Smart & Final Corporate / History
MORE THAN 140 YEARS OF SUPERIOR SERVICE, GROWTH AND SUCCESS
Smart & Final is a truly unique company, for it combines today's state-of-the-art technologies and management practices with the historical perspective of one of the West's pioneer companies.
The year was 1871, and Los Angeles was a small, dusty, ranching town. Streets were unpaved, buildings were modestly wood or adobe and the enclave's 6,000 residents--many of Mexican and Indian descent--probably were outnumbered by local sheep and cattle. Los Angeles mainly produced hides, wool and tallow. Indeed Los Angeles couldn't begin to compare with its northern neighbor, bustling, cosmopolitan San Francisco.
But Los Angeles' rural ambiance didn't deter partners Herman Hellman, Jacob Haas and Bernard Cohn from launching a new grocery business. Housed in a two-story brick building on Los Angeles Street, Hellman, Haas Grocery Co. sold necessities of the day including flour, brown sugar, salt, patent medicines, rope, sheepherding supplies, chewing tobacco and gunpowder.
Packaged goods were unknown: Hellman, Haas' food staples arrived in bulk and typically were sold by weight. There were prunes in huge casks, barrels of currants from Greece and rice for the town's burgeoning Chinese population. So vital was the store that Hellman, Haas was one of seven names in the first Los Angeles phone directory!
Indeed the entrepreneurs behind Hellman, Haas were a distinguished group. Herman Hellman later succeeded his brother, Isias, as head of the then-esteemed Farmers and Merchants Bank, which also was founded in 1871. Isias Hellman was among the group of community leaders who donated the land upon which the University of Southern California was built.
Meanwhile, Abraham Haas, Jacob Haas’ younger brother who had joined Hellman, Haas in 1873, launched the first flour milling and cold storage businesses in Los Angeles, along with several electricity and gas companies -- the forerunners of current Southern California power companies. Bernard Cohn later entered politics and briefly served as Mayor of Los Angeles.
By the turn of the century, Hellman, Haas had changed hands: The sole owners now were Abraham Haas and Jacob Baruch, who bought out Herman Hellman. The company name was changed to Haas, Baruch & Co. in 1889.
Meantime, Haas, Baruch introduced its private Iris label on canned tomatoes and launched a tradition of artistically designed labels to emphasize the cans' high quality contents. By 1895, the grocer's sales reached $2 million--a huge sum at the time.
By 1900, Haas Baruch was the burgeoning city's preeminent wholesale grocer. Over the next two decades, a chain of events--including construction of the L.A. Aqueduct, the discovery of oil in Long Beach and the opening of the Panama Canal--pushed the local population to nearly one million.
Abraham Haas left Southern California at this time and moved to San Francisco to found Haas Wholesale Grocers which became the leading wholesaler in the Bay Area. His son, Walter, who worked with his father in the food business, left to join a struggling clothing manufacturer, Levi Straus. Under his direction, the company flourished and Walter served as president for three decades, bringing Levi Straus to international fame. The Haas mansion in San Francisco, the original home of Abraham Haas, is now open to private tours as a San Francisco Historical Home.
On a parallel basis, the Santa Ana Grocery Company, which was founded in 1912 and mainly supplied feed and grain to local farmers, was sold in 1914 to J.S. "Jim" Smart, a banker from Saginaw, Michigan. Jim was then joined by partner H.D. "Hildane" Final, and the company name changed to Smart & Final Wholesale Grocers. The business relocated near the docks in San Pedro and immediately prospered. By 1919, sales surged to $10 million.
The grocery industry was also changing. As retail grocers gained strength, many were negotiating discounts directly with manufacturers, avoiding wholesalers altogether. Competition turned brutal: Of the city's 16 wholesale grocers in 1920, only 7 were left a decade later. Smart & Final survived by offering better service and by pioneering the "cash-and-carry" concept in Los Angeles. Previously, grocery stores--even at wholesale--required a clerk to collect goods for the customer.
Smart & Final rightly figured the chain could reduce overhead by introducing self-service but still retain high-quality selection and service. Its novel cash-and-carry debuted in Long Beach in 1923. Another innovation was locating stores near customers' businesses, recognizing the importance of their time and sparing them the trek to a remote warehouse.
In 1953, Smart & Final merged with Haas, Baruch, with Smart & Final the surviving company. The company shifted its headquarters to Haas Baruch's new warehouse in Vernon, Calif., which was quickly becoming the preferred distribution location for a number of wholesale and retail companies. Shortly thereafter, the company was acquired by a leading supermarket chain, Thriftimart, and grew to 83 units by 1984. Later that year, Thriftimart stores were liquidated and the company's resources focused on an aggressive Smart & Final store modernization and expansion program.
Smart & Final later expanded into the Florida market and acquired broadline foodservice distribution businesses, but exited those businesses in 2003 in order to focus all company resources on its core store operations in the West.
Smart & Final was acquired by private equity firm Apollo Management in May 2007. Later that year, the company entered a new niche of food retailing when it purchased 27 Southern California Henry’s Farmers Market stores and 8 Texas Sun Harvest stores. Smart & Final subsequently sold the Henry's and Sun Harvest stores to Sprouts in early 2011. Smart & Final was acquired by Ares Management, a private equity firm, in 2012.
Note: If you have any stories about Smart & Final's history, please share them with us to help keep our 140-year legacy alive. E-mail: Randall Oliver