Taking Stock

Rocky Road Continues For Most Retailers As Competition, Format Diversity Stifle Growth 

Despite conditions that were even more challenging than a year ago, there were some “winners” in this year’s annual market study. It’s a brief list, and the companies included on it have been mentioned favorably (and recently) in this column before. Those ‘winners’ (in no particular order) are: Kroger, Harris (“Who’s Your Daddy”) Teeter, Wegmans, Whole Foods and Trader Joe’s.

That’s not to say that everybody else did poorly (although there were a growing number of merchants whose sales declines were noteworthy). Our research found that operating in “The Great Recession” which hit the economy in 2008, is getting more challenging every year for most operators.

Competition remains the biggest reason for the difficulties retailers are facing in the $45.2 billion Mid-Atlantic market. When you think the region is already so oversaturated that a new store (typically entering at a premium real estate cost) couldn’t possibly open in a given neighborhood or marketing territory, you’d better think again. There’s a strong likelihood that a new retailer will be opening across the street from you nine months later; it could be a Costco, Wegmans, Walgreens or a Dollar Tree. Whether the damage comes from carpet bombing or a paper cut, it all has an adverse impact on the existing retailer, which usually is a supermarket operator.

Deep pockets? Virtually all the “growth merchants” possess those. The days of scaring off a group of independents or a small regional chain are over. Today, the competition is truly a heavyweight “mano a mano” battle. That may extend the surrender time for the losing retailer, but it doesn’t blunt the impact of the damage done. With so many styles of retailing now in play, it also makes defending against so much diversity an even more difficult task. That’s especially true for many conventional supermarket retailers.

Above all, the measurable reasons that business is so difficult comes the financial mumbo jumbo that we’re forced to absorb. “Unemployment is on the consistent decline and job growth has significantly improved” are typical of the headlines we’ve seen over the 18 months. Really? And how is this manifesting itself in real sales growth in the overall economy? Unemployment numbers truthfully are somewhat irrelevant when you consider that many of the people who have re-entered the job market have done so at lower level jobs than they had previously held, so many people remain underemployed despite the fact that actual unemployment is on the decline. While Wegmans, Whole Foods and Harris Teeter may not be feeling the sting of many people’s individual financial challenges, the still rocky, fluctuating economy is one of the primary reasons Wal-Mart has posted negative IDs for five consecutive quarters, and even the once “beloved” (by Wall Street) dollar store channel has flattened out. Damage was also created by last year’s 11 percent reduction in public assistance (“SNAP”) benefits, which affected those retailers that typically serve consumers in the lower middle and low economic brackets.

While there will be market shakeout or corrections eventually, don’t expect major external changes in the next 2-3 years. The internal maneuverings – acquisitions and leadership changes – are already occurring.

So without further ado, here’s my annual take on the retailers operating in Food World’s largest marketing area, Baltimore-Washington, based on the year in review and what they may face in the near future.

Giant/Landover – Based on its proud and successful 78-year history, it was a poor performance for the overall Mid-Atlantic leader. ID sales fell significantly and only one new unit opened during the past 12 months (the beautiful replacement store at 8th & O Streets in Washington, DC). Giant also underwent a leadership change for the fourth time in five years (Gordon Reid replaced Anthony Hucker as president) and the stores now seem impersonal and sterile. New Ahold USA COO James McCann wants the company to become “famous” in several areas, but my perception is that the Giant current shopping experience is more mediocre than being anywhere near the cusp of “fame.” With additional Wegmans, Whole Foods and Harris Teeter stores on the way, Giant’s great locations are only going to protect it for so long. Measurable change won’t occur without improved sales, which will only be gained through better execution. The clock is ticking.

