How do you continue the legacy of a 125-year-old historical food market when your customer demographics and behavior are rapidly changing? In this episode of Mastering Innovation on Sirius XM Channel 132, Business Radio Powered by The Wharton School, guest Anuj Gupta, General Manager of the Reading Terminal Market, reflected on the Market’s rich history and shared how he is preparing for national and local trends in the food industry.
Thirty years ago, the Market was an apocalyptic sight with 20 vendors, a leaky tarp roof, and an abundance of rats. It has since gone through a dramatic transformation, changing along with the city of Philadelphia. Now faced with a growing young population and more options in a shifting retail landscape, Gupta must think strategically to ensure the Market’s longevity. To compete with chains such as Whole Foods and food delivery services like Blue Apron, Gupta strives to bring in innovative food concepts and augment the customer experience in ways the competition can’t match.
Originally intended to be the “melting pot of Philadelphia,” the Market continues to be a public space that represents the many cuisines and cultures of the city while providing affordable and fresh food to local residents.
An excerpt of the interview is transcribed below. Listen to more episodes here.
Saikat Chaudhuri: There are numerous changes and perhaps challenges that are occurring because of the disruptions and adaptations in the retail space broadly.
You have the online shopping phenomenon with Amazon, but of course, Amazon is the same company which now has bought Whole Foods and wants to get into brick and mortar but in a very specific way. Farmers’ markets are seeing a resurgence. We’ve got food halls and food courts, especially upscale ones. In fact, here at Penn, we just had one [newly renovated] at the corner of 34th and Walnut Streets.
There are prepared foods by companies like Tyson who are getting more aggressive and smarter about tackling all that. What do you think about these trends? Which ones do you prioritize? There’s just so much going on. How do you think about all these changes?
Anuj Gupta: Well, there are two layers of the trends that I want to talk about. One is national trends and changes in customer behavior and patterns, and two, what is happening locally. Let’s talk about what’s happening locally. Downtown Philadelphia is now the fastest growing downtown of any big city in the country.
The growth is fueled largely by millennials and immigrants, some empty nesters as well. For the first time, after 55 years, a population decline in 2007, the city started to gain population. And now, for 10 years, we have incrementally gained population each year. It’s a very positive trend for our city. Commercial activity has followed the residential boom. And if you are a resident of Center City Philadelphia, the landscape that you’re living in now is vastly different in 2018 than if you lived here 20 years ago. So, your choices as a consumer are extraordinary on the shopping side. And of course, on the dining side, our city’s culinary scene is off the charts. There was a time when the Reading Terminal was the only game in town. If you wanted to shop for fresh food, we were one of the only choices you had. Even on the prepared food side, it was one of the few lunch options you had if you worked around the market. Now, the choices are innumerable. So, I want to establish that and put that on one side.
Now, let’s talk about national trends. 2016 was the first year on record, at least as far as this data has been kept, that the sales of prepared foods exceeded the sales of fresh foods. Irrespective of where you live, all of the trends are pointing towards people wanting a good, nutritious meal with some knowledge of what the ingredients are and where they’re coming from, and they want it to taste like a home-cooked meal. They just don’t want to cook it themselves.
“All of the trends are pointing towards people wanting a good, nutritious meal with some knowledge of what the ingredients are… They just don’t want to cook it themselves.” – Anuj Gupta
They don’t have the time, they don’t have the inclination, so on and so forth. So, that has driven the growth of meal kits, that has driven the growth of these mail order services like Blue Apron, Purple Carrot, Fresh Direct. That has driven the growth of online purchasing options and delivery services that the brick and mortar stores are getting into. So, I want to establish all of that because there are two layers of trends that are affecting us.
How do we respond to all of that? That is, absolutely, the biggest challenge as general manager. The Reading Terminal is often placed on the top three things you must do when you come to Philadelphia. The Liberty Bell and Independence Hall, maybe the Art Museum, and the Reading Terminal. That’s wonderful that tourists come, we welcome them, we welcome conventioneers when they come to our city. If they have no time to see any other aspect of our city, if they come into the doors of the market for an hour, they’ll get a sense of what our city is about. It’s a good reflection of our city.
But here’s why tourists and conventioneers come, because they know it is an authentic Philadelphia institution. It is designed specifically to serve locals, first and foremost, rather than just serving tourists and travelers. So, in order to maintain our vibrancy for another 125 years, again, we do nothing to dissuade the tourists from coming. In fact, they’ve turned our summer season, which used to be quite slow, into a fairly stable part of the business cycle. But, if we lose the ability to draw our locals, if we fail to provide them with what they are looking for, the tourists will actually stop coming as well.
There are three layers to my strategic plan for the market. One is, we’ve got to get our basics right in that the regular customer perceives it as clean and safe. You’re not worried about, when you go into a Whole Foods, whether the aisles are going to be clean or whether there’s any safety issue to be concerned about. That’s the expectation our competitors are able to offer their customers, and we have to offer the same.
Number two, as the city has taken off as a culinary destination, we have to re-center ourselves in the middle of that culinary universe. I’m looking for innovative concepts that still meet the needs of our regular customers. I want concepts that you have to come to the Reading Terminal to patronize because you’re not going to find them anywhere else, and I can give you a couple of examples of that.
“If we lose the ability to draw our locals, if we fail to provide them with what they’re looking for, the tourists will stop coming as well” – Anuj Gupta
Three, we have to improve our accessibility. I define it more broadly than the ordinary interpretation of the word. It is physical accessibility; it is virtual accessibility; it is a feeling of accessibility, that this is a place in which you are welcome, so on and so forth.
