Markets’ new owners aware of social media criticism, say change is never easy

Published 6:44 pm Wednesday, April 12, 2023

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NATCHEZ — The chairman and CEO of Harps Food Stores told Natchez Rotarians he is well aware of social media criticism since his company purchased The Markets supermarkets from long-time owner, the Loy family of Natchez.

“Change is hard, and change is hard for everybody,” said Kim Eskew, who has worked for Harps Food since 1977 when he moved to Springdale, Arkansas, from his hometown of Piggott, Arkansas, to attend the University of Arkansas, located less than 10 miles from Springdale in Fayetteville,.

Eskew and his wife, Karen, were guests of The Rotary Club of Natchez at its weekly luncheon meeting at The Carriage House on Wednesday.

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“Our efforts were to keep as much of what they (the Loys) did intact as we could. And we have tried to do that, but one of the things that did change was the warehouse where we buy our groceries from,” Eskew said.

The Markets previously purchased its grocery supply from Associated Grocers of Baton Rouge. Harps Food Stores purchases its products from Associated Wholesale Grocers, which has a warehouse in Pearl River,  just north of New Orleans.

“Because we changed warehouses, we have a different private label in the stores. And there are probably some different products at the Baton Rouge warehouse that are not available in Pearl River,” Eskew said. “So some changes took place.

“We kind of get set in our ways and get used to the products we purchase in the store. I know on social media we have caught some negative comments. You guys may not have known that, but I know it and we’ve heard it. This is not unknown to us because we’ve heard it all before. It almost happens every single time we do this (purchase new stores).”

Eskew said the most common social media criticism is about prices when his company purchases new stores.

“The most often heard comment is ‘you all raised the prices.’ That’s the number one comment we hear no matter where we’ve done this at and we’ve done it at a lot of places. I think, also, we just happened to make this purchase when we are going through the highest inflation we’ve seen since 1979,” he said. “I was looking at some ACNielsen numbers and right now, all grocers across the country, if you compare them to a year ago, prices are up about 11 percent today.”

He said prices would have increased regardless of which company was operating the stores.

“Milk is up. Eggs at one time were up almost three times their cost,” he said. “It’s easy to say ‘those guys bought those stores and they’ve not got to pay for them so they are raising prices.’ So, we’ve gotten hammered pretty good on price.

“The thing is, the first eight weeks, we did the best we could, knowing this normally happens, to match all the prices they (Loys) had in place before we purchased the store. That’s how we opened. We had the same price the Loys had on every single item and froze prices for the next two months. We just ate the increased prices. We know we have to weather that criticism.”

Harps Food Stores’ history

Eskew said when he became aware the Loys were selling their stores, he and his wife, Karen, visited cities where The Markets operated stores, and did so without telling others why they were visiting.

“Everybody was so nice to us. As many of us have made the trip down here to get these stores off the ground, everyone has come back and commented about how friendly everybody has been to them. You really stand out as being extraordinarily friendly, and welcoming and we certainly noticed that from the very beginning,” he said.

Harps Food Stores started as a family-owned business in 1930 when a couple moved to Springdale from California. They had some money and they invested it and opened a little grocery store called Harps Cash Grocery, Eskew said.

“They operated one grocery store for a very long time, probably close to 30 years.”

In 1953, the Harps’ oldest son, Don, came back from serving in the Army and went to work at the store, as did brothers Gerald and Reland, all three now deceased.

By 1977, when Eskew joined Harps Food, the company had 11 stores.

Harps remained a family-owned business until 2001.

When the Harps family put the company up for sale, it had an offer from a Bowling Green, Kentucky, company that was employee-owned, known as an ESOP — an Employee Stock Ownership Plan. The Harp family and that company were unable to come to terms, but an idea was hatched, Eskew said.

“What if we sell the company to our employees? I’ll be honest with you. I didn’t even know what an ESOP was. And an ESOP is fairly complicated. Essentially, we borrowed all the money we could borrow from the banks. Then, we had to borrow some money from our warehouse. Then, we had to borrow some money from the Harp family in order to do this deal. In short, we could not have borrowed another nickel if we had had to,” he said. “When you are under that kind of debt load, you better be successful because you don’t have much margin for error.”

Eskew said the first few years were stressful ones.

“You go back to 2001, our neighbor and friend, Walmart — and their office is just 17 miles up the road from our office — was building supercenters and neighborhood markets. At the same time we were taking on all this debt, we were getting this competitor into our markets. And unlike lots of markets, in that area, Walmart is hometown. Sometimes in other areas, Walmart gets knocked because they don’t contribute or give to a lot of local organizations and so forth. But where I’m from, they give an incredible sum of money,” he said. “My point being, the Walton family is really, really generous where we are doing business. They are really popular, so competing with them in that arena is tough.”

Harps, as an employee-owned company did succeed.

“The good Lord has blessed us because we managed to take care of that debt and pay down that debt. And we were also slowly able to grow. We get valuated every year and our initial stock price was $27.90 a share. Today, our stock is valued at $1,419 a share.”

Eskew told the story of a cashier who has been working for the company since before it became employee-owned.

“That cashier has $551,000 worth of Harp stock today that we have given to her over time … We have a store manager who has been with us the entire time who has about $1.5 million in Harp stock. So, for our employees, something we weren’t sure was going to be a good thing, has been an incredibly good thing,” he said. “We are having folks leave our company today with hundreds of thousands of dollars and some with even millions of dollars because of the success we have been able to enjoy at Harps. Employees who have been with us since 2001 have 20 times their annual pay in stock with the company. Most of us would feel pretty good if we have 20 times our annual pay waiting for us when we retire.”

COVID was good for grocers

“In the last few years with COVID, we have all seen a lot of change. While not all that change has been good … for grocers, COVID was like a godsend,” Eskew said.

Restaurants closed and people began preparing meals and eating them at home.

“And every meal that is consumed at home, rather than outside the home, is a win if you are selling the ingredients to make that meal at home. That’s what we do, so COVID was an incredibly good time for grocers.

“Today, we are all wondering what post COVID looks like. We gained a lot of sales during COVID and what if everybody starts eating out again and at the same level they did pre-COVID? What’s going to happen to our sales. That might cause some people to decide to sell their stores, and even the Loys, as they were considering what to do, they were probably thinking this is the best it’s ever been. Really, our company is worth more today than it has ever been worth, and we don’t know five years from not if that will be true or not. So if we are selling our store, we probably need to do it now,” Eskew said.

Because of that, companies like Harp have had great opportunity to grow.

“We are trying to buy those independents when they sell out,” he said. “They really want to make sure whoever buys their stores are going to take care of their people. I like to think because we are an ESOP, in effect, it’s almost like you’re selling to your employees because they are going to become owners now and we have a good reputation of taking care of folks who come to work for us.

“We are wonderfully happy to have bought these stores and to be in your community. We have enjoyed our time here. The employees have been great and the reception has been warm,” Eskew said.