The Sky’s the Limit

Making your mark in the convenience store industry requires hard work, dedication, great people and outstanding service. Throw in three generations of family-owned leadership and a firm commitment to quality and value, and you’ll understand why High’s of Baltimore Inc. is among one of the most revered operators in its markets.

“Our brand has been around for quite some time, so while we have flown under the radar in some areas, to our customers—the people that matter the most—we have a proud tradition of meeting and responding to their needs,” said Bill Darnell, president and chief operating officer of the Hanover, Md., chain, which operates 69 High’s Dairy Stores in Maryland and Delaware. The company, which markets Shell and CITGO fuels, currently employs about 500 people. “Our motto is ‘expect everyday convenience’ and our customers have come to appreciate that and reward us with many repeat visits.”

The Mid-Atlantic market is not for the faint of heart. Industry powerhouses like Sheetz, Wawa, GetGo and Royal Farms all compete within a relatively close radius, but there’s plenty of room for others. High’s has carved out its niche with a rich history, attractive stores and top-notch service—three hallmarks required for success in any retail business.

More importantly, High’s boasts an experienced leadership team that now spans three generations of Darnells. In addition to Bill, his father William F. Darnell, now in his late 70s, still maintains an office at the company’s headquarters. Brother Brian Darnell is executive vice president and chief financial officer, and Brian’s daughter, Briana Darnell, is the company’s director of real estate.

Growing Strong
As competition encroached on its markets, High’s sprung into action and responded with an elegant prototype about five years ago that emphasized fresh foods, coffee and bakery items, all in a larger footprint. The prototype was tweaked for newer stores to include modern amenities such as café seating and free wireless Internet service. New stores are in the 3,500-square-foot range.

“Since 1987, we’ve really focused on our store operations,” Brian Darnell said. “That’s been our priority. Customers know we have milk and our own branded ice cream, but the big segue into the future for us is providing prepared foods that fit into the busy lifestyles of the customers we serve.”

Like its competitors, High’s has simplified the foodservice program allowing customers to order quickly and conveniently on multiple touchscreen kiosks. Dozens of sandwiches, wraps, salads, fajitas, pizza and hot meals are available, with virtually all of them priced under $6. An extensive menu of side dishes and finger foods complement the foodservice menu, enabling the company to offer value meals to increase the average ticket ring.

To promote impulse sales, a strong variety of packaged snacks, frozen beverages and candy are marketed adjacent the food counter. Kiosks are also programmed to upsell snacks, deserts and side items, augmenting food sales.

Stores also move a large volume of packaged grab-and-go items, furthering its reach with today’s busy customers.

“Our stores have really evolved from that old-fashioned shopping for a loaf of bread and a gallon of milk into these modern facilities where people can get basically anything they want, and get it all on the go,” Brian Darnell said.

With foodservice such an important part of the company’s future, it needed a gourmet coffee program befitting an emerging market leader. It chose S&D Coffee’s Buffalo & Spring line, which offers exotic blends and specialty roasts like Fair Trade Certified and Rainforest Alliance brews.

“Supporting the environment and other sustainable initiatives is an emerging theme at all of our stores,” said Briana Darnell, who joined the family business in 2008. “The Buffalo & Spring coffees, along with our other green practices, sends a strong message to our customers that we are environmentally responsible and committed to preserving the planet.”

Another distinctive mark at High’s is that while they are open seven days a week, they are open from 5 a.m. until 11 p.m. daily. There are currently no 24 hour operations.

The company is using this to its advantage in a current promotion at the coffee bar, offering customers any size coffee for just 50 cents from 5-5:30 a.m. 

Helping to make the coffee offering successful is High’s proprietary bakery program. All of the items are baked fresh onsite using ingredients delivered directly from its wholesaler, Liberty USA, said Ben Jatlow, High’s director of business development.

Around the Store
While foodservice is the future, High’s still features an expansive grocery offering, something Brian Darnell described as vitally important to the company’s mission. “Over the years we have found that customers rely on High’s for their fill-in shopping between grocery store visits,” he said. “But they also turn to us for everyday c-store items, such as petroleum, coffee and dashboard dining. We see this as our competitive advantage over the big-box retailers we compete against for fuel dollars like Giant Eagle, Safeway, Wal-Mart, Sam’s Club and Costco.”

High’s stores feature 12 cooler doors, two freezer doors and a walk-in cooler. Since c-stores in Maryland are not allowed to sell alcoholic beverages, High’s proprietary dairy products and beverages have become staples for attracting customers to the cold vault.

As the prototype has evolved, so has the cold vault. While colas still have their shelf space, the cooler features an array of bottled waters, juices and healthier beverages—something the company has been focusing on throughout other areas of the store as well.

“C-stores probably aren’t the first place people go when they’re looking for healthy snacks, but we are actively introducing healthy options to enhance our appeal across all consumer demographics,” Briana Darnell said. “So while this has been our first attempt at attracting this market, we’ve seen a lot of success there, and I think more people are starting to look at our stores for these healthier items.”

As such, prototype units have introduced refrigerated center island gondolas that target this market. The display consists of prepackage items like celery and carrot sticks, fresh-cut fruit, granola and yogurt.

“Since it is the center island, it’s the first thing customers see when they walk in the door,” Jatlow added. “That goes a long way in changing customers’ perceptions and getting them to understand that we are all about fresh, healthy food options.”

