During a 73-year period, Stater Bros. Markets has evolved from a single store in Yucaipa to one of the most prominent grocery chains in Southern California.
With 166 supermarkets, 19,000 employees and status as a Fortune 500 company, few would argue the corporation is one of the great local success stories.
“They’ve always been very strong,” said Dave Heylen, vice president of communications for the California Grocers Association, a group that lobbies for legislation that supports the grocery industry. “They seem to really hone in on the basics – a traditional grocery store offering a wide variety of products.”
Although the Inland Empire has been the birthplace of some of the biggest players in the food industry, including fast-food titans McDonalds and Taco Bell, Stater Bros. is one locally-born giant that’s never ventured outside its home base.
Carole Christianson, executive vice president for the Western Association of Food Chains, an organization that supports food industry education programs and produces a yearly convention, says the company’s local success is in great part due to its entrenchment in the Inland Empire years ahead of competitors.
“They are grounded with their roots in the `Heartland of Southern California,’ ” Christianson said. “The Stater Bros. `family’ of employees is not just a saying, it is true from top down, bottom up.”
The beginning
The company’s roots can be traced back to August 1936, when twin brothers Cleo and Leo Stater opened their first market on West Yucaipa Boulevard.
Using a family approach to business, which included inviting their younger brother Lavoy into the fray, the Staters expanded to 12 locations by the 1950s, according to historical information on the company’s Web site.
The first market outside of San Bernardino County opened in 1948 on Mission Boulevard in the unincorporated Riverside County community of Rubidoux, said Jack H. Brown, chairman and CEO of Stater Bros.
During the 1950s the company expanded to 23 markets and opened its first location in Los Angeles County. The trend of branching off to other counties continued in the 1960s when the first Orange County location opened.
In 1968, the Stater family sold their interests in the company to Petrolane Inc., a conglomerate that at the time was the world’s largest manufacturer of propane, Brown said.
In 1981, Petrolane recruited Brown as Stater Bros. new president and CEO, a pivotal move in the company’s history.
“Jack Brown is really widely recognized as one of the top executives in the supermarket industry,” said Mark Hamstra, retail editor of Supermarket News, a New York City-based weekly trade publication that focuses on the retail food industry. “He’s considered one the smart strategists in terms of the industry.”
The Brown era
After taking the reigns as the company’s top executive, Brown embraced his local ties in the Inland Empire.
Brown, 69, grew up in San Bernardino and his first foray in supermarkets came at age 13 when he landed a job as a box boy at Berk’s Market Spot.
In the 1980s, Brown expanded the company’s advertising campaigns to include television commercials.
Infused with patriotism and a proclamation that the Inland Empire is California’s heartland, the ads proved to appeal to a blue collar demographic and set Stater Bros. apart from national competitors such as Kroger, which owns Ralphs and Food-4-Less, Albertsons and Vons, Brown said.
During the decade three catchy jingles – “American Tradition,” “American Dream” and “Spirit of the Heartland” – that are still used in ads today were penned by the company’s now-retired advertising vice president Jerry Bee.
“Basically, what we tell people is, `we’re working folks too and we’re working to make your food dollar stretch as far as it can,” Brown said.
The strike
In late-2003, Southern California members of the United Food and Commercial Workers Union voted to strike against Vons, Ralphs and Albertsons after being told a new contract with the union would reduce or eliminate certain employee benefits.
Brown says Stater Bros. status as a private corporation allowed it to keep benefits the same, so its employees didn’t strike.
Since Vons, Albertsons and Ralphs are all publicly traded companies, they’re susceptible to Wall Street pressure to post profit gains, Brown said. This likely played a role in the decision to cut employee benefits, which would reduce costs and allow stocks to go up, Brown said.
“Because we’re a private company and we don’t have any rich uncles, I said, `we aren’t going to participate in the strike,’ ” Brown said.
The strike lasted for months and during the period many shoppers elected not to cross picket lines and instead took their business elsewhere.
Industry analysts say this was a period when Stater Bros. gained ground on the national competition and solidified its spot as a leader in the Southern California grocery game.
“I think that was their knock on the door for everything else,” said Bob Vosburgh, group editor of Supermarket News. “They really made inroads there.”
During the strike, Stater Bros. customer counts went up 50 percent, Brown said. The company estimates they retained about 15 percent of that 50 percent once the strike was over, Brown said.
New headquarters
In 2007 Stater Bros. opened its new corporate headquarters and 2.1 million-square-foot distribution center at the site of the former Norton Air Force Base in San Bernardino.
The company had been headquartered in Colton, with 11 distribution facilities, at eight locations, in four cities, the Web site says.
Brown said the move was predicated on the location’s proximity to thoroughfares such as the 10, 210, 215 and 60 freeways.
“Logistically, it’s the best location in Southern California,” Brown said. “From that standpoint, that gives us a strategic advantage that no other chain has in Southern California.”
From the distribution center, the average haul to any store is about 41 miles, a distance Brown says is the shortest haul in the industry.
Less time on the road saves on fuel costs, the number of trucks on the road and their drivers, and gets merchandise to the store more quickly, Brown said.
All of these benefits result in savings that are passed on to the customer, Brown said.
The recession
In a response to the slumping economy, Stater Bros. cut the prices of about 4,000 items in January to ease the strain on customers who may have lost their jobs or were hit with pay cuts, Brown said.
In June, numbers were delivered showing the moved added about 1.9 million customers over the six-month period, Brown said.
“When we saw that trend I ordered another 6,000 prices cut, and that’s where we are today and our customer counts are ever higher,” Brown said.
Hamstra says he believes the company’s commitment to lower prices and customer service is on the the reasons it’s out lasted other chains that have tried to gain market share in Southern California.
“Their aggressive position on pricing has really helped them survive through the years,” Hamstra said. “I think Stater Bros. has always relied on a consistently low price scheme, where they make their profits through selling a high volume of product.”
Brown attributes the company’s success to one overriding factor: Stater Bros. employees and their commitment to the customer.
“There have been 20 major chains leave (Southern) California, or sell or merge during the history of Stater Bros.,” Brown said. The supermarket bone yard is filled with chains that forgot that the customers is No. 1.
“But it’s especially our people, they cannot match our people. When you go into our stores you will see the nearest, cleanest professional of any store in Southern California. It’s kind of a secret weapon. The quality of the Stater Bros family member is the secret to our success.”
