This week on the podcast to wrap up the CEO Series, Matt sits down with Kim Eskew, Chairman & CEO of Harps Food Stores. Kim has been with Harps for 46 years, working his way up from an entry level position as a cashier and stocker to CEO. During the episode they discuss Kim’s journey through the company and how the grocery landscape has shifted over the years, especially in Northwest Arkansas. They also touch on how Kim made the transition from in-store management to corporate marketing and how the company transitioned from a family owned business to employee owned and what that means for employees at Harps.
Kim Eskew 0:01
Because the anticipation is we keep growing, we keep being successful. The value of that ESOP is going to continue to go up, and all of those folks know they're going to benefit from it.
Matt Waller 0:18
Excellence, professionalism, innovation, and collegiality. These are the values the Sam M. Walton College of Business explores in education, business and the lives of people we meet every day, I'm Matt Waller, Dean of the Walton College and welcome to the Be Epic podcast. For the next few episodes, I will share conversations with top CEOs about the future of the workplace. The pandemic has transformed the way that we work, and we discuss their predictions for the future. I have with me today, Kim Eskew, who is chairman and CEO at Harps Foods, Inc. He has been with Harps for 46 years. He started in an entry level position and worked his way up and we're going to talk to him about that. He graduated from the University here in 1980. And he is from a small town in Northeast Arkansas. Kim, thank you for joining me today. I appreciate it.
Kim Eskew 1:21
Well, I'm happy to be with you.
Matt Waller 1:24
Well, Kim, your your story is really interesting. You came from a very small town in Northeast Arkansas. As you said, 280 miles from here, hard miles. And you needed to work to be able to go to school. And you started while you were in school, working for a local grocery store. Would you mind telling us a little bit about that?
Kim Eskew 1:51
I think first of all, I majored in civil engineering because when I was trying to just decide, well, what do I want to do when I grow up? And you know, when you're in high school, I think some people have a much better idea than others on on what kind of career to pursue. And and I'm really struggling with that, frankly, and and you take some aptitude tests and some things to try to help you determine well, what are my strengths? And and I was really strong and in math and science. And so it kind of steered me toward engineering. Now, I didn't know very much about engineering. But I decided well, that's what I'm going to major in because, you know, a lot of things the potential and career opportunities in that field. I thought were really good. So I entered the University of Arkansas majoring in engineering, but I had to get a job. And I had been working at a grocery store in my hometown of Piggott. And so I had some experience and saw that Harps Food Stores had positions open and I interviewed with them. And they they hired me and I started to work.
Matt Waller 3:10
So what were some of your early jobs at Harps?
Kim Eskew 3:15
I was a student and as a student, they called me a checker stocker, but you know, I cleaned bathrooms, mopped, floors, carried out groceries, did basically anything and everything at the store, nearly everyone was my boss. Because, you know, I was at the very lowest level, as far as the employees in the grocery store.
Matt Waller 3:46
What a great place to start where you are seeing the details of how things operate and you learn how to deal with people. And you you deal with all kinds of people in those kinds of jobs. Was coming from a small town, Piggott, I'm sure you got exposed to things you had never been exposed to before working at Harps.
Kim Eskew 4:11
Well at the time I left Piggott, I think our population was just under 3000 people. I graduated in a class of 73. And coming to Northwest Arkansas even then seemed like oh this is a big place. And you know, you go back to 1977, Northwest Arkansas was a lot smaller than it is today. Springdale I want to say had maybe 16,000 people something like that and I guess we're close to 90,000 today so it didn't look nearly as large as it does today. But it looked really big to me and and I had worked in a supermarket that was about 6,000 square feet in Piggott, and the one I worked at in Springdale was 25,000 square feet. So it it was four times the size and was much busier. And so it was vastly different. But the basics, you know, where the saying, my nature has been pretty much to enjoy every job I've ever done, it seems like there's been an occasional boss that I didn't enjoy. But for the most part, I've always enjoyed working, and I enjoyed working for Harps and, and that's the thing that really caused me to begin to consider it as a possible career.