Reaching New Customers
Briana Darnell believes these healthier options will increase traffic from the elusive female demographic and older customers that don’t want to wait in line at the supermarket. “I’d like to think that I’m in the demographic we’re trying to attract,” she said. “Young females, worried about finding a clean, safe store to do their shopping. Our knowledge of what this customer base is looking for has helped us focus on issues like cleanliness, product selection, brighter lights, etc., to put together a retail image that caters to their needs. What’s most rewarding is that when we do get these customers in for the first time, they recognize and appreciate the steps we’ve taken and become loyal customers.”

This point is becoming even more important now as some drug stores have begun takin
g the bold step as referring to themselves as “convenience stores for women.” As head of the real estate department, Darnell routinely competes with drug store chains for prime corners to expand the business. “It’s one more obstacle we have to overcome to preserve our business,” she said.

The drug store issue is one piece of a bigger puzzle c-store retailers face over the blurring of retail channels.

“The fact is not only do we have to compete with other convenience stores chains, we’re competing with drug stores, fast-food restaurants and specialty shops,” Jatlow said. “This competition goes much deeper than sales. We’re competing for real estate, labor, bringing new products to market and developing any other edge we can to keep our customers satisfied. These are considerable challenges in this business.”

Going Green to Reduce Costs

As the company is focused on expanding its services on the front end to be more competitive, it’s also enhancing its commitment to greener practices to make it more efficient and profitable on the back end.

All exterior lighting on the fuel canopy and building has been upgraded to LED bulbs. LEDs, which experts say can reduce lighting expenses by as much as 60%, also provide a longer life span than other kinds of lighting. The average manufacturer-rated lifetime of LED bulbs is about 150,000 hours versus about 20,000 hours for comparable halide bulbs.

High’s is now moving LED lighting inside the store, featuring the displays in the cooler and the freezer. Unlike fluorescent lights, which contain small amounts of mercury, LEDs are toxin-free and provide a more natural, daylight type of illumination compared to other kinds of lights. Inside, they create a brighter environment that looks sun-lit. 

Another green practice can be found in the cold vault. “We have completely eliminated door heaters and instead have gone with a film that doesn’t rely on electricity,” Briana Darnell said. “In addition, we have gone with National Resource Management and their energy monitoring system in order to reduce our energy usage even further.”

Using the National Resource system, Darnell and other area managers get real-time updates via email or text messages when coolers or freezers reach a certain temperature, indicating there could be a problem from something as simple as an open door, or a more serious issue requiring immediate repair. “This significantly reduces how much damaged merchandise is lost before we realize that something is not holding temperature,” she said. 

The National Resource system is IP-based meaning Darnell can call up the coolers and freezers at any time from a computer or PDA and get an accurate temperature on the spot. She also has the capability of tweaking the temperature if needed. “The system monitors all of the self contained units—our HVAC, the walk-in coolers and freezers and all exterior and interior lighting,” she said. “It covers the entire facility.”

Darnell estimated the system could reduce the company’s overall energy consumption by 20-30%. “That’s a huge impact on the local environment and our overall bottom line,” she said. 

To further reduce its carbon footprint, High’s is adding economizers to the prototype stores. The function of economizers is as its name implies, to “economize” cooling costs.  A c-store’s compressor is one of the most expensive pieces of equipment to operate. If the compressor can be shut down and the system still provide adequate cooling, energy savings can be realized.

Whenever the cooling system is calling for cold air and the temperature outside is cool enough, it is economical to shut off the compressor and bring in cool outside air to satisfy the cooling needs of the building.  Such is the function of these economizer systems.

Briana Darnell estimates High’s will be able to use economizers up to nine months year. “Excluding the really hot months like June, July and August, when economizers are less effective, the potential cost-savings is enormous,” she said.

High’s History
Economizers, text messages from the cold vault, space-age lighting, PDI’s Enterprise retail automation and a soon-to-be-launched loyalty program focused on the Shell fuel brand are all proof that High’s Dairy Stores have come a long way in 54 years.

William F. Darnell had been involved in the operation of High’s Stores since 1956. The company is now owned by Bill and Brian Darnell, who purchased the company from their father in 2004.

The High’s Ice Cream brand was born in Richmond, Va., in 1928, when Luther High, a Dairy Queen operator, and C.Y. Stephens of Pet Ice Cream Co., decided to create a chain of stores, with High as operator and Stephens as the production manager of the proposed plant. The first store was subsequently opened with one ice cream cabinet and one employee selling ice cream cones.

After High died, Stephens became the sole owner and developed five independently owned and operated High’s divisions in Richmond, Va.; Roanoke, Va.; Norfolk, Va,; Baltimore and Washington, D.C. Stephens eventually sold off four of the divisions retaining only the Washington company for his portfolio.

At one time, there were more than 500 High’s stores, which made the brand the largest ice cream store chain in the world. But following Stephens’ death in 1963, he left ownership of the Washington chain to a co-op of dairy farmers. The co-op was later sold to The Southland Corp. and stores were converted to the 7-Eleven brand, which together with the closure of the other High’s chains by 1987, left High’s of Baltimore as the sole operator of the High’s brand.

Going forward, the chain plans to continue developing new locations in Maryland and Delaware and to provide a clean, well-operated establishment in rural neighborhoods.

“There has been a lot of consolidation in this industry through the years,” Bill Darnell said. “As a result, family-owned businesses like ours are getting harder and harder to find, and that’s a shame. We take pride in our history, the corporate culture we have created with our great employees and our ability to provide customers with the outstanding service they deserve. I look forward to our next 50 years.” CSD

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