After closing four supermarkets in recent months, Tidymans LLC plans to build three stores in the Spokane-Coeur dAlene market in the next three years while remodeling six or seven others. The plan is part of a multistep rebuilding process that includes improvements in many aspects of the business, President and CEO Mike Davis says.


The Spokane-based regional grocery chain expects to start work next year on a replacement for its Cedar Road store, which it closed recently and has razed, Davis says. The new store will be at the same location, at 6401 N. Cedar. He says the company also will build two other stores in the Spokane-Coeur dAlene area between 2005 and 2007, although he declines to say where its looking for sites for those two outlets.


Tidymans also intends to begin paying down its debt aggressively.


By the end of this year, we will reduce our debt by 50 percent, Davis says. Over the next three years, we will be in a position to reinvest $15 million in the company and pay off the other 50 percent of our debt. Because of our debt level, we had gone three years without investing in the business. You just cant do that.


The Spokane-based chain had been losing money at stores in Lewiston and Moscow, Idaho, and Miles City, Mont., which it closed recently, Davis says. He says those three money-losing stores were a huge drain on the business, there were no prospects of reversing their poor performance, and because Tidymans owned its buildings in Lewiston and Moscow, it had capital tied up in the structures. It will sell the buildings and redeploy that capital, he says.


The company was hurt financially in May 2003, when it paid a $6.1 million judgment to two former female employees who had brought suit alleging they were passed over for promotion because of sexual discrimination. The payment of the judgment basically redirected funds that would have been used in the business, Davis says. We were not able to pay down debt as much.


A month after the judgment was paid, Davis, who had been with Tidymans since 1984, was named president and CEO, replacing John Maxwell.


Earlier, Tidymans had closed two stores in Wyoming that it had acquired in 1998 from Minneapolis-based Supervalu Inc., which supplies groceries to Tidymans. That was about the same time it also bought eight County Market stores in Montana from Supervalu. Those closures, along with its four recent store closures, have left Tidymans with 17 stores: nine Tidymans outlets, seven County Markets, and a Dissmores IGA in Pullman. It has seven Tidymans outlets in the Spokane-Coeur dAlene area and one each in Missoula and Kalispell, Mont.


As it has closed stores, Tidymans has reduced its payroll, and now has about 1,100 employees, down from a peak of 1,600 in 1999, Davis says.


Among the first things Davis did was to conduct consumer research, hold focus groups with employees and its best shoppers, and meet with key vendors to get a picture of what was right and what was wrong with Tidymans.


The bad news, he says, was that we were not perceived to be outstanding in any aspect of the industry. The good news was none of our competitors was perceived as outstanding, either.


In 1991, the company had increased its emphasis on fresh foods and launched a Northwest Fresh Market branding campaign. Davis asserts that those steps had put it head and shoulders above the competition as a seller of fresh foods, but Tidymans had let that reputation slip.


Similarly, he says, Our history was built on a pride of ownership and a feeling that each employee could make a difference, and that feeling had been lost.


Also, the chains lack of capital investment in new stores or in updating its outlets was hurting Tidymans, he says.


We have gone in the last five years from having some of the most modern square footage to having some of the most dated, Davis says.


To combat its eroding image as a purveyor of fresh items, Tidymans unveiled changes in its meat departments in May, telling customers it no longer would carry meats that contain additives. Also, it began stocking only higher-end Angus beef, pork, and chicken, Davis says.


Today, most retailers sell chicken that has additives of as much as 15 percent of the weight of the meat, and pork that includes as much as 12 percent additives, Davis says. Theres one retailer that sells beef that has 18 percent additives.


On Sept. 22, the company will introduce a series of changes in its produce department, Davis says.


Davis and the chains perishables and produce supervisors have been meeting via conference calls with Supervalu staff members three times a week and also have talked with the produce managers in Tidymans stores to work on a myriad of points.


The effort has ironed out differences between Tidymans own employees and Supervalu staff members, Davis says.


Theyre the largest wholesaler in the country and one of the largest retailers, Davis says of Supervalu. We should take advantage of (the knowledge of) their people.


Changes in the chains bakery and deli departments will be next, Davis says. When youre competing against the big guys, the way you can position yourself is you can focus on perishables and good service, he says.


The company already has worked to improve customer service by holding total store employee meetings, telling employees not to be afraid to make a decision at the point of contact when a customer voices a concern, Davis says.


In the companys consumer research, we were perceived as being a little more friendly than our competitors, but we were perceived as being a little less helpful, Davis says.


Now, the company is recognizing store employees who go the extra mile to provide good serviceand it monitors the performance of its stores and staff by employing mystery shoppers who shop its stores once a week.


Meanwhile, Davis says, Tidymans soon will revamp its customer rewards program so that customers wont have to use customer cards to take advantage of low prices on certain items every day.


Cutting corporate staff


The company also has made some significant reductions in our corporate office staff, Davis says. Were now at 33 people; our peak was 52. The reductions were called for as the company reduced its size and sought to use the expertise of Supervalus people more fully, he says.


While Tidymans is working to confront the issues that have plagued it in recent years, the rest of the grocery industryalways fiercely competitivehas continued to grow in the companys markets, Davis says.


In the last five years, not counting Wal-Marts, in our combined market areas we have had more square footage added than we operated, Davis says.


That has placed urgency on the companys efforts to sharpen its edge, and Davis says that Tidymans plans to remodel six to seven stores in the next three years will ensure that all of its outlets will have been updated within the industry standard of seven to 10 years.


Those remodelings and the three new stores Tidymans plans to build will show employees that this is a place to have a career, Davis says. For our customers, it shows were back in the game.


He says the company will fund its capital-investment program partially with $2 million in cash that it amassed by liquidating the inventory at the four outlets it closed recently. It was able to save an additional $800,000 by moving equipment from those outlets to stores where equipment needed to be upgraded. It will raise additional funds by selling the land and buildings that the Lewiston and Moscow stores had occupied, and it will obtain the rest from operations.


Its possible that opening outlets of Supervalus smaller, low-priced Save-A-Lot stores, could be our next growth area, somewhere in the Northwest, although Tidymans has no concrete plans to open Save-A-Lot stores, Davis says. Tidymans also could seek to open its own type of supermarket in areas of Oregon, Colorado, Utah, or the Dakotas that are served by Supervalu, he says. Because the industry changes so rapidly, however, Tidymans isnt making plans beyond its current three-year capital-spending plan in concrete terms, Davis says.