Matt Waller 5:45
That experience that you had early on and enjoying your work is so critical, because if you enjoy your work, you actually do better at it than if you don't enjoy it. But I also think to your point, you've had good bad bosses and bad bosses we all have if we've worked for a while. And the good thing about having bad bosses is you can learn from them, what not to do. You know, so tell me, then once you graduated, what did you start doing at Harps?
Kim Eskew 6:20
I just started filling a role as an assistant manager at our store here in Springdale at that time, but was angling to be the number two person in a store for us, we call the grocery manager, and that person is responsible for all of what we consider the grocery department to be in the store, which is everything excluding like meat, produce, and bakery deli. So all of the center store, it falls under the responsibility to grocery manager, and I was looking to get promoted to that position. And shortly after I graduated, that did happen and, and I got promoted to the position of grocery manager in our store in Mountain Home, Arkansas, which was one of our busiest stores, you know, at that time. So so that was a great opportunity for me.
Matt Waller 7:11
So being grocery manager in your number one store, that must have been a vote of confidence early on that you were performing well.
Kim Eskew 7:22
I think it was. And you know, and it was really challenging. I tell our folks back then this was, this was pre Walmart, in the grocery world. And so the sales that we were doing in those days, if you translated it into today's dollars was much greater than a typical grocery store will do today. And in terms of sales per square foot. So the the amount of groceries that we checked out and processed through that store, for the most part is much greater than we do through a store today. But it was, I think, a vote of confidence. I haven't made any money in my life at all at that time. And so, so it seemed like and when I when I decided to become a go into the grocery business. You know, I come from a I would say, a desperately poor family, my dad, for most of my dad's life, worked two jobs. And I can really say he worked three jobs. But he worked. He worked at a at a shoe factory in Piggott called the brown shoe company. And then he also worked for a nursery in Piggott called the Piggott nursery. And he would go there after he got off work at the factory and work till dark. And and then he also was the custodian in our church. And even having done all that we were still really poor. So when when I looked at at what I anticipated that you could make as a store manager for Harps, that was four times more money than my dad had ever made working three jobs. Some folks might have looked at that said, well, that's not paying that great. I looked at it and thought, I don't know what I'm going to do with all this money.
Matt Waller 9:22
That is great. So how long did you stay at that store? In Mountain Home? Was it?
Kim Eskew 9:30
Yeah, Mountain Home Arkansas, stayed there for two years. And then we purchased there were there were two Kroger stores in Fort Smith. And we bought those two Kroger stores. And I got chosen to be one of the managers in one of those locations.
Matt Waller 9:49
What year would that have been? Roughly?
Kim Eskew 9:52
That was 1982.
Matt Waller 9:54
82. So but you had had some experience while you were working while you were going to school, and then after school with Harps. So did you see a lot of differences in how they operated, how they merchandise product, et cetera, et cetera at the Kroger store you took over?
Kim Eskew 10:15
No, I didn't see a lot of differences that, you know, the stores in those days were not nearly as elaborate as they are today. I mean, they were basic stores with generally, you know, you had center store, and then you had a meat department, a produce department and a bakery deli. And virtually everybody had the same departments. And Kroger was was very similar to that.
Matt Waller 10:40
Was turnover like it is today? Or was it lower back then?
Kim Eskew 10:45
It was much lower back then. And, you know, if you looked at an application then and that person had taken a different job every two or three years, you would have thought I'm not going to hire that person, they're not going to be around very long. Today, it seems that changing jobs every two or three years that that person, well, gosh, they hang around for a long time, it is a radical difference today. In those days, that was a real negative, if you change jobs every two or three years.
Matt Waller 11:21
All of a sudden, being in charge of the entire store. Were there any surprises for you, or challenges in running the store?
Kim Eskew 11:31
There were always surprises, probably the biggest surprise to me was the amount of theft both from customers and from employees, you know, in, in our business, it's really the employees that typically will get gets you for the most money. You know, the shoplifting that takes place is significant. But it's usually a small amounts at a time. If you get employees stealing from you, they can get you for big, big dollars. And, and it's much more difficult often to detect them.
Matt Waller 12:13
Yeah, shrink is a big problem.
Kim Eskew 12:16
It's a huge problem.
