If the new culture Chuck Bengochea says is at the heart of resurrected Family Christian Stores has yet to prove itself, early evidence may be found in the manner in which he talks about it.
The CEO of the humbled giant of Christian retail spoke candidly with CBA Retailers+Resources for almost two hours at Family’s headquarters in Grand Rapids, MI, in October—an openness in marked contrast to the chain’s long-time former tight-lipped business style.
Bengochea spoke candidly about where Family went wrong, what it plans to do to turn things around, and the challenge of repairing industry relationships strained by the bankruptcy, which saw suppliers swallow around $55 million in debts in the settlement that kept the chain alive.
While not wanting to “make prior management look bad—I wasn’t here, I didn’t walk their shoes, I don’t know all that was involved”—Bengochea added: “I know that I ran into a lot of broken things. The store experience was bad, processes were bad. Those are facts.”
At the heart of the resurrection plan that won Family a reprieve is “a customer-centered filter,” Bengochea said as he sat in Family’s conference room, with an open-neck shirt and “Hope” bracelet on his wrist. “I don’t think anybody who was at Family Christian didn’t want a customer-centered filter,” he said. “The issue was the financial constraints that created decision-making processes and created decisions that were not best for the customer.”
By way of example, he pointed to bringing in product that’s cheap and has a good margin, but “is not even remotely close to being trend right or compelling. You make a bunch of decisions that way and you end up losing your customers.”
The three legs of the new Family stool are style, selection, and service—the look of the stores, what’s on the shelves, and the customer experience.
Work on changing the look of the stores began soon after Bengochea arrived in mid-2014. “Even with the constraints that bankruptcy cost us, I think we made a lot of progress,” he said. “We didn’t put a lot of capital in because we didn’t have it, but we were a cluttered store—at times we even felt a little bit like a flea market. It seemed that the strategy was if there’s an extra square foot of space in the store, put something in it.”
Though that may make sense on paper, with “enough people doing that you create chaos in the store … the customer says, ‘I don’t know what’s going on here, I’m confused.'” As a result, shoppers may still come to the store for a specific item, but they’re put off browsing: “I’m just going to hunt my target and I’m out.”
Taking out some fixtures has enabled customers “to breathe,” Bengochea said, creating wider pathways for them to move about and improving sight-lines “to see where things are.” Phase two of the interior improvements will include emphasizing stores’ Bible departments and improving the book area: “Our books section was really weak. It didn’t encourage you to browse because it kind of lumped it all together and you had to work really hard to find what you were looking for.”
As part of the overall new look, there will be messaging that focuses on Family’s non-profit status, directing profits to ministries helping the poor and needy. For example, a large wall banner with several beat-up pairs of shoes affixed to it in one of the first stores undergoing the next round of changes explains that “Our Earnings go to replacing shoes like this for kids in Chichicastenango.”
This branding needs to be handled sensitively, Bengochea acknowledged. Supporting good works has been part of Family’s goal since it established The James Fund in 2003, and became its central goal when the company became a full-on nonprofit a decade later. But what should have been a draw to customers sometimes was a turn-off.
“Our heartbeat for ministry so overwhelmed our thinking at times that we didn’t even know that we were unintentionally offending customers,” Bengochea said. “You would come to the cash wrap and we’d ask you to support multiple ministries in multiple asks. We did it sincerely, because we were trying to help the widows and the orphans—we weren’t getting bonuses, we were literally going to help build a safe house in the Dominican Republic, and help a child be sponsored.”
But the result was that shoppers ended up feeling guilty. “The motive was not that Family Christian made more money, but it impacted the service experience. So we have really cut back on that and said we want our stores to be ministry-centered, ultimately, but it can’t be knocking you over the head at the cash register with 30 things you need to support.”
Integral to improved customer service is staff training, centered on a new service promise: “We will love our guests by providing skilled and selfless service that glorifies God.” The focus recognized that good intentions aren’t enough. “We still have to execute with excellence,” Bengochea said. “That’s why we’ve gotten in trouble. Even with people rooting for us, you still have to do that.”
