In a pandemic, Puget Sounders get to know their milkman

Smith Brothers welcomes, on average, 1,000 new customers a month. In the last two weeks of March, they saw 10,000. What was already a robust system of delivery to 54,000 homes mushroomed practically overnight.

Luckily, in recent years, Smith Brothers — which celebrates its 100th anniversary this summer — invested in new technology to improve efficiencies in production, warehousing and routing. New hires brought strategic thinking to the complex web of delivering not just milk but also hundreds of other regional food products. No one had or has contracted COVID-19, thanks in part to existing sanitation policies at the company’s dairy facility.

“If we would have been doing things the way we did them in 2016 or 2017, it probably would have blown up in our face,” CEO Dustin Highland told The News Tribune in an interview this month.

“This whole pandemic has basically taken over our lives,” he said. “Everyone here is basically working full tilt to keep up with the influx of customers.”

It was almost like the company had been preparing for this moment, when suddenly thousands of Americans turned to home grocery delivery — still very much a nascent subset of grocery sales. In 2018, about one-fifth of U.S. consumers reported ordering groceries online sometimes, according to Coresight Research. In 2019, that number jumped to nearly 40 percent, but those sales still account for only 3 percent of total retail sales of food and beverage.

The demand for the services of national delivery companies like Instacart and Shipt has outpaced the supply of gig workers who fulfill those orders and raised worrying safety concerns.

What separates Kent-based Smith Brothers from Walmart and Target, the leaders in grocery delivery, is their local connection. In addition to their roots in Pacific Northwest dairy, the service now offers other regionally sourced pantry staples: bread, bagels, yogurt, cheese, coffee, salad mixes, bacon and deli meat.

“We live in an area of the state where I think that is more important to people,” said Highland. “The Puget Sound and Washington in general care more about where their food comes from. It’s ingrained in the culture, which makes our job easier in terms of finding great local vendors, farmers and customers who want that.”

MILK DELIVERY GONE WILD

As the state went into lockdown to stifle the spread of COVID-19, Puget Sound residents flocked to the dairy company’s website, signing up in droves for home delivery.

In early March, the numbers ticked up in relatively normal fashion — a few customers here, a few there. Highland estimated that they “started seeing it go crazy” by March 12 when the country formally entered a national emergency.

“We’ve always called our service essential,” he said, “but now we actually need it.”

While the state shed more than 500,000 jobs by that month’s end, Smith Brothers hired 33 drivers and shuffled 10 production workers — those with time on their hands due to the loss of school, office and restaurant business, which “cratered” nearly 30 percent — to the warehouse to pick orders and load trucks.

Many on the team started working longer hours, with some drivers on the road 14 hours a day.

The onslaught of first-time home delivery customers has compensated for about half of that drop. Though overall milk sales are down, residential volume has spiked by nearly 50 percent.

“We basically went from delivering to 53,000 to 54,000 customers, and now we have 63,000 to 64,000 customers on our home delivery routes. It kind of peaked pretty early. The last two weeks of March were the biggest and craziest,” said Highland.

Two days in a row, 500 new customers signed up. Their monthly average is 800, lower in the winter and higher in summer months when they typically market their services at festivals and farmers markets. They ran out of porch boxes, the branded metal tins you see on stoops across the Puget Sound, from Seattle down to Olympia and up through Bremerton.

“We got the amount of customers in two days that we would normally get in a month. We are literally supporting this with sheer determination — and overtime,” he laughed.

“What was really cool was our team really banded together, whether it was our plant or production team that makes the milk, or our warehouse team who stock and load trucks, or the milkmen and milkwomen who deliver.”

They had to make some changes. Customers have a standing order and delivery date and time; they typically have up until 6 p.m. the night before to add or subtract items, but now the cutoff is at 2 p.m. Order size and frequency have both increased, as attrition has decreased. Drivers are dealing with more crowded trucks, where milk is packed in bulk and picked upon arrival at every house, and spending more time at each stop.

“Customers were definitely impacted,” said Highland, but most have been patient and understanding.

“Everyone is stressed out right now. Internally, all of our teams are working longer hours than they normally do; they’re not around their families, they’re worried about safety, they’re worried about all these things. Tensions can run a little bit high. We are trying to enforce: take a deep breath and try to be a little bit more empathetic. Customers are stressed out as well at home,” he said. “Have a little extra ounce of patience during this time.”

HOME DELIVERY OF THE FUTURE?

Highland considers Smith Brothers extremely fortunate to be in a position of growth when so many small businesses are suffering. Getting through those first two weeks was the hardest part.

About 2,000 new customers remain on a wait list that Highland and his team are working frantically to onboard and add to their routes. They needed more refrigerated trucks, not an easy feat in the middle of a global pandemic that has uprooted supply chains. They finally secured 10 new ones that should be ready to hit the road in early June.

The company also landed a $575,000 bid on the Farmers to Families food box program arranged by the U.S. Department of Agriculture. Smith Brothers has been shipping 20,000 gallons a week of milk to area food banks and other food lifelines, said Highland, another feat as farmers across the country dumped thousands of gallons of milk in March and April.

One of the biggest questions facing small food retailers is how long this trend will last.

“How much should we invest in our operational side of our business in order to support these new customers?” asked Highland. “Let’s not try to overextend ourselves. What if this ends at the end of April, and all 10,000 of those customers that we got decide to quit the next day?

“Our service works best when it becomes a part of your life, and it becomes a habit. That every week, you get a notification that your milk was delivered and your kids run out to the front porch and bring that milk in. We didn’t want to lose any of those things that attracted our customer to us in the first place.”

He hopes it will last, and if May is any indication, the milk must go on.

“The short answer is: I don’t know,” he said. “The long answer is: I really hope so. We are really trying to show all these new customers that A), we care about them, and there is something about our service that has kept us around for 100 years.”

To sign up for Smith Brothers home delivery service, check if your address falls in their delivery zone — but be patient.

This story was originally published May 27, 2020 at 5:00 AM.