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Season of change

11/16/2015

UNC Business magazine - Southern Season: Season of Change - UNC Kenan-Flagler Business SchoolExpansion has always been in the cards for Southern Season. Founder Michael Barefoot began the company as a small coffee roastery – the original location was just 800 square feet – in 1975.

A few years later, it moved to a slightly larger location, shifted its focus to gourmet food retailing and opened a small restaurant. In 2003, the company moved to its current location. With nearly 60,000 square feet, the flagship location is not only one of the largest specialty food stores in the United States – it’s also a triple-threat, with a gourmet marketplace, full-service restaurant and cooking school under one roof.

Along the way, Southern Season became a Chapel Hill institution. The culinary mecca built a loyal customer base and a reputation for celebrating local ingredients and carrying products sourced from small businesses, vendors and farms across North Carolina.

“Southern Season was built around the idea that new food items, products and trends in the way people integrate food into their lives are coming out every day – and we are, hands down, the best at bringing those new brands into our store,” says Brian Fauver (BSBA ’04, MBA ’11), chief financial officer at Southern Season. “We are fighting the good fight for the small, innovative food companies out there. We are their first shot at a big customer base – we put them on shelves alongside more established food companies. That’s why a lot of people come to the store.”

So when Barefoot sold Southern Season to a Carrboro-based private equity group in 2011, its leadership faced a challenge: protecting the company’s unique brand and sustaining its commitment to the community while finding ways to scale the business and attract new customer demographics in new markets to produce the kinds of financial returns its private equity owners expect.

New locations were already in the works – Southern Season opened its second store in Charleston, S.C., in 2013, and a third in Richmond, Va., in 2014. It plans to open eight additional locations across the Southeast in the coming years, making it imperative to maximize efficiency, streamline processes and implement sustainable business practices to drive increased revenue in existing locations and support future growth.

The company turned to UNC Kenan-Flagler for help, signing on as a client in Pat Garner’s “Consulting for the Entrepreneurial Firm” class. Developed by Garner – who spent decades in the trenches of corporate America helping brands such as Coca-Cola grow – and entrepreneurship professor Patrick Vernon (MBA ’03), the class gives undergrads a chance to tackle real-world business problems for clients. With guidance from expert coaches and guest mentors, students perform in-depth research and analysis, present their findings and make recommendations for strategic and sustainable business solutions to the client.

Since its inception, over 60 companies – Burt’s Bees and Roote NC among them – have signed on as clients for Garner and Vernon’s classes. Dave Herman, president and chief operating officer of Southern Season, wasn’t sure what to expect from the experience.

“I joined the company in April, so I was new on the job,” says Herman, a veteran retail executive. “I didn’t know what to expect.”

Neither did the students. As undergrads in the early stages of their formal business education, most had never taken on such a complex and rigorous task – let alone had to learn the skills needed to complete their work in real-time. And that’s by design. The immersive course intentionally pushes students out of their comfort zones and requires them to figure out how to navigate each step of the process, from research and analysis to reporting.

“It’s not the usual textbook problem where all of the data and info is given to you,” says Paul Piscitelli (BSBA ’16).

Students broke into three teams, each assigned to analyze one of Southern Season’s core business units: its gourmet marketplace, restaurant and cooking school.

“The scope of work was about creating synergy across the three silos, as Dave described them,” says Garner. “Ideally, strategy drives a company’s structure – but the structure of Southern Season has driven the strategy for years.”

Each team set out to answer the same key question: How could Southern Season create true synergy across its business components to maximize operational efficiency and revenue growth?

After interviewing employees, conducting exit surveys with customers, analyzing sales data and digging into research on customer demographics, marketing trends, technology and more, the teams compiled strategic recommendations in three areas.

UNC Business magazine - Southern Season: Season of Change - UNC Kenan-Flagler Business SchoolCross-selling to drive synergy and revenue

One of the biggest challenges for companies with multiple business units is creating synergy – as opposed to operating in silos – which is critical for maximizing revenue.

At Southern Season, this could mean offering restaurant customers a coupon for the marketplace to purchase a bottle of the wine they enjoyed with dinner. Or if a customer purchases flowers for a wedding, an employee might suggest the restaurant as a location for the rehearsal dinner or cooking classes for a bachelorette gathering.

Identifying ways to drive customer engagement and spending across multiple aspects of a business is an easy way for companies to maximize revenue.