Safeway – It was another challenging year for the company’s Eastern division. However, there’s good news to report for private equity firm Cerberus Capital Management. They got a near steal in acquiring Safeway for $9.4 billion. Whether it becomes a great deal for anyone beyond a small group of Safeway executives and its shareholders remains to be seen. Cerberus and its AB Acquisition subsidiary will certainly put their imprimatur on its potential newest and biggest prize. Led by industry veteran Bob Miller and former Cerberus executive Justin Dye (now Albertsons’ chief strategy officer), expect Safeway to become more “Albertsonsized” when it gains control of the 1,335-unit chain. With that control likely will follow more decentralization (how much is not yet known), which is a good thing compared to Safeway’s intractable “red-headed stepchild” treatment of the Eastern division for many years. Now that the company’s Baltimore-Washington stores have been moved from Cerberus/AB Acquisition’s Albertsons LLC unit to its New Albertsons, Inc. division (read about this $659 million deal later in this column), a better regional alignment (Acme, Shaw’s, Jewel/Osco) has been created. Based on its track record (and also that of other PE companies), don’t expect a lot of cap-expenditures on broadening the real estate pipeline. However, if the new owners really want to improve their connection with their current and potential future shoppers, they need to achieve a significant image change (especially against new competitors). An injection of pizzazz is necessary to enhance its long-standing perception as a risk-averse “vanilla” retailer. Safeway also needs to add more labor in its stores and adjust its everyday retails, given that Giant is beginning to lower some prices, Harris Teeter just announcing a price impact program and Wegmans enjoying great success with its CLP (Consistent Low Prices) strategy. Within a year, we’ll get to witness if significant changes are made to improve the Safeway shopping experience or whether this entire Cerberus-led acquisition was driven by a desire to roll up the entire Albertsons fleet and go public.

Shoppers Food & Pharmacy – After seven nomadic years in the desert, there is a sighting of an oasis. Thanks to the more enlightened new management team at parent company Supervalu, the discount retailer is finally showing some forward progress as ID sales improved for the first time in ages and the company installed the knowledgeable and experienced Bob Gleeson as Shoppers’ president last year. Gleeson has worked for all six of Shoppers’ previous leaders, including the late, great Ken Herman, founder of the discount operator. His skill set and temperament have restored morale at the regional chain that suffered greatly under the sheer ineptitude of past Supervalu CEOs Jeff Noddle and Craig Herkert. Also helping the Bowie, MD-based retailer is a commitment to return to the days when price was the catalyst of Shoppers’ success. But there are long-term issues that bear watching. Externally, Shoppers has been hurt by the new wave of competition.  The competitive assault has not come from the higher visibility competitors – Wegmans, Harris Teeter or Whole Foods – but rather from similarly niched price and ethnic merchants such as PriceRite, Save-A-Lot, Aldi, International Markets and the myriad of dollar stores that have opened in recent years. Internally, the issues are different, but also could be game changers. During the past six months, speculation has been fairly pervasive that SVU is considering selling its second largest regional chain. But, if Supervalu decides it wants to hold on to Shoppers, will it provide enough cap-ex (especially to invest in new stores or replacements) to keep pace with its rivals who have demonstrated that they will make the needed investment to open new stores to grow their market shares?

Harris Teeter – Still ranking eighth among all B-W food and drug retailers, Harris Teeter has a long way to go to challenge Giant and Safeway for market share dominance. But in the one-on-one battles, HT is winning a lot of matches and clearly outpaces the big two in attracting millennials and other categories of new shoppers (as did Wegmans, Whole Foods and Trader Joe’s). Now with Kroger’s $100 billion muscle behind them, Harris Teeter just fired its first post-Kroger salvo: a 15 percent price reduction in its Baltimore-Washington area stores. Prior to the Kroger acquisition, HT had been opening approximately four stores a year in the B-W area. Expect that rate to increase slightly. What I don’t expect to change is the investment in training, strong customer service and high level of retail execution that’s been a hallmark of the Matthews, NC merchant for many years. Imagine what Harris Teeter might look like by 2017 if it can continue to execute at its present levels: approximately 55 stores in the B-W market (far more than Whole Foods or Wegmans would have), a strong consumer image and a pricing program that would play better than either Giant’s or Safeway’s (at least by current comparison). That would be a powerful proposition to bring to the market.

