SimonDelivers More

Last summer, Liwanag Ojala received a vision of the future from her little son. At least she hopes it was a vision of the future.

Ojala had become a regular customer of SimonDelivers, the New Hope–based grocery delivery company, when she was six months pregnant. “It was winter—it’s not comfortable for me to get around, I’m worried about getting stuck in the snow, I’m not comfortable driving,” she recalls.

Fast-forward almost three years to the summer of 2007. Ojala was now president of SimonDelivers (more on how that happened later), and she’d been away from home on a week’s vacation with her husband and son.

“We got home late on a Saturday night, and [SimonDelivers] doesn’t deliver on Sundays. Sunday during the day, I said to my husband, ‘There’s no food in the house; we haven’t been home for a week. We’re getting our order tomorrow, but we have to go to the grocery store. There’s no Cheerios, there’s no bananas, there’s no milk, and I need something to tide Cameron over in the morning.’

“So we’re at the grocery store . . . and my son says to me: ‘What is this place? Is this an airport?’ And I said, ‘No, this isn’t an airport, this is a grocery store. This is where people shop for food.’ . . . His reference point for shopping had nothing to do with being in a store. Certainly, he’s been to Target and he’s been to Costco and he’s been in other places, but in terms of a regular habit, he doesn’t know that experience.”

Ojala believes that “there are going to be more and more people who are even older than my son who just understand, ‘This is how I’m going to buy things.’”

Ojala became president and COO of SimonDelivers in October 2006, just as the company received an infusion of cash from Minneapolis-based venture capital firm

Denali Partners. (The amount is undisclosed, but Denali’s investments typically have ranged from $1 million to $5 million.)

Before Denali chipped in, founder Simon Foster and earlier investors were positioning

SimonDelivers for sale. The company had built a brand in the seven years since its founding—its bright yellow trucks and green “totes” were familiar in many parts of the metro area—and it was one of the few survivors nationally in the online grocery market. But sales were flattening.

The company has approximately 35,000 individual customers per year—about 20 percent of them order groceries weekly. In 2006, SimonDelivers posted sales of about $60 million, down from $64.7 million in 2005. It says sales were down slightly again in 2007, but it expects them to be above $60 million this year, when Ojala also expects the company to reach profitability for the first time. 

“We’re sort of a company on the brink, meaning on the good brink!,” she says of SimonDelivers’s plans for growth. Its message has “historically been convenience and delivery, but convenience and delivery is not enough to grow the business.”

A Fresh Restart

SimonDelivers covers a 3,500-square-mile market area in and around the Twin Cities, extending south to Rochester, north to Wyoming, west to Monticello, and east to River Falls, Wisconsin. It operates two distribution centers—a hub at its New Hope headquarters and a spoke in Inver Grove Heights.

Chris Servais, vice president of operations and an employee since 2000, compares the operations to a Rubik’s cube puzzle that’s required many twists and turns to solve. “All the business processes we use are generally occurring somewhere in the business world today,” he says. The “pick-to-light” system, for instance, which uses barcode-triggered lights to guide the pickers in the frozen section, is common throughout the grocery business. But it has taken years of trial and error for SimonDelivers to integrate that and its other processes into a single system.

There are seven temperature zones inside the company’s labyrinthine warehouse, ranging from zero degrees for pizzas and other frozen foods to -20 degrees for ice cream to ambient temperature for nonperishables. Here and there are specialty areas where butchers are cutting meat, employees are putting together packages of deli meats and cheeses, and produce people are sorting through apples and berries.

Managing this entire operation is an attorney who got into the grocery business by chance. Ojala, who grew up in New Jersey, came to the Twin Cities to earn a law degree at the University of Minnesota. Upon graduation, she joined Minneapolis firm Briggs & Morgan, where she specialized in mergers and acquisitions. When the M&A market slowed a few years back, she was recruited by Edina-based food distributor Nash Finch Company, despite her lack of a grocery background.

“It was a time when [Dallas-based distributor] Fleming was on the brink, large wholesalers were buying up retail chains and thinking about alternative formats,” Ojala recalls. “So I think [Nash Finch was] looking to have expertise on the legal side internally to help manage that, without large billable hours for outside counsel.”