Within those three prongs of my plan, I’m happy to point out examples of how we’ve tried to respond to this incredibly dynamic environment.
Chaudhuri: Absolutely. And I think that’s a logical next place to go because it ties in with the vision of the future. You were touching upon this earlier, is the market then going to be a place to shop, or eat, or maybe, host events and experiences of some sort?
Gupta: It’s all of the above. Let’s talk about how we have applied some of those principles in our strategic plan in all of those areas. The first merchant that I brought in was when I started as general manager in summer of 2015. I started in June of that summer and my first task was to prepare the market for Pope Francis’ arrival. Pope Francis was coming to Philadelphia that summer and we were expecting, literally, thousands upon thousands of people descending into not only our city but into our building. We had to get the operations of the building situated and properly in line so we could accommodate these crowds.
Well, the funny thing about that was the crowds never materialized. In fact, we probably would have been better off being closed for those three days, but it forced me to learn the mechanics of the market very quickly. So, once that passed, I turned my attention to leasing. And the first merchant that I brought in, it was actually a concept created by an existing merchant in the market, she’s owned a bakery there, her name is Lisbeth Helen.
She came up with a concept that it’s extraordinarily simple at its premise but very innovative in that you’re not going to find anywhere else. It’s called Condiment, and the idea is this: any basic ingredient you need for cooking a meal at home — butter, salad dressings, marinade, salsas, dips, toppings, you name it — it’s all being made daily, from scratch, from ingredients in the market.
Many of these items, whether it’s butter, mustard, ketchup, or some of these salsas, we take them for granted as shelf stable items. We’ve forgotten what they are supposed to taste like. You have a bar of freshly turned butter, it’s customizable, it’s compounded 10 different ways, you can add fresh herbs and spices on it. It elevates your cooking experience to a whole another level.
“If I’m trying to position the market as Philadelphia’s market and make it welcoming to Philadelphians across the board, then we need to reflect Philadelphia.” – Anuj Gupta
And so, that was the first concept that I brought in, again, tying into that theme of being innovative and offering customers something that you have to come to the market to patronize it because you’re not going to find that anywhere else. So, that’s an example of how we’re trying to innovate on the fresh food side of the market. On the prepared food side of the market, the newest merchant that will open in — knock on wood — maybe a week or so, is two gentlemen who’ve never run a brick and mortar restaurant before; they’ve only done catering. It’s Puerto Rican street food.
Now, that doesn’t sound so novel, on its face, but you’re not going to find that cuisine anywhere in downtown Philadelphia, at least not in a fast-casual setting. And we have a fast-growing Latino community in the city. A fair proportion of that is Puerto Rican. If I’m trying to position the market as Philadelphia’s market and make it welcoming to Philadelphians across the board, then we need to reflect Philadelphia.
So, the name of the store’s called Loco Lucho. That’s an example of how we’re trying to bring in addition on the prepared front, and again, offer some customers something they’re not going to get anywhere else. And then, you mentioned the experience. So, we have a fair amount of data on our customers and our customer behavior.
We know, in comparison to our competition — Whole Foods, Trader Joe’s, conventional ShopRite, Acme, et cetera, the mail order services because there is no experience there — we know that we offer an experience that simply can’t be replicated at those places.
About Our Guest
Anuj Gupta is currently the General Manager of the historic Reading Terminal Market. In this role, he oversees all aspects of the nearly 80 merchant market’s day-to-day operations including leasing, marketing, special events, as well as guiding the non-profit corporation’s strategic direction. Prior to this role, Anuj served as Executive Director of Mt. Airy, USA. Under his direction, Mt. Airy USA undertook the redevelopment of one of the largest Transit Oriented Development sites in Philadelphia which in 2014 became a second campus for the acclaimed K-8 Wissahickon Charter School, invested over $1 million in redeveloping blighted sections of Germantown Avenue, launched a new business association and destination website for Mt. Airy and expanded the organization’s housing counseling capacity to serve nearly 600 people annually. Under his leadership, MAUSA also started the Mt. Airy School Coalition – an innovative approach by a community development corporation to work directly on behalf of the traditional public schools in its catchment by raising resources on their behalf, providing advocacy and leveraging community support towards their needs. Prior to this position, he served for three years (2008- 2010) in Mayor Michael A. Nutter’s administration in a number of roles including Chief of Staff of the Department of Licenses & Inspections, and Deputy to the Managing Director. Prior to joining Mayor Nutter’s administration, Anuj was an attorney at Ballard Spahr Andrews & Ingersoll, LLP where he practiced in the firm’s real estate/affordable housing group from 2004-2007. In 2013, Anuj also opened his own restaurant – Jyoti Indian Bistro – a fast-casual south Asian restaurant in Mt. Airy.
Anuj is a graduate of the University of Pennsylvania Law School (J.D., 2003), the University of Pennsylvania’s Fels Institute of Government (M.G.A., 2003) and Carnegie Mellon University (B.S., 1996). He currently is a board member of the Welcoming Center for New Pennsylvanians (Chair), PHL-Diversity Board of Directors, the Free Library of Philadelphia’s Board of Trustees, an appointee to Governor Tom Wolf’s Commission on Asian American & Pacific Islander Affairs and a member of the Board of Trustees of Chestnut Hill Hospital. You can find more @RdgTerminalMkt.
Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.