Better product selection is going to include gifts from outside the Christian retail products industry, including some new exclusives. There’s more emphasis on home decor, a broader selection of jewelry, and apparel that goes beyond “100 percent cotton, $5 tee shirts to blends and synthetics.” Bengochea said: “Our lens is Christ-centered, but Christ-centered doesn’t mean it has to have an in-your-face Bible verse on it.”
Along with the in-store changes comes a major review and revision of Family’s online presence. “Family didn’t really view the web as e-commerce,” Bengochea said, noting the website was hard to navigate and clunky to use, but done properly offers the greatest potential growth. “It was more a marketing vehicle to drive people to the store,” he said.
Fixing Family’s three online problems—”engagement, functionality, and fulfillment”— will be a major emphasis in the next year. “We fall short in all three areas. I don’t want to click a button and find out you’re going to send me the Mark Batterson book in two weeks; that’s just not going to work.”
Integrating brick-and-mortar and online means becoming “channel-neutral,” Bengochea said. “We don’t get to choose which channel the customer wants. We can’t say that’s going to be a great experience, the store, and the other is going to be mediocre, so you’re going to come to the store. Well, no—actually, the answer is going to be Amazon.”
Appropriate pricing for the two channels is going to be a challenge, he agreed. Long known for majoring on discounts to draw traffic, Family will be dialing back its reliance on cut-pricing. The past emphasis on coupons was born in part out of “a little bit of fear of making mistakes … because if anything outside of coupons was tried and it didn’t work, people got slapped,” said Bengochea.
But it also revealed a general lack of confidence: “If I didn’t feel good about my service experience, if I didn’t feel like I had the best product, then I had one option: coupons. Ultimately coupons are crack cocaine; you get addicted to them.” That said, “there will always be a role for coupons in retail, always. The question isn’t whether you use coupons, it’s what’s the mix, and how deep and how broad.”
The new Family also intends to strengthen relationships with the local church. That could include creating new tools, like a separate web page, and even custom products such as Vacation Bible School and Bible study materials. “Much in the same way that LifeWay has Beth Moore and all the resources she has,” Bengochea said.
If Bengochea has a clear eye on what needs to be fixed front-of-house, he’s also aware of the repairs that are needed in the back, too, including its supply chain approach and relationships with suppliers.
His job, in a nutshell: “What I have responsibility to do is improve relationships with all my vendor partners, most of whom are in CBA. I have responsibility to apologize for the bankruptcy, to ask for forgiveness, and I have a responsibility to create great working relationships where they have a chance to win and we will have a chance to win.”
Coming out of bankruptcy, Family learned “just how broken our supply chain was,” said Bengochea. The reason: limits and terms that didn’t adequately take into account vendors. “They got hurt by it,” Bengochea admitted. “The relationship is rational and appropriate now; we’re paying on industry standard terms and we’re faithful and committed to that.”
No longer able to pretty much dictate the way things went, “all of a sudden we realized how clunkily we moved products from the order to fulfilling in our stores, and replenishing, and we think there’s a tremendous, tremendous, tremendous opportunity to more just-in-time fill in our stores, which offers a sales lift because the product will be there when it needs to be. But it will also do two other things that are really important—it will reduce our working capital because we’re not going to have all this money tied up and it will reduce our costs.”
Family’s store count as Bengochea spoke was 258, down from 266 last year and with a couple more closures likely, in line with the survival plans in the bankruptcy filing. Around 50 to 75 jobs will have been shed in total, from a chain-wide count of around 2,500. Despite the challenges, morale remains good, Bengochea said, noting that turnover had been just 9 percent even during the months of uncertainty.
New stores could follow. “Our heartbeat is ministry,” Bengochea said. “We don’t want to close stores because that’s the Gospel not being shared, that’s people not being ministered to, that’s orphans not getting resourced. We want the system to be alive and well so that more lives are being touched.”