Serving up brand stories

Consumer engagement is paramount to the success of businesses like Southern Season. One of the best ways to engage customers is by creating an emotional connection through storytelling. As the old saying goes, behind every great business is a great story. And at Southern Season, a business built on culture, there’s not just a great story – there are multitudes.

Students saw an opportunity to spotlight one of the company’s greatest attributes – its commitment to supporting the local community – through digital storytelling to help customers form connections to the many small-scale, local producers whose products line the market’s shelves.

For proof of concept, a student team produced a video featuring Pam Runyans, a baker whose story is sweet as pie. With her three children – Abigail, Bob and Camille – all serving in the military, Runyans began making pies to help ease her nerves during deployments. Her hobby soon blossomed into a business and ABC Pie Company – the “ABC” is a nod to her children – was formed.

Students presented the video on their iPads in-store while distributing pie samples to customers – and it was a big hit.

“Digital storytelling creates an innovative energy and increases customer loyalty,” says Cole Johnson (BSBA ’16).

And for companies focused on expansion, storytelling can be a valuable tool to reinforce a commitment to the brand’s core values and appease concerns from loyal customers wary of change.

“As humans, we have really good intuition for what’s going on behind the scenes with things,” he says.

Mining millennials for sustainable business ideas

Though each student team focused its research, analysis and recommendations on a different aspect of Southern Season’s business, there was a common message running through each: Millennials matter.

The business world has been buzzing about millennials for years, and companies know that attracting the millennial audience is a must for their businesses to survive long-term – but understanding how to do so is a different story. So for Southern Season, gaining insights and recommendations straight from the source was invaluable.

“The students attacked it from a different perspective,” Herman says.

When courting the most connected generation in history, chances are your first impression will be made online – so when it comes to technology, companies need to be on top of their game. This includes upgrading websites to a responsive design – which provides optimized viewing across all platforms – and ensuring an easy, efficient user experience on mobile devices.

It’s also essential to consider how other technology systems affect the overall customer experience. For restaurants, this could mean equipping servers with tablets connected to the point-of-sale system to transmit orders to the kitchen in real-time, shortening the time customers wait for their food.

Students also noted that while social media provides an effective platform for reaching the millennial audience, companies must view communication as a two-way street. The key is to communicate with consumers, not at them. Millennials are natural collaborators, so inviting them to be part of the conversation is an easy way to not only boost engagement, but also turn customers into brand advocates.

The teams once again underscored the importance of communicating the company’s core values. Millennials, they pointed out, are a generation that cares a lot about the values of the companies they work for and buy from – so emphasizing Southern Season’s commitment to supporting small businesses and farms in the local community could help attract the younger demographic.

UNC Business magazine - Southern Season: Season of Change - UNC Kenan-Flagler Business SchoolA valuable experience

It’s easy to see how clients like Southern Season benefit from partnering with Garner’s class. But for students like Sophia Hilliard-Arce (BSBA ’15), who plans to pursue a career in consulting, the experience was especially impactful.

Herman “treated us like professionals,” she says. “He listened to our recommendations and took them into consideration. He was pushing us to learn.”

And so they did. Over the course of the semester, the students who started out as novices evolved into near-subject matter experts on topics including gross margin return on investment (GMROI) calculations and incremental revenue breakdown, enabling them to draw meaningful conclusions and make data-based recommendations to their client.

The class also greatly benefited from a highly involved client.

“It truly takes a great client to have a good engagement,” says Garner. “Dave committed himself and the resources of Southern Season to provide a challenging and very rewarding action-based learning project.”

In addition to attending multiple Wednesday evening class sessions, Herman met with each of the student teams throughout the semester and even had lunch with some students one-on-one. And though final presentations for the class coincided with Southern Season’s busiest time of the year – the weeks between Thanksgiving and Christmas – Herman says investing his time to work with the teams was worth it.

“This has been an incredible and valuable experience for me and for Southern Season,” he says. “I was so impressed with the students – their energy, their vigor, their questions. And who they are as people is just as impressive.”

At the conclusion of final presentations, Herman addressed the class one last time.

“The last few months, I’ve been the student,” he told the group. “What you do as students just amazes me.”

 

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This article originally appeared in the Spring 2015 issue of UNC Business magazine. Access interactive content and read more by downloading our free app for iPad or Android, or view the full issue on your desktop.