Bob-bobbing along

Meet the guy on the brown bag. Robert Mariano is the chairman, chief executive officer and president of Roundy's Supermarkets, the parent company of Rainbow supermarkets that saw $3.9 billion in sales in its most recent fiscal year, but he may be better known to Rainbow customers as "Chairman Bob."

That's him on every Rainbow shopping bag that goes out the door, and that's him, too, in Roundy's television ads in which Mariano approves each of the store's private label foods, sold under the Roundy's and Roundy's Select brand names, before they go on the shelves.

Mariano, 59, has chaired the Milwaukee-based Roundy's since 2002. A Chicago native who earned his MBA at the University of Chicago, Mariano took over when Chicago-based investment firm Willis Stein & Partners acquired Roundy's seven years ago. Mariano had been CEO of Chicago-based Dominick's Supermarkets Inc.

The "Chairman Bob" campaign includes a personal statement on the company's website in which Mariano explains his management style and personal tastes, including his favorite food: "I'm very close to the Italian sausage."

On a tour of the recently remodeled Rainbow Foods store in Roseville, Mariano discussed his career in the grocery business, the origins of the "Chairman Bob" campaign and the fallacy that we're eating out less often.

Q Are people shopping more to eat at home rather than eating out?

A I haven't seen that that much. I think for people who still have dual incomes, time is still of the essence. They may reduce how much they will spend at a quick-service restaurant, but they may be eating out as much as they were. So I haven't seen a lot of movement there yet. I think what we've seen in the stores is people shopping for more value. I read that people are grocery shopping like they're shopping for a car. That's true. That's at all economic levels. So they're just watching what they buy.

A Yes. We've been on a very aggressive effort to grow our own brand presence. The company used to be a wholesaler, and now is a retailer, so we've been on an aggressive campaign to add things constantly. It kind of plays right into where the customer is at.

Q How many private label items do you have now?

A About 4,000. And that's probably grown by about 1,000 items a year. It has to grow to about 6,000.

Q Standard & Poor's has a recent report out on Roundy's. It says you have good cash flow and a solid position in the Upper Midwest, but that you're highly leveraged, don't have as much flexibility as you might like to have. Is that fair?

A We're going to spend on Cap- Ex this year probably around $90 million in new and remodeled stores. In addition, we'll probably pay down debt about $50 million to $75 million pre-paid debt -- not required debt payments, but prepaid debt. Last year we prepaid about $75 million of debt. So we're in a very strong position.

A No. We're not actively pursuing anything. We're trying to run a business.

Q Wal-Mart is now the largest food retailer, and larger than the next five retailers combined. How do you respond to that influence in the industry?

A I think you play to your strengths. And our strengths are in perishables and our ability to serve each neighborhood uniquely. Customers in the United States are fickle. They'll never believe you have the lowest price, they always think there's a better deal. That's just the American way, so in a respect you have to earn your stripes each and every week you go out there. We want to be the best supermarket. We're a supermarket. We're not a Wal-Mart.

Q What about Bob? Nobody really knows who you are. What's your story?

A I've been in the grocery business for almost 40 years. I started as a part-time clerk. I was trained to be invested in "What is the quality of the products you're selling?" People in the ad agency noticed my detailed and granular interest in the product, and that kind of got them thinking. That's where they came up with the whole "Chairman Bob," because it was indeed how we ran the company.

A I would say it's more collaborative than that. I drive it, but it's no good if I make the decision and we're not there in a collaborative way.

Q When the executives are trying to decide on taste or something, it's not as autocratic as it might seem?

A No. It's very much market-driven, because we're going to go get products off the shelf and say, "What's Trader Joe's doing? What's Wal-Mart doing?" There's even a great retailer up in the northeast, Weg man's, and might ask what are they doing? We're going to go outside of our market and outside of our stores and say, '"What's really going on here? Who's cutting edge?"

Q In developing your private label foods, have there been rejects?

A As we go through the process there are rejections. Like when we first started making our own bratwurst, which, not only is it our own brand but we make it ourselves in Kenosha (Wis.) The [test] products by and large had MSG and I said "No, wait, we're not using MSG. You go back and get this reformulated." And so they had to start from scratch.

A I haven't found an acceptable standard for the customer to judge against. This is good, but compared to what? And people's dietary needs are unique and different.

Q What's it like to be chairman?

A We have a lot of fun. We work hard. I still love the business. [Since my picture is on Rainbow bags] people always say to me, "We always see you on garbage day, Bob."