done.” He also taught us that we may as well anticipate and do the work anyway since he's going to ask us sooner or later.

Self-discipline; work ethic; values; friendship; trust; your word.

We worked hard, and worked smart. They aren't mutually exclusive.

Work Smart - Focus on Process

LEAN?  Lean in our store was not just about cuts of meat.  We didn’t need the manufacturing experts at Toyota to teach us that even on a small scale there was an efficient way to make something or put something away.  It was clear that in order to save time, and ensure quality, paying attention to the linear nature of things was important.  When you’re opening several hundred cases of canned goods, pricing them, and putting them on the shelf (label-forward, of course, with older stock toward the front), you learn quickly that tilting the box flaps downward, and angling the box at a height where you can quickly grab them and move them to the shelf with minimal distance, time and “dent risk” is valuable. Eliminate waste in processes? Efficient production yield?  ROI? We mastered efficiency; we had to, it was a thin margin business. 

And 5S? Yes: Sort, Set in order, Standardize, Shine and Sustain.  This current operations management methodology noted by the catch phrase, "a place for everything and everything in it's place" was in practice far before there was a name for it.  It's also likely the root of my operational OCD which I leverage to help stop the bleeding in poorly performing companies and organizations.  I sometimes call it "feather duster logic."  You won't sell canned goods covered with dust.  You won't sell anything if it doesn't present well, whether it's DelMonte peas, software, or the software company itself. 

Make the process of consumption and purchase seamless and effortless for the customer. 

Keep minimal inventory with the exception of “deal” items – for example, I remember the summer of 1979, my brother and I lugging 300 cases of Coca Cola products down the stairs to our storage area – dad negotiated one heck of a deal on soda.  He knew that all the kids in the neighborhood were going to bug their parents for Fanta on those hot days. 

July and August come at least once every year.  Nothing like orange and grape (even strawberry in those days) Fanta to quench that thirst.  Again and again. (Side note: I suggested the idea of bottled water and his response was “Who would pay for something that comes out of the faucet for free? “ --This was long before Aquafina and Dasani. Oh well.)

Watch The Cashbox

In business, the money in the drawer, or the capital in the business is often borrowed bread.  My father taught us that before we saw a penny, the employees, vendors and suppliers had to be paid first. I remember the categorizing of bills by line item – insurance, taxes, sales tax, frozen food, groceries, fruit and produce, soap/cleaning/household, e.g.) I have seen many larger businesses (and done extensive restructuring and turnaround operations on) whose owners didn’t understand that the bank’s lines of credit and other debts had to be paid.  They paid themselves first and vendors last.  Ignoring the cashbox leads to peril, and under a personal guarantee on which most commercial banks lend, for operating capital, growth and expansion, e.g., grandfathers’ saying comes to mind, “A banker is someone who gives you an umbrella on a sunny day and takes it away when it rains.”

Manage Your Costs

When you work for your parents and grandparents, you quickly learn not to leave lights on, blast the air conditioning, or leave the giant door to the walk-in cooler open too long.  You also learn to buy product you can make money on, not be attached to inventory, and watch waste.  My father went to work at five-thirty on many a cold morning, and never stopped for $4 coffee.  He and our #1, 40+ year employee, Fred (Freddy) Principe, made coffee for employees and the first customers in the door.  You need to have a handle on all the costs involved in what you do, and what you sell.  I remember learning many such lessons from Freddy, our dear meatcutter who measured everything consumed in the course of his work – sheets of wax paper, rolls of string, fennel and salt for home made sausage, e.g.  It’s all margin, and margin is money. 

Years later, while managing a restructuring of a transportation company, I told the owner that the hourly cost of his operation was $177 and he was selling the service to the market for $95 to $125/hour.  He didn’t believe me at first.  Honestly, he never took the time to measure it.  In one of my assignments, a $300 million manufacturing company which lost $15 million a year for four years in a row, got there because the CEO and the management team never stopped to look at two simple things – what their product cost to make ($191) and what they could sell it for ($175).  Oops.  Maybe they were planning to make it up in volume.  You can't pay your obligations and keep employees employed with hope.

(Photo: 1971 Plymouth Station Wagon)

My dad drove five year old wagons instead of buying new vans every other year.  The wagon used less gas, had lower operating costs, higher resale value, and had the extra seats which our 1961 Chevrolet van lacked.  Whatever didn’t fit in the back of the flip-down seat “Plymouth Custom Suburban” (which held a 4” x 8” sheet of plywood) we had shipped.   We did have a bathroom.  It was right next to the payphone.  We had a payphone because it was a way to get a discount on the phone bill.  No “bundling” in those days.

Austere, very austere.

Buy What Sells

If your deli customers ask for low salt turkey, ham and cheese, then buy it for them. If customers buy cigarettes and lottery tickets, make them available.  If customers want $100 a gallon Tuscan, first-squeeze organic olive oil, get it for them. They want their specific brands of red wine vinegar, “Kitchen Ready” tomatoes, Borax and canned peas.  Palmieri vs. Crugnale bread; Wise vs. Lays; Coke vs. Pepsi; Ivory vs. Joy; Hendries vs. Hood; Nabisco vs. Keebler; Crest vs. Colgate: Salada vs. Lipton; Winston vs. Marlboro.  It was the great brand battle frontier.

There is hearing and there is listening – make sure you listen. ( I love the MBA story of Frigidaire’s colossal marketing blunder trying to force-sell 19 cubic foot fridges in South America where people have spotty electricity and buy food fresh every day.  Doh.)