Wal-Mart – It was not a particularly good year for the Bentonville Behemoth. The past 12 months in the B-W market represented the slowest period of new store growth for the planet’s largest retailer since the mid-1990s. ID sales in this area were generally flat (which slightly bettered the chain’s national results) and, other than the excitement of opening the two stores in Washington, DC (which are doing very well; three more are planned for the District), Wal-Mart was shifting internal gears by opening more smaller units (Neighborhood Markets, Wal-Mart Express) in markets other than B-W or points north. Wal-Mart’s other pressing challenge will be repairing the horrific out-of stock situation at its stores (a $3 billion opportunity, according to new Wal-Mart CEO Doug McMillon). However, viewing the big picture, Wal-Mart is still a very formidable force to reckon with and, by every measurable metric – average per store volume, customer count, sales per square foot, etc. – Wal-Mart truly remains a Behemoth. Company executives have acknowledged that their corporate pride has been hurt and that there have been too many scandals and distractions that have affected the company’s momentum. But they’ve never lost their desire to be the “cheapest guy in town” and like all retailers who want to sell more stuff, Wal-Mart will always have my respect. Competitors, too, should respect, but not fear the Behemoth, especially when wounded.

Wegmans – With only one new B-W store this year – in Germantown, MD – it wasn’t an especially explosive year for the Rochester, NY-based regional chain. But, that’s not the point. With each new 125,000 square foot store drawing from a legitimate shopping range of up to 15 miles, Wegmans can have an impact on a local market more than any other retailer in the Northeast. With its first Montgomery County, MD stores now open for nine months, customers are coming from the extremely affluent southern parts of the county (Bethesda, Rockville, Potomac), from Washington, DC and from Frederick County (where Wegmans also operates a store). With new units slated for Owings Mills, MD and Alexandria, VA, Wegmans will continue to gain steady market share growth without the quantity of stores typical of other retailers. With the recent opening of its new smaller (80,000 square foot) prototype in tony Chestnut Hill, MA, the uber-retailer has proven it can get most of its package in a store that’s 40 percent smaller than its larger models. That reduced footprint potentially gives the family-owned merchant markedly better opportunities to penetrate more demographically favorable areas that were not possible before due to real estate challenges. A Wegmans in downtown DC, or in Baltimore? Perhaps an 80,000 square footer near Tyson’s Corner or in Annapolis? It’s certainly more plausible than a year ago. And one more thing about Wegmans: Over the past 18 months, I’ve heard several industry executives comment that the retailer’s in-store execution has slipped a bit and they’re not as sharp as they were five years ago. My response: pure fiction. Sure, every day might not appear like a grand opening celebration and, by 6:00 p.m., their stores might look a little beaten up. But by comparative standards, Wegmans continues to execute at the highest industry levels. Just check their customer loyalty scores, their average basket size and sales rings against all comers.

Chris Michael: A Stellar 41 Year Career Devoted To The Independent Retailer 

There was no retirement tour, no grand announcement of his stepping down, no fanfare about his many past accomplishments. That’s not surprising, because if you know Chris Michael, you know he wouldn’t have wanted any hoopla surrounding the recent announcement that after 41 years with Associated Wholesalers Inc. (AWI), he was leaving the company that became his life’s mission -a mission he carried out with passion, dedication and a burning desire to improve the status of his members and for that matter, all independent retailers.

Chris and I are the same age (63) and he was one of the first people I met when we formed Best-Met Publishing Co. in 1978. At that time, Chris served on AWI’s board as a second generation independent grocer whose family owned a supermarket in York, PA. One could tell almost immediately that Chris had the intellect, work ethic and leadership skills to take AWI to another level. By 1980, he was named president and CEO, replacing Harlan Helzer, who retired after many years of service. Chris Michael was only 29 years old when he was elected.

During his early tenure, he pushed AWI to merge with United Associated Grocers and, about a decade later under his guidance, the Central Pennsylvania cooperative wholesaler acquired another co-op, Affiliated Food Distributors, based in Scranton.

