An all-in-the-family dairy -- relatively speaking

STEW LEONARD readily admits that it's ``almost impossible to separate the dairy -- the business -- and the family.'' To begin with, the Leonard family itself is a tangible presence throughout his sprawling dairy store here in Norwalk. Every time you turn around, it seems, you're meeting another aunt, uncle, or cousin.

Mr. Leonard pauses in a tour of the cavernous freezer and storage area -- 70 percent of the store's floor space -- to tote up the family members on the staff: three of his four children, two sisters, two brothers-in-law, two sisters-in-law, two daughters-in-law. . . . He grins, says there must be more, and remarks that it's not just his family that's extended throughout the place. Fifty percent of the 450 people who work here have a relative on the staff.

But the tie between family and business is secured by more than the numbers of relatives and related people. To Mr. Leonard, the tasks of nurturing a family and nurturing a business have gone hand in hand. He recalls his sons, Stew Jr. and Tom, cleaning up smelly milk cans at the family's old milk-delivery operation, and his daughters, Beth and Jill, working as pre-teen cashiers in the store. Now the three oldest children are all managers in the business. Throughout the years, he says, it has been a constant process of teaching by example.

He was aware of his children's ``little eyes watching you all the time,'' seeing when you stopped to pick up a piece of paper in the store, watching how you treated a customer or an employee. A man given to homespun wisdom, Mr. Leonard says his thoughts on being the head of a family, as well as the head of a business enterprise, are epitomized in a line from an old poem: ``I'd rather you should walk with me than merely point the way.''

The ``way'' Mr. Leonard has hewed to with his family and his store revolves around some venerable moral teachings. ``There's nothing truer than `Do unto others,' '' he says, and explains that in business terms that means always thinking in terms of your customer's need. ``It's very dumb to say, `I want to make money!' You're much better off to fill the customer's need -- which is to save money -- and the world will beat a path to your door.''

The world around Norwalk has done just that for Stew Leonard, pushing annual sales at what has been dubbed the ``World's Largest Dairy Store'' to $80 million. Authors Tom Peters and Nancy Austin cite the store as an entrepreneurial gem in their latest book, ``A Passion for Excellence.''

But that success hasn't come easily. The store itself grew out of a crisis. Fifteen years ago Mr. Leonard learned that the small dairy that had supported his family and his father's before him lay in the path of a new state highway. Should he get out of the business altogether, or was there a way to keep the traditional family livelihood alive?

True to form, he talked to each of his customers and found that home delivery of milk was getting too expensive for many, but that most would be willing to drive to a place ``that still had that dairy feeling.'' Armed with that finding, he sought out Bernie Gouz, who ran a successful dairy store business on Long Island, learned from him, and formulated plans for his own store.

Naysayers were rife, he recalls. How can you offer lower prices at the same time you're investing in this huge physical plant, they asked. Following one particularly depressing bout of soul-searching, his wife, Mary, assured him that she believed in him regardless of what others said. After that, he says, he never listened to the doubters again.

Occasionally, over the years, morale problems cropped up at the dairy store as they do in other businesses. A recent one came to a head when Mr. Leonard, his family, and a number of employees were attending a trade convention in Chicago. He had heard ill-defined rumbles of dissatisfaction and decided to get the whole group together in a hotel room to talk matters out.

What emerged was ``vehement opposition'' from employees to a new medical plan, which imposed a deductible in an effort to cut costs to the company. When that depth of feeling became clear, Mr. Leonard says, he and his family agreed to return to the old system. The morale problem was snipped, but best of all, he adds, the children were there learning, soaking it in ``like sponges -- they've been sponges since they were little kids.''

Good relations with employees have been a matter of constant on-the-job training for the Leonard offspring. Beth suggested the idea of an in-store bakery a couple of years ago and was immediately put in charge of the project. The bakery has since become a huge success, selling, for instance, some 75,000 chocolate-chip cookies a week. As manager, says Beth, ``my main job is to look around at people and try to be sure they're doing new and interesting things.''

She observes that her dad was ``really good about all the time recognizing your contributions'' and says she tries to do likewise with the 40 or so people who now work with her. Nothing makes her happier, she says, than to see someone progress to a better position.

Stew Jr., an administrator with the store, agrees. ``The biggest satisfaction,'' he says, ``is seeing people grow -- the people who work here -- because if the people who work here are happy, the customer will be happy.''

The biggest satisfaction to Stew Leonard Sr. and his wife, one suspects, is their children's enthusiasm for the family business, something Mr. Leonard says they always dreamed of. ``My children are the reason the business is growing,'' he says, ``and the children understand that the employees are the backbone of the business.''