But that requires doing retail well. “There has to be a compelling value proposition.” he said. “I don’t think it’s as easy as, well, you’re a Christian bookstore, I don’t want to give money to the devil, so I’m going to buy from your store. I think it has to be compelling.”
At the same time, he sees an opportunity. “I’m convinced if you knew we had a really good shopping experience and every time you spent money with us it didn’t go to somebody’s investor returns but to orphans and safe houses, you would choose us.
“Here’s the advantage we have: our core customers are Christians, they know God has a special place in His heart for the hurting and the oppressed and the least, and we as Christians need to care deeply for them … what we’re trying to do is a perfect fit with what they’re called to do, so if we execute it well.”
Suppliers may be happy that Family Christian survives to make their products available to consumers, but that’s not the same as being happy with the losses they agreed to swallow. Visiting suppliers around the country to talk about Family’s future plans, Bengochea said that the response had been: “’I love everything you just said, so let’s see how this unfolds’—which I think is totally fair. Trust is earned, it’s not dictated.”
Part of Bengochea’s visits have included talking through Family’s new core values, which are headed by a commitment to “honor Jesus with every breath.” “We do, and that needed to be said because we had mistreated partners and vendors in the past and we’re never going to intentionally do that again,” said Bengochea, though “we’re going to fall short, because we’re humans.”
The other core values: “We will serve and love our guests and each other, we will listen well, we will speak the truth with transparency and authenticity, and we will strive for excellence in all that we do.”
Repairing the breach between Family and partners will require “a posture of humility” and “an acknowledgment that our decisions impacted them, even though it benefited us, obviously.” Second is to “redefine the relationship with them,” Bengochea said. “We had basically made all those folks order-takers, and we want to say you’re not an order-taker, you have a lot to add to this relationship and we need to listen and listen well on recommendations and skus and products that are coming our way. We need to be trustworthy financially, walk our talk, pay on time, and do everything we said we were going to do.”
This more collaborative way of doing business will involve sharing plans. “Because I’m convinced that if I know what you’re trying to accomplish and if you know what I’m trying to accomplish, there will be opportunities identified that we wouldn’t have seen if we were just talking products.”
The Family plan is being driven by a new leadership team drawn from outside the CBA world. “They’re coming to a difficult battle but they’re coming because I think God has burdened them with it, and because they believe that what we’re saying is what we’re going to do.”
Bengochea’s style is “radically different” from the past, he said. After losing sight of the customer, Family’s second biggest mistake had been failing to create “a collaborative, best-in-class working environment,” he went on. “There were too many silos. My buyers, I want them in the stores, I want them talking to customers, I want them out ahead of what’s trend-right, and what’s coming up. I’m not interested in them sitting at 5300 Patterson Ave. and looking at analytics.
“Buying is one part history: how did I do last cycle? But it’s a lot part vision: what’s coming. The only way to know that is not just to have that vendor tell me what’s coming. That’s good input, but I need to go talk to customers, I need to go see what’s out there.”
What is the new Family’s place in the Christian retail world? “I don’t want to be the big bully; I don’t pretend that we have all the answers,” Bengochea said. “I just want to be a company that people say, ‘yes, they’re trustworthy, they’re walking faithfully, they’re demanding, but they’re easy to partner with, and you can tell they’re doing everything in their power to help the oppressed and bring honor to God with every breath.’
“I do believe that was our heart, but I don’t believe we were executing it.”
Bengochea Brings Ironman Determination to FCS
Chuck Bengochea knew the scale of the challenge he faced when he arrived at Family Christian Stores in June 2014. In fact, he’d turned the job down almost a year earlier.
With a successful track record of leadership first at Coca Cola and then at HoneyBaked Ham Co. of Georgia, where he had spearheaded a major turnaround following a sales slump after the economic downturn, he valued the time he could give to his triathlete pastime and was looking toward retirement.