Always a risk taker, Chris saw an opportunity to broaden AWI’s reach in 2006. Acknowledging that the wholesale business was evolving and consolidating, he knew that to grow his company’s business he needed to find a different way to attract independent retailers. With the White Rose acquisition, AWI could offer independents a distribution alternative to the member-owned concept and at the same time expand the company’s footprint into the largest grocery market in the U.S.

On paper, the strategy seemed sound, although Chris told me at the time that blending different business models and cultures would be a challenge and that AWI would move cautiously to integrate the two businesses.

Objectively, that integration never worked out as planned. Perhaps the differences between the two wholesale firms – in customers bases, internal cultures and the sheer division of doing business on a daily basis in Robesonia, PA vs. Metro New York – was difficult to overcome.

So, as AWI attempts to restructure its business, it will do so without the man who was the linchpin in an earlier restructuring, bringing a somewhat sleepy group of Central PA wholesale grocers together to form the second largest grocery co-op in the Northeast.

Chris, we wish you and Linda all the best in retirement and in whatever future endeavors you might seek. Now’s the time to enjoy life and have fun. And also know that you made a difference.

White Rose Sale Critical To AWI’s Future Success 

New AWI chief executive Matt Saunders steps into the leadership role with his plate full. The veteran wholesale executive, who was brought into the Robesonia, PA co-op by Chris Michael two years ago, knows that selling White Rose is key to the long-term success of AWI, a point also echoed by vice chairman Mike Rothwell, the respected owner of Pennington Quality Market in Pennington, NJ, who noted, “A sale of White Rose will give AWI the opportunity to get back to our co-op roots, with a sharp focus on growing the core business.”

As to who might buy the Carteret, NJ distributor, that’s wide open to speculation, but one thing seems consistent when talking to other industry analysts and observers – selling any wholesale business today, especially one that is unionized and based in the New York metropolitan area, will be a tough task.

“There would seemingly have to be a guarantee that White Rose’s larger customers – Kings/Balducci’s, Fairway and RMG – and the groups that it controls such as Met Foods and Associated would have to be part of any transaction,” said a veteran New Jersey based retailer who currently is not a White Rose customer, but once was. “From a logistics perspective alone, all the major wholesalers in the Northeast – Bozzuto’s, Burris, C&S and Supervalu – can easily service White Rose’s customers based from their current distribution centers and can supply them less expensively and more efficiently. So, securing White Rose’s customers is vital to selling the business.”

Saunders will relocate to Wyomissing, PA and must also deal with a membership that is concerned about the financial stability of AWI itself. Much of that concern stems from the company’s inability to maintain its liquidity level as determined by its banks. As such, earlier this year AWI paid its members only 50 percent of their annual patronage (rebate) for fiscal 2013, which the company stated was $10 million. To account for the other half of that annual payment to the member/owners, AWI issued new Class “B” stock. That new stock can ultimately be converted to Class “A,” but only if approved by AWI’s board as part of the redemption process.

Additionally, a letter from Michael to AWI’s members earlier this year, he stated, “…the Class ‘B’ shares have no maturity and will be redeemed by a majority vote of the board of directors from time to time after a minimum period of one year….the modifications were immediately necessary to maintain our financing facility, minimize our interest expense and provide the necessary liquidity to maximize the annual patronage dividend payment.”

From June 17-19, Saunders and his team led a series of “town hall” meetings in Scranton, Robesonia, York and Pittsburgh to personally inform and update AWI’s members about the current state of affairs and assure them that, with the proposed sale of White Rose, AWI can return to the form of previous years and use the proceeds to build a stronger company.

Saunders also acknowledged that financial advisor, Lazard Middle Management, has prepared a prospectus on White Rose and expects to circulate that “book” by the end of the June to interested parties.

There’s no sugar-coating the fact that it’s been a difficult year for the Robesonia, PA firm as it has tried to deal with challenges at White Rose that in turn have affected AWI’s internal balance.