Matt Waller 12:17
Was it, is it bigger today than it was then? Or is it about the same?
Kim Eskew 12:21
I believe it's larger today. You know, it's, we try we're on retail accounting in our stores. And so we tried to account in definable quantities, what our shrink is in many different areas, so that we know what that is and so the, the when we inventory our stores, and we do about three inventories a year in a store, you know, that helps us to zero in on the unknown loss that's taking place and sometimes can alert us to some real problems that we have in the store, if that is, is continual. If we do a couple of inventories, and they continue to show a lot of shrink, then we know we have some sort of theft issue.
Matt Waller 13:11
How long did you manage that store?
Kim Eskew 13:13
In total, I was there for four years.
Matt Waller 13:17
And what what did you do after that? What was your next step?
Kim Eskew 13:21
In mountain home we purchased, Walmart, moved out of their old store in Mountain Home and built a new store. And we were on the parking lot at that time of the Walmart. So we're back in those days, it was a good thing to marry a grocery store with a Walmart. And of course, Sam Walton later thought, well, that would be a good thing to have under the same roof. But we purchased that building and actually moved our our business then into the old Walmart store. And, and then I became the manager of that location, which at the time was it was our largest store. That store was 63,000 square feet. And we had around 200 employees in that store. And it was it was our best store.
Matt Waller 14:18
And how long did you run that store?
Kim Eskew 14:21
For about four years.
Matt Waller 14:24
And what was your next move after that?
Kim Eskew 14:26
I became a district manager. We were family owned at the time and we had just purchased five additional stores in Oklahoma. And Gerald Harp, who was vice president of operations and one of the owners of the company decided that he couldn't cover all of the stores himself. And so he decided to have a couple of district managers to help with store supervision.
Matt Waller 14:58
And how long did you do that?
Kim Eskew 15:01
for four years
Matt Waller 15:04
Moving from managing a store to managing the district, was that a big jump for you? Or was that not a problem?
Kim Eskew 15:13
It was a jump in that when I managed the store at the at the end of the day, you kind of could go home and know that, hey, everything's good. Or if you had problems, you knew where the problems were, if you had a personnel issue, you knew where the personnel issue was, if you're trying to do that, for 12, or 14, or 16, stores, you never go home thinking, I know how everything is going everywhere. I don't know where my problems are for certain. And there's never a day when you go home, and everything is just exactly the way it should be. You feel a little lack of control, when you have multiple locations that you're trying to supervise.
Matt Waller 16:06
And was it hard to, you know, manage the managers? In other words, were you spending a lot of time mentoring them, training them?
Kim Eskew 16:18
I was. And, you know, the biggest thing is, is for folks to kind of accept responsibility and accountability for what we've entrusted them with. And I always tell folks that when we allow ourselves to make excuses, then sometimes we're accepting failure. And, and I said, the trick really is bad things happen, a new competitor comes to town, you lose your number two person that was great. And now my job is a lot more different, stuff happens, you know, and the thing we can't allow ourselves to do is to use that as an excuse, to not hit our goals to not hit our budgets, we've got to find a way to be innovative in order to still be successful, even when bad things happen.
Matt Waller 17:15
And so what was your next move after that?
Kim Eskew 17:19
From district manager, I became the director of marketing for Harps. And I, having spent my whole career really in operations felt like, even by my measurement, that seems a stretch. And I don't think I don't think I was the first choice for the job. We we employed a national search firm, to find talent in order to fill that position. And as I had made known that I was interested as well, I would see these folks come in, and they would be interviewed and, and I would hear well, this guy is doing that job for Winn Dixie or for this, and I would think, oh, man, they're a lot better choice than I am. And so I kind of had low hope that I would be chosen for the position. And I really think I ended up getting the position after another person had turned it down. Maybe they couldn't come to terms. But no matter how I got the position, I thought, well, now it's up to me what I do with it. And then it's one of those feelings you get, you're really happy that you got the job. And now you're thinking, how in the world am I going to do this job?
Matt Waller 18:42
That is a big change from operations in many, many ways. What did marketing entail?
