At 100, Minnesota grocery chain Coborn's continues to 'take chances'

ST. CLOUD – In the early 1900s, Chester Coborn worked at a paper mill and dabbled in business with a feed store and mercantile shop.

But he was an entrepreneur at heart. So he bought a cartload of apples that had come to central Minnesota by train.

"He rented a store on Main Street," said Chris Coborn, Chester's great-grandson. "He got it all beautiful and signed and everything. He was ready to go the next day. And he came in the next morning to open his store for the first day of business and he found all his apples had fallen through the wood floor of the store into the dirt basement."

Feeling defeated, Chester returned to the paper mill. But in 1921, he tried again, opening a grocery store in downtown Sauk Rapids.

"And we are now celebrating our 100th anniversary from the second attempt he made in 1921," said Chris Coborn, chief executive of Coborn's Inc. "I don't know if there's a better way to define resilience or determination. He left obviously a very lasting effect on this company culture."

The employee-owned company has now grown to 9,000 employees. It operates 60 grocery stores — as well as dozens of liquor stores, pharmacies and gas stations — across Minnesota, Wisconsin, North Dakota and South Dakota.

While 2020 sales figures were not disclosed to the Star Tribune, the company recorded $1.4 billion in sales and was listed as the state's 19th largest private company in 2019 by the Minneapolis/St. Paul Business Journal.

And while Coborn's has found its niche in midsize markets in the Upper Midwest, it also competes in the tight Twin Cities market. A look at retailers in the Twin Cities from Metro Market Studies in Tucson, Ariz., gives Coborn's a market share of nearly 5%. That places the company behind Cub, Walmart, Costco, Target, Lunds & Byerlys and Hy-Vee — but ahead of Sam's Club, Aldi, Whole Foods, Trader Joe's and others in terms of market share.

Chris Coborn describes the "method of madness" for growth was having different retail formats, saying that not every community they eyed needed a traditional grocery store. Maybe it needed a liquor store or a convenience store.

"What Coborn's has done is they've looked very carefully at what their marketplace is and where they can be successful versus just opening up stores across the street from each other," said Phil Lempert, retail food analyst and founder of Supermarketguru.com. "I think Chris has really focused on where they can be successful — and I think that's smart."

Lempert, based in Santa Monica, Calif., said he thinks Coborn's ranks among the top five or six grocery chains in the country when looking at merchandising, pricing and innovation.

"Just because you aren't the biggest doesn't mean that you're not the best for shoppers," he said.

Over the years, some risks have yielded better results than others. Expansion through diversified services such as liquor stores and petroleum has seen success. Video rental stores, once popular, have fizzled out. But even the purchase of online grocer SimonDelivers in 2008 — thought to be a misstep at first — proved invaluable to the company.

"That was a really expensive learning experience," Coburn said. "We acquired it, and we tried to build on it. It was a great marketing company because they had the technology, but they weren't very good merchants because they were tech people. They weren't retailers."

Coborn's thought bringing its retail know-how to the technology SimonDelivers developed would result in a great opportunity, he said. But the company found that consumers weren't yet ready for the service a decade ago.

In 2019, Coborn's stopped its delivery service in the Twin Cities. But the company continued to use the technology it acquired to allow for online purchasing and curbside pickup.

So when the coronavirus pandemic hit, Coborn's was ready for the surge in demand for online orders — much in the same way its larger competitor, Minneapolis-based Target, was — while others scrambled.

"Whereas a lot of other folks in the industry had to go seek out third-party solutions, we were fortunate that we already had our own [system]," Coborn said. "Looking back, if we had held on to that business in the cities, that business would still be there today. But as it turned out, it's not. That's how things work sometimes."

When Coborn started on the payroll in 1974, he earned $1.75 an hour, and the company had supermarkets in Sauk Rapids, Foley and Willmar, as well as two in St. Cloud: Centennial and Fifth Avenue. The company added its first liquor store at the Fifth Avenue store when he was in high school.

He often worked odd jobs like driving to pick up beer in New Ulm or dog food in Sunburg when shelves were empty.

"On the weekends, I'd go pick up whatever I was asked to go pick up," he said.

Like many family companies, the Coborn kids grew up amid the day-to-day business.

"Dad would drag us down to the store on a Sunday after church to take care of some chores while he was up working on payroll," Chris said of his father, Dan. "And if we had our schoolwork done for Monday, he would take us along on a ride in a semi-truck — we had that one truck — down to our wholesaler in St. Paul to pick up a load."

Now the fifth generation of Coborns is making its mark: Emily Coborn is vice president of operations for the eastern region, and Peter Coborn is director of pricing strategy.

Emily started as a cashier at the Sauk Rapids store as a teenager, while Peter started in landscaping. They both tried other things before returning to the family business: Emily worked for Supervalu, and Peter worked for Johnson Brothers Distributing. But both found their way back.

"Being around the office and the people, they really just felt like family to me," Peter said. "And everybody needs food. It's a cool, wholesome mission to make sure you're helping out the communities that you serve, and I've always liked that. I mean, we're a for-profit business, but at the end of the day we're trying to help people meet their basic needs."

Dave Meyer, chief operating officer, has worked with three generations of Coborn's leaders.

"I started as a 3-11 [p.m.] manager in Mason City, Iowa. And like Chris, I didn't make a lot of money when I started," he said. "But my dad knew the Coborn family, and he said you'll have an opportunity if you work hard."

The company started building and acquiring more stores about 50 years ago as a way to allow people to grow within the company instead of leaving to search for other opportunities.

"One of the things Chris has said when we've made these acquisitions — and [his] dad said the same thing: It's coming with human capital. It's coming with people. And a lot of those people become future leaders in the company," Meyer said.

The company is celebrating its centennial with "Deals of the Century" for shoppers. The Coborn Family Foundation in June gave $1 million to Great River Children's Museum — which is working to renovate space in a downtown St. Cloud building — and $10,000 donations to 10 local nonprofits or organizations.

"We are so fortunate in our region to have them here and have their continuing commitment to employees and to the broader community," said Patti Gartland, president of the Greater St. Cloud Development Corp., which focuses on business retention and expansion in the St. Cloud area. "They are an industry leader. You don't get to be of the size and scope and scale of a low-margin industry like the grocery industry without being incredibly innovative."

The company's next big endeavor is joining with Associated Wholesale Grocers, the largest retailer-owned grocery co-op in the country.

"We had to do some soul-searching on supply chain because [it is] so critical to us," Chris Coborn said. "We can't sell from an empty shelf."

Kansas City, Kan.-based Associated Wholesale will serve as the primary supplier to Coborn's beginning next year, first from the former Creative Memories warehouse. In the next few years, the company plans to build new warehouses for perishable items and dry goods.

Coborn estimated the first phase of the project will have a local economic impact of nearly $100 million. Being a partner in the supply process should also make products more affordable for customers.

"We've been more lucky than smart at times. As my dad would say, you can create your own luck if you work hard," Chris Coborn said. "I'm hoping this next generation will continue to do more of the same because really there isn't any secret sauce. It's to respect those that we work with, have humility, work hard, be smart, take chances — all those things — and in the end, hopefully you have more wins than losses."