Acme has completed the realignment of its marketing and merchandising staff and, although there were only a couple of job eliminations, all staffers had to reapply for their positions, which resulted in some new job classifications, many of which paid less than before.
Under the supervision of Bob Gleeson, the new senior VP-merchandising at Acme, the merchandising team now consists of these sales and merchandising managers (SM&M): Nate Atkins, dairy and pre-pack meat; Joe Cunnane, DSD snack; Jeff Geiges, meat and seafood; Marie Ann Mozzone, meat and seafood (assistant SM&M); Eve Gigis, total beverage; Frank Hubmaster, frozen food; Jenifer Krause, health and wellness; Don O’Brien, dry grocery; Sandra Sage, bakery; Nick Sborlini, non-foods; and Mary Washinko, deli.
Others on the merchandising team include: Jay Schneider, produce development manager; Sue Glenn, floral business support manager; James Trish, produce business support manager; Brian Lindsay, deployment manager; Mike Santangelo, schematics analyst; and Lisa Kibler, and Marlon Miller, who are both store set-up coordinators. Represented on the new marketing team are: Kent England, director; Sherry Caldwell, marketing lead; Ricky Meekes, ad specialist; Robin Hamilton, marketing analyst: and Lynn Smith-Palombit and Elaine Cole, who are both now local marketing coordinators. The organizational changes will take effect on September 27.
Although we keep hearing good things about division president Dan Sanders (especially about his intelligence and strong people skills), the fact remains that Mr. Sanders doesn’t have much of hand to play with. Morale remains subpar at division headquarters in Malvern, PA and is worse in the stores. In order for the new boss to be effective, he needs capital for new projects, an aggressive plan to lower pricing and some type of signal that executives in the ivory tower in Eden Prairie are interactively involved. That hasn’t happened yet and time is running out as the competitive volume increases and the economy still stalls.
Supervalu has also realigned its corporate merchandising team, now under the direction of Steve Jungmann, EVP merchandising., which in part fueled the Acme marketing and merchandising reorganization, In the area of business development managers, a layer of management in center store, fresh, health and wellness and merchandising strategic initiatives will be eliminated. This downsizing includes all the business development manager (BDM) roles. According to Jungmann, the BDM role was originally created to be the touch point between corporate and banners – to be strategic drivers of category plans and sales. Over the past couple of years, Supervalu said that this role has become one of execution versus strategy as originally intended. By eliminating this layer, the company said it will be able to speed decision-making within its merchandising team. There are no changes to the BDM positions located in banner produce merchandising or corporate supply chain.
To assume the responsibilities formerly held by the enterprise BDMs, Supervalu is adding category director (level I and II) positions, and additional business support managers (BSMs) and business support specialists (BSSs). Current merchandising directors will take on the new category director title. Jungmann, in a memo, noted that this change is not a reflection on the individual contributions of each one of the BDMs. “They are talented individuals who have worked hard to get us where we are today. We thank them for all of their contributions.”
He added that this change will help Supervalu streamline work flow, increasing efficiencies in decision-making and speed-to-market; improve communication to its banner teams and vendor partners; and ensure accountability for category financial metrics with one point of responsibility. “We will be aligning resources appropriately with the workload and have clearly identified decision-makers and strategic owners for each category. BSM roles will be enriched through ownership of the category or sub-categories, giving our associates opportunities for increased responsibility and clear career pathing.” Jungmann stated
As for private brands, the retailer/wholesaler said it has always been the long-term plan for the enterprise merchants to “own” the private brands strategies and results for their categories. Therefore, it is moving the “ownership” for private brands business results to the new category director roles discussed above. In order to facilitate this change, the private brands merchandising and sales team, which presently has this “ownership,” will be eliminated. Supervalu will be adding three private brands product manager positions to the product management team, and the business analytics team will now report directly to Andy Abraham, group VP-private brands.
In fresh merchandising, led by senior VP Ed Hanson, the private brand manager positions on the fresh team will be eliminated. Their current work will be distributed among the merchant teams and the private brands assistant manager. Jungmann stated that this change is only taking place within the fresh team because the breadth of private bands products in this category is much less than other categories.
Supervalu announced that effective September 22, Rich Juliano, group VP merchandising strategic initiatives (and a former Genuardi’s executive), will retire. His role will not be filled, and the merchandising strategic initiatives team will be re-aligned to other areas within enterprise merchandising as follows: supplier diversity, led by Michael Byron, will report to Ed Hanson; merchandising services will report to Patty Fishman, VP non-foods merchandising; merchandising execution, led by Corey Pearson, will report to Spencer Insolia, VP strategic pricing; and enterprise data management, led by Jim Siefert, will also report to Insolia.