If it can sell White Rose at a fair price, there’s every reason to believe that AWI’s core $1 billion a year business can remain intact and potentially even grow.

We should know more by the end of the summer.

‘Round The Trade 

A rollicking good time was had by many at Wal-Mart’s annual meeting held earlier this month at the (where else?) Bud Walton Arena on the campus of the University of Arkansas in Fayetteville. More than 14,000 shareholders and Wal-Mart associates came to hear celebrities Harry Connick, Jr. (who also emceed), Pharrell Williams, Sarah McLachlan and Robin Thicke perform at the annual spectacle. When the show business ended and the real business began, Behemoth CEO Doug McMillon claimed that the biggest task facing the world’s largest merchant was to bring the changing world of e-commerce together with its physical stores to improve its customers’ shopping experience. “Our purpose of saving people money will always be relevant, said the 23-year Wal-Mart veteran, who was elected chief executive in February. “We’re going to invent the new and bring together the digital world of e-commerce with the physical world of our stores.” In the meantime, McMillon and his team are continuing to deal with a prolonged slump. ID sales at its U.S. stores (which account for 60 percent of the retailer’s total sales) have now declined in five consecutive quarters and customer counts have also dipped. Clearly, Wal-Mart is being hurt by the slipping buying power of its primary customer base. Competitors have had 20 years to memorize the company’s playbook and have thus developed methods to defend against the Behemoth’s go-to-market initiatives. One of Wal-Mart’s ongoing problems is the numerous lawsuits and ethical issues it continues to face. The biggest of all, its Mexican bribery scandal, is now nearly three years old. You would expect that with so much time elapsed and with Wal-Mart’s detailed, costly investigation into this “black mark,” that there would some answers to be gleaned by now. Not so, according to an excellent story in the New York Times on June 4. Although the Times piece detailed the connection of the bribery scandal with the departure of several former Wal-Mart executives and how the company has changed its compliance structure and personnel, there’s no indication that the investigation is nearing its end or that a report will soon be issued. What we do know is that Wal-Mart has reportedly spent $439 million on the investigations and restructuring of its compliance program. Geez, we put a man on the moon faster than this. And that’s really a critical problem that McMillon needs to improve. His predecessors – Lee Scott and Mike Duke (who ironically are both linked to the problems in Wal-MartMexico) – never worked hard enough to change Wal-Mart’s image as a somewhat sneaky, heavy-handed company that squeezed its associates and leveraged its huge clout to achieve its goals (Mel Brooks might have referred to them as “Engulf & Western”). McMillon has a real opportunity to change that image. More Wal-Mart news: the company is taking its online price comparison tool – “Savings Catcher” -nationally. “Savings Catcher” compares competitors’ ads for items at Wal-Mart and offers gift e-cards for the price differential when a competitor’s price for an eligible item is lower. Wal-Mart test-marketed the program in about a half a dozen markets this spring…Grocery Outlet, which is a significant factor on the West Coast and acquired New Holland, PA-based Amelia’s Grocery Outlet in 2011, is reportedly on the sales block, according to multiple sources. The small-box discounter is currently owned by PE firm Berkshire Partners LLC. The company operates approximately 180 stores and had estimated annual sales of $1.4 billion, with earnings in the $100 million range. It is reportedly seeking at least $1 billion to sell…Advantage Sales & Marketing (ASM), which along with rival broker/agencies Acosta and Crossmark led the effort to take their businesses national, has a new owner. Leonard Green & Partners and CVC Capital Partners have acquired a majority interest in the Irvine, CA-based sales and marketing firm from another PE firm, Apax Partners. The price is reportedly in the $4 billion range for a company whose annual revenue is estimated to be $1.6 billion. Leonard Green marks the fourth private investment firm to own ASM since 2006. Leonard Green also has a stake in other food companies such as BJ’s, Petco and Jetro. I wonder if the Los Angeles investment company will seek to make ASM the first food brokerage firm to launch a public offering? Both Acosta and Crossmark are also controlled by Wall Street financial investment organizations…in the biggest food industry deal of the month, it looks like Tyson’s all cash $8.55 billion bid to acquire Hillshire Brands was enough to convince Hillshire’s board to win the competition between the large protein processor and Pinnacle Foods (Aunt Jemima, Duncan Hines, Wish Bone, etc.). Tyson’s bid also trumped an $8 billion offer made by Pilgrim’s Pride. The spoils of potentially losing aren’t so bad in this case. If Pinnacle elects to offer no further challenge to Tyson’s bid, it would receive a $163 million termination fee.