Learn How to Sell Value

We had a customer who came in three times a week to take advantage of an amazing promotion on Sunkist oranges.  He never forgot my father extending the offer of special 4/$1 pricing on those oranges which normally sold for a quarter.  He started buying 12 oranges a week and a year later he was up to two dozen. 

He ultimately started buying them by the case.  His doctor validated what my father had told him (my father was a medical technician in WWII) - that increasing his intake of fruits and vegetables, and vitamin C in particular, would extend his life.  He lost weight and stopped eating sausage and egg grinders.  We had to buy more oranges.  His wife accused him of having a ‘comare.  Give the guy a break, he liked citrus fruit.  (He also bought baking soda and peroxide for his canker sore problem. Cha ching.)

My brothers and I would deliver groceries in shopping carts to the customers in the area.  If they had to carry the Pastene Kitchen Ready canned tomatoes and the go-along cans of tomato paste themselves, they’d buy one can; If I hoofed them in a cart and carried boxes up a narrow stairwell to a third-floor tenement, they’d buy 14.  My father knew that was a way to sell value. 

Flexible Payment Terms

Some trusted customers took advantage of credit accounts – zero interest, too.  They sent their kids and grandkids in to do shopping without money – it was put on account, and at the end of the week when they received their paychecks – these people worked hard and while they were eligible for welfare programs, they were too proud to accept – they settled up their accounts.  In five decades of business, just one customer stiffed us –temporarily – they came in 20 years after running up an unpaid tab, and paid, explaining that they’d had some years of bad luck and economic difficulty, but things improved, the unpaid bill haunted the family, and wanted to settle up. 

My father left the slip in the drawer under the register all that time – he said, I knew they’d be back.  I knew it would bother them knowing the kind of people they were.  No interest charged.

Expect Surprises

Grocery trailers break down, freezer compressors fail, vendors sometimes can’t ship.  Hurricanes, floods, power outages.  Stuff happens, and make sure you and your business “happen” to have a plan. Simple contingency plan – three ring binder with your key vendors, their home phone numbers if need be.  On Monday or Tuesday morning, when you open for business, your customers don’t care about your behind the scenes issues, only whether you can serve their needs.

Around 1980, when the City of Providence decided to spend millions on brick sidewalks and other infrastructure on our street, one lane of traffic was closed, parking curtailed and business was severely impacted. The most loyal customers parked blocks away and walked – stopping at our store was worthwhile because my father had figured out the little incentives they needed to keep them coming in the door.  Sometimes it was a simple “thank you for your loyalty” when the last bag was bagged at the register, or one of us siblings carting their shopping to their car, or down side alleys and city streets, in sunshine, rain and snow, to help them bring their shopping up narrow tenement stairways to their tables.  Farm to table?  Yes. We were the ones who picked it up from the farm and got it to their tables.

At the end of it all, the relationships between our family and our customers were more about family than commerce.  There were simple concepts in play: value, pride, quality, your word, loyalty, fair margins, peace of mind.

Years after, he reluctantly sold the business and real estate (literally some guy walked in and said, “I want to buy this place.”). My father retired for a few years, and then my mom passed away, and he was contending with the void left by her as well as being idled. Some people’s jobs are what they do, some people’s jobs are who they are.

In the early 1990's my dad received a call from Alan Costantino, the founder of Venda in Providence, who asked him to come out of retirement and lend his expertise to setting up the structure, vendors and processes to establish an unequaled Italian food shopping experience which thrives today.  Alan knew that Emil’s customers would find him and follow him, and they did. 

My dad went to work every day in “semi retirement” working 60 hours a week and worked up to the day he passed, focused on follow-through on commitments he’d made, and conversations he’d had, the day before, and on what he was to accomplish that day.

I am extremely thankful for the wisdom learned in Fioravanti's Market, lessons learned then and lived and shared still so many years later. In 1983 The Providence Journal (reporter Bob Chiappinelli) did a headline story about my father and our store, focusing on how the store was the center of our family life.  The title of the article was "Dream Fades But Life Glows For Owner of Market." It told the story of how my dad's plan to become a doctor after a stint as a WWII medic and Providence College PreMed graduate got sidetracked with the demands of the family business.

My father, like many men of "the Greatest Generation," never complained about the life detour, that generation just worked hard, took great pride in what they did, and took great care in relating to people, and lived simple, honest, hard working family lives. 

American values were the foundation on which a postwar economic boom was built; and that boom's cornerstone was the working family business.

Although, like his father before him, Dad was the head of the family and the head of the enterprise.  My dad was not a CEO, nor was he the highest decorated GI to received an honorable discharge after WWII, but he and my mother (as well as grandparents, aunts, uncles, cousins and virtually all the people that we called by name in our market) taught us about business, and the business of life. They all led by example, stood tall and strong through adversity and maintained sanity, humility and composure through times of challenge, opportunity, prosperity and loss.

Daily, I witnessed the equivalent of the "fishes and loaves" miracle where a couple worked full time, together, and raised and educated five college graduates and managed to make exponential returns on humble means. For that daily tenacity and commitment, there ought to be medals and awards, but valor on the battlefield of life is rewarded with succession and progeny, with values and perseverance that is undeterred and perennial across generations. They provided infinite wisdom in matters of commerce, and matters of life.

And, not a day goes by, that I don't miss that "market wisdom," that I don't miss them all - family, of course, but also the customers, vendors, and the good people from the old neighborhood.

• An excerpt from the forthcoming book "Market Wisdom" by Paul Fioravanti, MBA, MPA.