Other organizational changes on the merchandising strategic initiatives teams include: schematics where three schematic supervisor positions will be eliminated, one schematics manager and two schematics analysts will be added to the team; the downcoding function currently housed with the mapping team in store design services, will now be housed with the schematics team; in enterprise data management the number of managers will be reduced from five to four and the remaining teams will continue to be aligned by categories; planning analysts who currently report to strategic pricing (Spencer Insolia) will now report directly to a newly-created merchandising planning supervisor role. This new position will report directly to Kerrie Flaten, forecasting and promotional execution manager.
Insolia’s strategic planning team will also be adding four new specialist support groups (SSG). Those groups are comprised of pricing and promotions, space and assortment, vendor negotiations and category strategy. All enterprise merchants will be supported by the data and information provided by the SSG. Enterprise merchants will use information provided by the SSG to obtain insights for category decision making. Merchants are responsible for develop category strategy, execution and owning all final decisions. Each SSG will be led by directors who will provide strategic and tactical direction to help optimize merchandising decisions across the enterprise. The SSG director will utilize both internal data analysis and external data to drive efficient and accurate decisions; optimizes related tools and processes and analyzes historical data to measures results and develop future improvements. Each SSG will also include manager and analyst roles.
The banner pricing managers, currently reporting to banner lead merchants, will now report into enterprise merchandising on Insolia’s strategic pricing team and will continue to be located at the banner offices.
Supervalu and its CEO Craig Herkert certainly seem to love “process.” Let’s see if this new “streamlined” team can actually help sell more groceries and gain wider respect from its vendors.
Will A&P Store Sales, Closings Lead To
Other Increased Real Estate Opportunities?
So we’re finally at that point. One of the “have-nots” has begun to make the difficult decision that its survival might depend on how quickly it can unload assets. With last month’s announcement that A&P will closing 25 stores in five states during the next six weeks (along with the recently announced sale of seven units in Connecticut to Big Y), how much longer will it be before Supervalu ignites its divestiture engine and follows a similar course for its struggling Northeast retail banners? Having examined a number of Shaw’s, Acme, Shoppers and Farm Fresh units over the past two months, one thing is certain in my mind – the entire Northeast fleet is sinking. Whether it’s uncompetitive pricing, weak merchandising, a significant cutback in variety (SKU rationalization – ain’t it great?), less labor (and declining morale) in the stores and fewer local decisions being made, how much longer can SVU deploy its “rope-a-dope” strategy, particularly with its stock price falling into the $10 per share range?
I’m sure new A&P chief executive Sam Martin hopes that the “third CEO is a charm” adage proves correct, because he’s got an almost impossible task at hand in trying to rescue the Tea Company, where 30 years of bad management has left it fighting for mere survival. But let’s give Martin some due. In the first six weeks on the job, he’s closing six percent of the store base and sold most of the Tea Company’s stores in the Nutmeg State, a similar decision that Shaw’s made earlier this year in Connecticut. Martin also brought in his own management team (some of whom worked with him at Office Max and Fred Meyer) and, much like his short-tenured predecessor Ron “Hopalong” Marshall, has been blunt about the problems and challenges that lie ahead. That’s more than we can say about Craig Herkert, Supervalu’s CEO, who no longer should be classified by anybody as
“new.”
While it may be easy pickins’ to also place some blame on banner presidents Larry Wahlstrom (or former president Mike Witynski at Shaw’s), Dan Sanders (Acme), Dick Bergman (Shoppers) and Gaelo de la Fuente (Farm Fresh), that would be grossly unfair given the decisions (or lack of them) made by Herkert, his predecessor Jeff Noddle, and the “think tank” senior management team and the consultants who are making or shaping the decisions made at “Oz” world headquarters in Eden Prairie, MN. The division presidents have been adversely impacted by having virtually no capital to spend on improving or expanding their store bases, and the core message that each of the
banners used to stand for – price, variety, perishables or sheer convenience – has been blurred or weakened by Supervalu’s continued inability to reinforce and improve each of the banners’ former strengths.
In fact, the core message of each of its four Northeast banners is rapidly trending in the opposite direction. Shoppers’ “price” message has greatly diminished over the past 18
months; Farm Fresh’s consistently excellent store conditions, priority on perishables and strong customer service image have eroded; other than still having the best locations in the Delaware Valley, Acme is bleeding market share because of its pricing structure and labor cuts at the stores. As for Shaw’s, it may be unsalvageable because I couldn’t begin to imagine a plan that could save it. It really is that bad.