Kim Eskew 18:52
It was, I was responsible for advertising, which was which was largely newspaper and a little bit of television. And, and some radio. I was also responsible for merchandising, which has to do with how every store is set up, the position of every item on the shelf, really everything the customer comes in contact with when they walk into the store, product wise, I was responsible for.
Matt Waller 19:22
So you were over really marketing and merchandising.
Kim Eskew 19:26
Matt Waller 19:26
Kim Eskew 19:28
Matt Waller 19:28
Okay. That that's a lot of responsibility. Did you feel like your experience in operations informed a lot of your decision making and planning and strategy?
Kim Eskew 19:41
It did. And, you know, when you're a store manager, you think you know a lot more than you know, but you look at it from a certain perspective. And then when you're the guy making the decision, you know, it's easy for the store manager to be critical of the ads, to be critical of the pricing to even be pretty critical of product selection. And then suddenly, you're the person that's, that's making those decisions. And you see, it's not always as clear cut as maybe the store manager thinks it is. And I was blessed that, you know, we had an advertising manager who had had that job for probably 25 years or more at that time. And we had a gentleman that was responsible for the grocery pricing and merchandising that had had that job for a very long time. And so now you got this hotshot college kid that comes in. And and these were all guys that had grown up in the business, but had not been to college. And now you have this young guy that comes in, and I just told them, I said, look, I'm gonna have to learn this from you guys, as we go along. So bear with me. And they really carried me early on in that job.
Matt Waller 21:11
So, boy, it's so important to have mentors, isn't it?
Kim Eskew 21:15
Matt Waller 21:16
So let me guess, you stayed in that job for four years?
Kim Eskew 21:20
You know, I'm less. I think it was longer than four years,
Matt Waller 21:25
I was just guessing.
Kim Eskew 21:26
I moved from director to vice president of marketing. And I held those positions, man it may have been eight years or more that I held that position.
Matt Waller 21:39
And what was the difference in your responsibility when going from director to Vice President?
Kim Eskew 21:45
Really, there was not a difference. It was just a title change.
Matt Waller 21:50
During this time, up until you became vice president of merchandising and marketing, how much had Harps grown since you started when you were a student?
Kim Eskew 22:02
You know, in those early years, we hadn't grown a great deal. You know, most of the growth at that time was organic, we were building stores, and we didn't have much turnover in store managers. And and maybe we add a store every two or three years. You're you really know when that store comes up, you want to get it because it might be a couple of years before the next one comes up. So so there was not real rapid growth during that time.
Matt Waller 22:36
So after being vice president of merchandising and marketing, what was your next role?
Kim Eskew 22:42
I became executive vice president in 2001. Gerald Harp, who was the last surviving family member of the brothers, there were three brothers there was of the our founder, Harvard Harp started Harps in 1930, and he had three sons, Don Harp, Reland Harp, and Gerald Harp. And those sons when Harvard died in a car accident in 68, you know, the responsibility for the meaning the CEO fell to his oldest son, Don Harp. And Don, stayed in that position til 1995. And then he retired and Gerald Harp then became the the president and CEO. And then in 2001, Gerald decided he was ready to retire and put the company up for sale. It almost sold to a company called Houchins industries, which is located in Bowling Green, Kentucky, but they weren't able to reach a deal. And Houchins happened to be an employee owned company. And so the possibility of selling the Harps company to the employees became what was considered. And that's what Gerald Harp decided to do. And in 2001, we became an ESOP. And Roger Collins became our new CEO and Gerald left the company. And Roger promoted me to executive VP with really, at that time, I was really responsible for running the company. I was over operations and merchandising and marketing at that time. And so it was a we no longer were family owned, so we no longer had a person that we would have to go to, in order to get the blessing to do whatever we wanted to do. And now it was it was on us in order to I try to make the company successful. And if you're familiar with ESOPs, you know, the nature of that is, you go out, and you have to borrow a bunch of money in order to buy the family out, which usually means we had as much debt as we could possibly take on. So we were very highly leveraged, which just increases the pressure all the more when you're trying to grow a company and manage a company. And at the same time, because this happened in 2001, Walmart is building super centers and neighborhood markets at a at a pretty rapid pace. So we've got new competition that's really formidable coming in into our markets on a pretty regular basis. So so those early years as an ESOP, were really scary at times.
