After serving as CEO of Dallas-based Borden Dairy Co., Tony Sarsam took the reins of Byron Center-based grocery distributor and retailer SpartanNash Co. (Nasdaq:SPTN) last September during the COVID-19 pandemic. Sarsam and his team have adjusted to quickly evolving consumer buying habits that include a trend toward online grocery shopping. SpartanNash recently opened a 55,000-square-foot micro-fulfillment center in Caledonia that will support 24 of its stores in West Michigan by processing online grocery orders, delivering them to stores for pickup or directly to homes. MiBiz caught up with Sarsam at the facility’s grand opening last week to discuss his first year with the grocery giant and the pandemic’s effect on grocery retail and distribution.
Was SpartanNash forced to fast-track the micro-fulfillment center project as the COVID-19 pandemic pushed more consumers online?
I would say it probably fast-tracked it a little bit because it gave us the confidence — this was, really, a growing area for us — to develop our expertise in. With the more explosive growth we saw (during the pandemic), it actually did give us a platform to accelerate this project.
We often talk about trends that will stick post-pandemic. Is online grocery shopping the next frontier?
As far as the future, it will involve more people who are buying online and using either the delivery at-home or click-and-collect model. Do I think it completely supplants in-person shopping? Probably not. But I think it will continue to grow. I think this will be among the stickiest habits that we get out of the pandemic as people learned how efficient this was for them.
Was SpartanNash positioned well for this new market dynamic, or did it have to move with relative urgency to catch up?
We started four years ago with our own online model (called Fast Lane). We’ve been growing sure and steady since then. We had a big spike during the pandemic, and that gave us the idea of accelerating this project as well as thinking about what are some things that will make a real difference to people as they shop online. We believe that our stores, in their communities, distinguish themselves with personal touch. We wanted our online model to represent that, as well. There are plenty of online models that don’t offer that. We wanted to actually have this as a distinguishing attribute for our offering.
SpartanNash has supplied Amazon’s grocery service since 2016. Last year, you signed a commercial agreement that granted Amazon the option to buy 12.5 percent of the company. Was the location of the fulfillment center — just down the road from Amazon’s fulfillment center — in any way related?
Nope, we just needed a great place in the greater Grand Rapids area to serve our customers.
Are you starting to increase the volume that you’re supplying to Amazon as part of the commercial deal?
The Amazon growth has been terrific. We’ve had a relationship with them now for a couple of years. We signed a more thorough contract with them almost a year ago and we continue to grow with them as they grow their model.
Starting as CEO in such a crucial industry during the pandemic seems like a difficult task. As you approach a year into your position, how has it gone?
First of all, it’s been a terrific experience. The people at SpartanNash have been warm and wonderful, as have the people in this part of Michigan. It’s been a great experience moving here. Starting up as a CEO during the pandemic is tough. Part of what I do is I want to meet people and have personal interactions and small group communication. All of that stuff was not really doable. You could do it in two dimensions on a Microsoft Teams call, but it’s not quite the same. I had to pivot with what’s important to my style, and that general pivot was to get out. I got out and spent a lot of time in our stores and distribution centers and did it that way since our headquarters was working more remotely.
You have brought on several new faces to the executive team, including a new chief financial officer and chief supply chain officer. Why was this needed, and what were you looking for in candidates for these posts?
It’s really just thinking through what the company will need as it moves into its future and what kind of skills we’ll need across the entire organization. It was time for us to think about that and bring on some folks who we thought could help us in that journey.
Some of those additions came from Borden Dairy Co., where you last served as CEO, including new CFO Jason Monaco. What sort of benefit comes with working with familiar faces?
Well it’s an advantage to work with people that have great skill. So I had a chance to do that in my last couple of companies. I meet and encounter them, and say, ‘I want to work with them again.’