I will give Supervalu some credit though. The recent announcement that it has partnered with Rite Aid, which will open 10 Save-A-Lot stores that will be part of its existing
drug stores in the Greenville, SC market, could be a win-win situation. The move will help SVU expand the crown jewel of its operation as it attempts to open approximately 1,200 new Save-A-Lots nationally by 2014 (an unrealistic number in my view).
For Rite Aid, which has lagged behind the two other drug chain heavyweights – CVS and Walgreens – in almost every area including growing its food business, the opportunity to
operate full-fledged grocery stores puts them ahead of their more profitable rivals – at least in the grocery segment. However, adding several hundred new grocery and perishable SKUs also means that execution at store level must rise exponentially. That’s a tall order based on the track record of the Camp Hill, PA drug chain over the past decade, during which its overall performance resembles that of another once stalwart chain retailer.
But enough about A&P already.
Despite Vendor Concerns, Ahold USA Nearing End Of Reorganization Process
Is there a more popular grocery executive in the Northeast than Jeff Martin, Ahold USA’s EVP-marketing and merchandising? While Martin’s recent speech at the AMR/MAFTO dinner meeting didn’t yield any ground-breaking nuggets, he delivered a detailed view of Ahold’s agenda, while skillfully addressing some of the vendors’ concerns. Martin’s got that special gift of making people feel better about themselves. One of those vendors concerns was the bureaucracy that some perceive has now become part of the reorganization process. Martin admitted in his speech (and candidly to me later that evening) that Ahold USA is somewhat behind on its initial timeline, but the end of the process is in sight. When I voiced the concerns of some reps and brokers that the company had begun to resemble the way Stop & Shop went to market (slow decision making and less than sharp retail execution), Martin was aware of the perception and he admitted that he at times is frustrated with the process. However, he added, those situations should abate shortly, when the entire merchandising team is housed in Carlisle and the chain’s IT platform is deployed. Martin’s team has also filled some slots in the past four weeks. Giant/Carlisle veteran Joanne Leonardi has been named director of HBC. She will ultimately report to the VP-HBC & pharmacy (currently an open position). In the interim, she will report to Jeff Dichele, senior VP-non-perishables. Recently named category managers include Becky shop, pet/baby/GM and Joel Brissenden, seasonal/cards. Additionally, Dan Glei, senior VP-brand and format development, has added several key people to his team. They include: Edgar Elzerman, VP-corporate brands. He will be based in Carlisle with team members working in Quincy and Carlisle. Reporting to Elzerman are: Michael Sherman, director of corporate brands sourcing (based in Quincy); Robert Frappier, director of corporate brands integrity (based in Quincy); Melissa Smith-Hazen, director of corporate brands design (based in Quincy); and Mark Gilliand, director of corporate brands merchandising (based in Carlisle); The director of corporate brands and senior manager of corporate brands sourcing roles, both to be based in Carlisle, are yet to be filled. Also named to Glei’s team are Ned Maroney, senior director of pricing & merchandising systems (based in Carlisle) and Steve Lamontagne, VP-format development. Lamontagne and his team will be based in Carlisle. More Ahold news: the sheer number of people who are now part of the expanded Ahold USA organization has created a space challenge in Carlisle and the company announced that those associates who work for Giant/Carlisle and also for Ahold Financial Services (AFS) will be relocating from 1149 Carlisle Pike to new facilities Ahold Financial Services, which currently operates on the first floor of the Carlisle office, will relocate to the former Dickinson College building (the Stoner Building complex) on the Harrisburg Pike. The relocation will allow AFS to remain together as a team and less than a half mile away from the Ahold USA support office in Carlisle. That move is expected to occur in the next 60 days. Ahold USA tax associates located in Carlisle will also move to the Stoner Building Complex on the same timeline as AFS. As for Giant/Carlisle, president Rick Herring and all division associates will be relocating to the Brookwood office in Carlisle, off of Walnut Bottom Road. Planning is under way within the division with an expected move later this month. There will also be relocation for some Stop & Shop associates in the Boston and metro New York areas. Mark McGowan and Stop & Shop/New England division employees will be relocating from Braintree, MA to the Ahold USA Support office in Quincy (QCP). This move is expected to take place in 2011. In the metro New York area, president Ron Onorato and Stop & Shop associates will eventually relocate from their current space to other offices in the region. Information will be communicated as soon as possible. Robin Michel and her team in the Giant-Landover division will remain in their current offices in Landover, MD. Also housed out of the Landover offices are select Ahold USA support office functions, including consumer affairs. Additionally, Ahold USA intends to move its MAC risk management, AFS central check collection, and associates currently working on the Oracle (NextGen) project in Canton, MA to QCP in 2011. Carlisle-based associates working on the NextGen project will continue to be based in Carlisle. The S&S/Giant-Landover IT application maintenance and support team in Building 60C in Braintree, finance team and payroll department currently based in Building 60A also in Braintree, will move to QCP sometime in 2011. Remaining in Braintree will be Ahold IT technical services, HP technical staff and the S&S/Giant-Landover retail help desk. On the Ahold USA financial front, the sales and earnings numbers continue to be good (especially compared to the overall supermarket segment). For its second quarter, net sales in the U.S. were $5.5 billion, up 5.5 percent. Much of that gain was made by its acquisition of Ukrop’s ($120 million). Identical sales were up 0.5 percent (ex-gas) and operating income rose $22 million to $270 million (4.9 percent of sales). Ahold no longer reports its U.S. numbers by operating banner. While a 0.5 percent increase in ID sales may seem meager, the supermarket channel as a median group is still showing negative IDs in the two percent range, even though deflation has cycled through. The fact is that the recession lingers and even those consumers whose disposables incomes haven’t been financially impacted are operating in a culture of thrift. With virtually every Northeast market over-stored and a plethora of retailers to choose from, expect the sledding to be slow for quite some time.