Local Notes 

As I am writing this in late June, the first wave of Harris Teeter’s price impact plan is just being rolled out. By July 4, expect the media fireworks to begin and then the real impact to be felt. Like the price reduction plan unveiled in late April in its core Charlotte market, the upscale service-oriented merchant – which has grown more quickly than any other supermarket chain in the Baltimore-Washington market over the past decade – is about to address its one perceived weakness (high retails) with an aggressive new program. Backed by strong parent firm Kroger, HT now has the leverage and flexibility to work on areas that aim to strengthen the company’s infrastructure and ultimately grow market share. Like the Charlotte price impact initiative, Harris Teeter has reduced thousands of items which are supported by in-store signage and will shortly launch an aggressive radio and TV campaign promoting the plan. We’re told that the initial rollout will take 2-3 weeks to implement at store level before a formal announcement is made. The pricing initiative is already producing favorable results in Charlotte (and also in Asheville and Henderson, NC) and its impact could be huge in B-W where market leaders Giant/Landover and Safeway are not perceived as strong price operators and have fallen even further behind HT in service and perishables image. We’ll be out checking stores in early July and we’ll keep you posted about the upcoming battles. Corporately, parent firm Kroger continues to buzz along, seemingly immune from the other difficulties most of its supermarket rivals are experiencing on the top and bottom lines. In its recently completed first quarter ended May 24, the Cincinnati based supermarket juggernaut reported a 9.9 percent increase in total volume to $33 billion; ID sales (excluding fuel) improved by an impressive 4.6 percent. Kroger’s quarterly earnings reached $501 million, an increase of 1.5 percent from the same period a year ago. After posting these strong results, Kroger raised its net earnings guidance for the year to $3.19- $3.27 per share from a previous expectation range of $3.14-$3.25 and said it expected identical store revenue for the year to range between 3-4 percent for the year, up from 2.5-3.5 percent. During a conference call with financial analysts, Kroger officials noted that the sharp sales jump was an indication that shoppers were less cautious in their spending and more confident that the economy was recovering. “We are seeing strong positive indicators in shopping behavior,” CEO Rodney McMullen stated. “Our customers have exhibited less cautious spending behavior, for example. Consistent with the rise in consumer confidence index in May, our own customer research tells us that more customers perceive the economy to be in recovery. While it is obviously welcome news, the recovery remains fragile, especially for customers on a budget.” According to new COO Mike Ellis, Kroger’s acquisition of Harris Teeter is “going extremely well. We are spending time with Harris Teeter and learning a lot about how they connect with customers. Their store standards and fresh foods are world-class, and our cultures are a great fit, which makes our integration work rather easy.”…the news isn’t quite as rosy at Ahold USA, a chain that was once thought to be the leading contender to acquire Harris Teeter. The Zaandam, Netherlands- based international retailer posted operating income of $533.69 million in its first quarter ended April 20, down 6.2 percent and its U.S. ID sales remained slightly negative for the third consecutive period. Overall U.S. sales were down 0.3 percent (at constant exchange rates) and ID sales (excluding fuel) also dipped by 0.1 percent. Underlying operating margin declined from 4.1 percent to 3.9 percent. Dick Boer, Ahold’s CEO, told analysts in late May that Ahold will invest more aggressively in the quality and merchandising of its fresh assortment as well as in employee training while also focusing more sharply on price, under a program called “Project Thunder” which was first test-marketed last year and now has been rolled out at about 200 stores). “We are accelerating our plans for further rollout, increasing the intensity of the program in New England (Stop & Shop) specifically,” Boer noted in a conference call with financial analysts in Zaandam. By the end of this year, Ahold said it expects the program to be implemented in more than 50 percent of its stores, largely funded by the