Matt Waller 25:55
How from your perspective, over operations, merchandising, marketing, how did the change in ownership structure affect you?
Kim Eskew 26:07
Well, I felt like the decisions I made, were really the decisions that were going to go forward. And I was really setting the strategy for what we were doing on pricing advertising and everything there was there was no higher power that had to agree to it. You know, it was, it was pretty much now we did have an executive committee, and it was a collaborative environment. And I was by no means doing this alone. But it felt like there was really a small group of us that are resetting the direction of the company.
Matt Waller 26:47
So what was your next role after that?
Kim Eskew 26:52
Well, a little later. So well, several years later, I was promoted to President with with really not a responsibility change. And then in, in 2016, I became CEO.
Matt Waller 27:09
Was, I suppose with all of your experience, that was probably a fairly easy transition.
Kim Eskew 27:17
It was, you know, you, I really felt like I was I was prepared for it. And that was the whole experience I'd had of coming from the very lowest parts in the grocery store. And literally nearly doing every job that there is to do really gives you an intimate knowledge with the business that you're running. And to me, it makes making decisions much easier.
Matt Waller 27:53
What has been the value of being an ESOP to your employees? And also, how much is the value of your firm increased since since the ESOP?
Kim Eskew 28:10
Well, you know, we didn't know when we became an ESOP. One, we didn't even know what an ESOP was, I didn't. So for most of our folks, they heard more we're going to be employee owned, and they had no idea what that meant. I had no idea is this going to be a good thing? Or is it going to matter? And, and the truth is, when we started out, it's almost like your 401K, you know, people tell you, this is going to be a big thing. But you start and you're young, and you think I need every dollar I'm making to survive. So putting 2% or 4% into a 401k. This doesn't seem like that makes good sense to me. And, and so you start off and you get your first allocation, and maybe that first allocation is $500, or something, and you think, well, I don't know what the big deal is about that. I would rather just have the $500. But we started off and our stock was valued at $27.90 a share, and that was in 2001. And and today, that stock is worth $1,410 share. And and we have employees who have over a million dollars in their ESOP account. And I like to tell the story, because sometimes I get asked, well, Kim, what what do you like most about about your job and and every year I try to visit personally either with a phone call or in-person with employees who are retiring and who have worked for us at least 20 years. And, you know, right now we've been an ESOP for 21 years. So those employees would have been with us the entire time that we've been an ESOP. And, and the really cool thing, the thing that that makes it all seem more significant and more enjoyable for me is those employees are leaving with about 24 times their annual pay in their ESOP. So so if that person's making $20,000 a year, they've got $480,000, in their ESOP, that we're going to give them and that might just be an I say this, but it might be a cashier. That's got nearly half a million dollars in their ESOP, that cost them nothing. And if you're a manager, that you may have a million dollars or more in your ESOP and, and we have some people now that have over $2 million in their ESOP, and these are folks who never believed they would have a million dollars. And, and it's all because of, of their hard work of their the reason that they stuck with this job, which is counter culture today that instead of leaving, and going to another job, you know, they stayed with this job. And at the end, you know, we're handing them a check for $500,000 or a million dollars. And that is so gratifying to me, and it makes it seem like this job has really mattered. And you're gonna have a much better retirement, because you chose to stay and work for Harps. And I am overjoyed to to give them that money.
That must be gratifying. And you've had a big part in this the whole way through. But to have a 5,000% increase in 21 years in the value of the firm that that's remarkable, very impressive. Kim, I'm so glad that we had this time to connect and visit and I really do love the story. And you're, you're a great role model for people. So thank you. I know you're very busy. So I appreciate you taking the time and effort to talk to me about Harps and your career. It's been very interesting.
Well, thank you. I'm happy to do it. And I'm proud of our company and proud of our people. And happy to share it with the folks that listen to this.
Matt Waller 33:08
On behalf of the Sam M. Walton College of Business, I want to thank everyone for spending time with us for another engaging conversation. You can subscribe by going to your favorite podcast service and searching be epic. B E EP IC