Local Notes
Wawa, arguably the best run convenience store chain in the country, plans the most extended geographic expansion in its history when it enters the Orlando and Tampa markets during the next year. The 529 store privately-held retailer, which operates stores in Maryland, Pennsylvania, Delaware, New Jersey and Virginia, will bring its dynamic food and fuel format to Central Florida, hoping to open about 15 stores over the next 24 months…A&P will open it first new store in several years, when it cuts the ribbon on a replacement store on September 24 in New Providence, NJ…Foodtown, the Avenel, NJ based independent group, will soon be utilizing C&S as its primary grocery suppler after many years of being serviced by White Rose…Wal-Mart posted improved second quarter earnings, but continued to struggle with ID sales. For the period ended July 31, earnings increased 3.6 percent to $3.59 billion, but identical store revenues declined by 1.4 percent, continuing a recent trend of negative identicals. Overall sales rose three percent to a whopping $103.7 billion for the 13 week period. Clearly, the realities of the slow recovery have impacted many of Wal-Mart’s core shoppers, but the fiercely combative and diverse retail landscape makes it clearer than ever that the Behemoth can no longer steamroll much of its competition. And don’t minimize the effect that the dollar store channel is having on the planet’s largest merchant. In Wal-Mart legal news, the Bentonville, AR retailer is asking the U.S. Supreme Court to review the gender discrimination lawsuit (the largest in U.S. legal history) involving more than one million female associates (past and present) at Wal-Mart and Sam’s Club stores. The original suit was filed in 2001. Wal-Mart is hoping the Supreme Court will not allow the litigation to continue as a class-action suit, an action that has already been upheld by four separate courts. The scope of the lawsuit is not only large, so are the potential financial ramifications: an unfavorable verdict against Wal-Mart could cost it more than $1 billion…I was personally deeply saddened by the death of John Kluge, superstar businessman, world-class philanthropist and one of the greatest people I’ve met in my 59 years on this planet. Kluge passed away peacefully on September 7 at his Charlottesville, VA home, two weeks shy of his 96th birthday (his full obituary appears on page 2 of this issue). I first met John Kluge through his business partner, David Finkelstein, in 1978. Both men, whose successes were self-made, were larger than life. Not only in their career achievements, but with their tremendous people skills and their penchant to help the less fortunate. In a rare interview we did with Kluge about 12 years ago, he explained how he personally negotiated more than 100 business deals of all shapes and sizes, ranging from entrepreneurial acquisitions (laundromats) to selling his TV stations to Rupert Murdoch for several billion dollars. He truly lived for the “art of the deal” and it didn’t surprise me that he paid for much of his tuition for Columbia University by winning high stakes poker games in Harlem in the 1930s. Whether you visited John Kluge in New York, Charlottesville or Palm Beach, a day with him was always full of interesting stories, deal making or strategizing, with a few R-rated jokes thrown in. At 95, he lived a very full and wonderful life and I was always honored to call him a friend. May his soul rest in peace…industry quiz of the month: What do the words Bimbo, Lala and Tata mean to you? If you answered that they are three foreign companies which are increasing their business in the US, you have a one-track mind about the grocery business. If your brain took you in another direction, you’re probably not old enough for Viagra use yet. Incidentally, Bimbo acquired George Weston Bakery and Lala purchased Farmland Dairies. Both are based in Mexico. Tata, an Indian firm, just acquired the corporate services and technology unit from Supervalu.