expected $250 million of cost savings in the U.S…if you’ve been reading this column from the beginning, you saw that I referenced an intra-company transaction involving Cerberus and its supermarket holding company, AB Acquisition LLC as it applies to the private equity firm’s pending purchase of Safeway for $9.4 billion. Here’s the skinny; Safeway’s Eastern division was assigned by Cerberus/AB Acquisition to be part of its Albertsons LLC unit. That unit currently includes the nearly 200 Albertsons stores that the PE firm acquired from Supervalu in 2006 as well as the Albertsons stores that were part of another SVU purchase in March 2013 (totaling about 630 Albertsons and United Supermarkets in the West) and the pending Safeway deal. At that time of the March 2013 deal with Supervalu, Cerberus/AB Acquisition also formed a new operating company called New Albertsons, Inc. (NAI) which is comprised of Jewel-Osco, Acme and Shaw’s (approximately 450 units). Now that Safeway’s Eastern division has been added to that unit, it makes for a more logical geographic alignment and also will help with NAI’s debt rating. The “swap” from Albertsons LLC to NAI is valued at $659 million for the 124 Safeway stores primarily located in the B-W market. Another Safeway tidbit: the chain will not be building its planned new store in the affluent Tenleytown section of Northwest Washington, DC (42nd & Davenport Streets). The reason isn’t budget cuts, but rather a budget enhancement. It seems that the posh GeorgetownDay School will acquire the property originally slated for the new Safeway to consolidate its campus. Actually, Georgetown Day will acquire both the Safeway parcel (the bigger plot) and the adjacent land which was the site of the former Martens Volvo car dealership for the whopping price of $40 million. That doesn’t sound like a low-margin deal to me at all. And while we’re still on the subject of Safeway, I was happy to see our old friend Rick Stein, former VP-merchandising for the chain’s Eastern division, at the recent FMI Connect show in Chicago where he was recently hired as VP-fresh foods for the large trade association. We wish him well in his new endeavor. As for the FMI Connect show itself, it was a major improvement from the large association’s last exhibitor show in 2012 in Dallas, which to be polite, “stank to high heaven” (no dead skunk puns intended). While there’s still lots of room for improvement, moving the show back to Chicago (where it will remain for the next three years) was a wise move and, although there was still a dearth of large CPG companies exhibiting, the vibe was a lot better, the education forum was improved and FMI’s affiliation with United Fresh (produce) proved to be a valuable partnership. Although I’ve heard some rather loud criticisms of the show, my advice is to be patient. It’s the first year of a new show era and FMI CEO Leslie Sarasin and her revamped team having been working hard over the past five years attempting to purge the previous inertia that was created by her predecessor. And remember it’s never going to be like the old “swingin’ soiree” of the 1980s and ‘90s, when the annual FMI Show was more like a three-day party than a meaningful trade meeting. One show that consistently “hits it on the screws” is the annual IDDBA convention, held in Denver this year. Celebrating its 50th anniversary this year, the IDDBA Dairy-Deli-Bake show has grown rapidly over the past decade due to its ability to bring in both established and new vendors in key perishables areas while also attractin
g important decision makers from both large chains and independent retailers nationally. IDDBA will always play well because it takes a targeted, focused approach in its planning and offers the kind of platform where interaction with important decision makers is expected…it’s with mixed feelings that I report the recent retirement of Russ Reynolds, area sales director for Supervalu’s Eastern region. Russell was certainly more than an area sales director – he was really the embodiment of what comprises a great employee. Extremely loyal, unbelievably hard-working, smart and off-the-chart funny, Russell spent more than 40 years in this business and, despite some significant health issues, never had a bad day. I’ve taken an oath of silence about some adventures we had when Russell was in the brokerage business – those stories are best delivered in an oak-paneled room with some barstools. Suffice it to say that, as a salesman, confidant