But, encouraged by his wife, he accepted the role when approached a second time. “I thought there’s an unbelievable fight to be had here, a fight for the Lord, for success, to change the customer experience, to fight for the 2,500 people who deserve to be successful so they can have a job so they can pay their mortgages,” he said.
What did he bring to Family Christian? “The talent God has given me to inspire and organize a team,” he said. “I’m not great on details but I have clarity of strategy, vision. What I want to bring here is clarity of the idea, clarity of the brand, and to assemble a phenomenal, world-class team.”
Born in Cuba and raised in Florida by a single mother, Bengochea’s business experience is twinned with a triathlete’s determination. “My DNA is to be an Ironman,” he said. “It’s a long day, and you better pay the price and persevere.
“You don’t quit, whether it’s an Ironman, which is a secular activity, or this (Family Christian), which is mission: you don’t quit. I don’t care how many cramps come your way, I don’t care how bad you feel, I don’t care if your head hurts or if you have a flat tire, I don’t care … you get to the finish line.”
Bengochea “wants to win,” but not in the sense that somebody else loses. “I just want to be better than we’ve ever been and I think that’s what an athlete does. I’m not interested in finishing an Ironman. I’m interested in doing well—I’m shooting for the podium.”
Reflecting on his approach to business in an interview with The Pentecostal Evangel a few years ago, Bengochea said too many Christians in business put God in a box. “They leave God at home and change their behavior in the office as they pursue a profit or a bonus,” he said. But “we serve a living God who’s not in a box, who’s King and on His throne every day regardless of where we are.
“Christians in business should honor and serve God every day in how they treat their vendors, employees and customers—all that’s under God’s authority. God is over your job, not just your church.”
His job at Family Christian, he told CBA Retailers+Resources, was “to be on my knees before Him and to be humble before Him, to listen well, and to create a good plan that everybody here can get excited about.”
iDisciple Expands FCS Ministry Focus
Central to Family Christian’s rebirth plan is the growth of iDisciple, the digital content service that provides devotionals, teaching, sermons, and music online and to mobile devices.
Run by a sister company not part of the bankruptcy proceedings, iDisciple “is a key strategy for Family Christian Stores,” according to Steve Biondo, Family Christian’s senior VP of human resources and organizational development.
“When you think about our mission, which is to help people find, grow, share, and celebrate their faith in Jesus Christ, iDisciple is an integral part of that, because it brings content you want to you anytime, anywhere, on any device,” he said.
Launched in 2013, iDisciple has around 350,000 users, with a recent updated version adding greater functionality, including the ability to more narrowly define the kind of content offered.
The monthly subscription costs $4.99, though some stores are testing a basic free version. In-store kiosks where customers can try out iDisciple are also being added because “we don’t want to slow down folks at the cash wrap” by trying to explain the service to them there. Family Christian has its own iDisciple channel to help staff become familiar with its features and benefits.
In terms of general subscribers, “we were hoping for more uptake at this point in time,” Biondo admitted, “but the testimonies, the stories, the level of commitment we’re seeing from loyal customers is pretty profound. Unsubscribe rates continue to decline as we get better at curating content, and with the quality of the app itself, the speed and reliability.”
Could the service cannibalize some other product sales? “Potentially,” Biondo said, “but in the end that’s not our mission. What we’re really excited about is helping people grow and celebrate their faith. What we’re seeing is that as people engage in their faith, they’re expanding their purchases and not declining products [that help them grow].”
The digital service is not directly linked to Family Christian Stores yet, either brick-and-mortar or e-commerce, but “I can see where iDisciple supports product sales at some point in the future. I can see it helping that. We don’t want to become an advertising engine, but where it can complement your faith journey and help you find additional resources that just aren’t on iDisciple, then it makes sense.
“We want to be careful to stay really missional, really really pure in what iDisciple is about—but it can complement our resource centers and the ministry that we’re involved in.”