and most importantly as a person – you can’t find anyone better than Senor Reynolds. I know you’re going to hate leaving the business you love, but I hope there’s nothing but enjoyment and good times ahead, my friend…it’s been a very tough month for deaths – the obituary column is much too full. First, I want to express my condolences to Supervalu Eastern region president Kevin Kemp and his wife Lori on the death of Kevin’s mother, Jeanne T. “Bettylu” Kemp, who passed away last month in Jasper, IN at the age of 78. Also passing on from the food business was Tyler Kohler, 87, former partner in the brokerage firm Kohler, Gore & Muchnick. What a genuinely nice man Tyler Kohler was. His southern gentleman’s charm, his sly wit and his neatly trimmed beard (one of the few guys sporting chin music in the 1970s) made him stand out in a crowd. Tyler retired in 1995 and he and his wife Betsy moved to their dream home in Vermont, where he died peacefully earlier this month. From the world of show business, among those who have left this good earth in the past month include Ann B. Davis, best known for her iconic role as housekeeper Alice Nelson on “The Brady Bunch,” who died at the age of 88. It is with sadness that I also report the death of Ruby Dee, 91, who along with her late husband Ossie Davis was not only a great actress, but someone who raised the visibility and stature of African American performers in a career that spanned an incredible 74 years. Casey Kasem, the internationally famous radio host and DJ who pioneered the weekly “American Top 40” show passed away at age 82. At least now, Kasem can find some peace after his wife Jean and his three adult children waged a battle over control of his health care that seemingly resulted in more legal wrangling than concern over Kasem’s well being. One of the most underrated jazz pianists and composers, Horace Silver, is dead at the age of 85. Known for his distinctive bop sound and creative arrangements, Silver had been a staple in the modern jazz scene since the early 1950s. Perhaps you never heard Silver’s work, but if you are familiar with Steely Dan’s 1974 hit “Rikki Don’t Lose That Number,” listen to Silver’s “Song for My Father.” You will quickly notice that either Donald Fagen or Walter Becker were paying homage to Silver or simply ripping off his riff. Sports dignitaries who died this past month include Tony Gwynn, the Hall of Fame outfielder who spent his entire 20 year career with the San Diego Padres. Gwynn had an unbelievable career batting average of .338 and won eight National League batting titles. Nobody in the history of the game could place the ball more expertly through the gap between the third baseman and shortstop (he called it the “5.5 hole”) than Gwynn, who also grew up in San Diego and was a basketball star at San Diego State. Sadly, Gwynn was only 54 years old. Chuck Noll, Hall of Fame coach of the Pittsburgh Steelers, is dead at the age of 82. When he was hired in 1969, Noll began the transformation of the Steelers, then one of the worst teams in the NFL, into the most feared franchise in the league, winning four Super Bowls in a six-year period (1974, 1975, 1978 and 1979). “Chuck Noll is the best thing that happened to the Rooneys since they got on the boat in Ireland to go to America,” said Art Rooney II, son of the team founder. Finally, we’ve lost the man who played alongside Jackie Robinson on the only Brooklyn Dodgers team to win the World Series, who coached Derek Jeter during the New York Yankees dynasty days of the late 1990’s and whose manager near the end of his career was Casey Stengel. Don Zimmer died earlier this month at the age of 83. “Zim” was truly one of the most beloved characters in the modern era of baseball and he spent the last 66 years of his life drawing a paycheck from the game he was enamored with. During his lengthy career he served as a player, a manager, a bench coach and an advisor. So devoted was Zimmer to the game of baseball that he and his wife “Soot,” were married at home plate during a minor league game in 1951…before I wrap this up, I want to extend thanks to our readers and advertisers, who have really helped make our signature issue successful once again. It’s been a challenging year for everybody in the grocery industry; competition has never been fiercer at every level – there are simply no more layups. So to all of our supporters, a tip of the hat for making this market study among the most successful in our 36-year history.