With Miller As CEO, Albertsons Streamlines Senior Management Team To Sell More StuffÂ
I thought Robert Edwards, the former Safeway CEO who was named chief executive of the combined Albertsons and Safeway organizations when that deal was completed in late January, might stay on as CEO for a year. I was wrong.
Edwards’ tenure as Albertsons’ (A/B Acquisition) top dog lasted about 10 weeks. The length of his stay should be the only surprising part of that story, since the $9.4 million deal has had Bob Miller’s fingerprints on it from the beginning.
This is by no means a slap at Mr. Edwards. After all, it was he who put the deal on the table, about a year after succeeding Steve Burd as Safeway CEO. And Edwards’ unofficial other role as CTO (chief transition officer) was vital since Albertsons acquired a company that was considerably larger than it was ($36 billion in yearly sales vs. $23 billion in annual revenue). Having served as CFO under Burd from 2004 until 2012 (when he was named president), Edwards knew Safeway’s culture and its systems and helped ensure a very smooth transition.
While he will stay on as vice chairman, it was clear to many trade observers that Robert Edwards achieved his goal of providing Safeway’s shareholders with maximum value while also creating an opportunity for him to enjoy the financial spoils of the Albertsons acquisition and ultimately riding into the sunset. There’s nothing wrong with that at all.
On the other hand, the newly announced management team (which was already partially in place) really sets up well for Albertsons in the long-term.
Nobody has influenced the leadership roster of the grocery industry over the past 25 years more than Bob Miller. From his roots at the old Albertsons that began more than 50 years ago, to his role as chief executive at Fred Meyer (which was sold to Kroger), to his stints as chairman of Wild Oats, Rite Aid and Albertsons’ sister company, Supervalu, Miller has provided a platform of leadership that is unparalleled in the modern era of the food business. His has trained and taught hundreds of future executives. The current Albertsons leadership team is comprised of Miller protégés who have been able to execute Miller’s mantra of keeping things simple, focusing on the customer, operating clean stores and offering fair prices.
With Miller’s “official” elevation, the board has created a new “office of the CEO” which includes current executive VP-chief administrative officer Justin Dye and current executive VP-chief marketing and merchandising officer Shane Sampson. Wayne Denningham, another long-time Miller disciple, who was one of three executive VPs of operations (Jim Perkins and Kelly Griffith are the other EVPs and they now will report to Denningham), now also becomes COO for all divisions. Don’t be surprised if Perkins and Griffith are also given expanded store coverage duties
The transitioning of the two big companies is almost complete. The new lineup contains a lot of skill and firepower. They are unburdened by process and ego and free of having Wall Street’s invisible whip beat them down every quarter. It’s a team that’s geared simply to sell more stuff and empower the associates to feel a connection to the new organization.
Let it rip.
Robert Weis Stepping Down As Chairman;Â Leaves A Legacy Of Strong, Steady LeadershipÂ
One of the classiest (and most unsung) leaders of the grocery business announced on April 8 that he will not stand for re-election as chairman of the company his family started 103 years ago. Robert Weis, who for the past 20 years has led the Sunbury, PA regional chain through challenges and sea changes, is retiring from day-to-day activities at Weis Markets.
Mr. Weis is 95 years old and has been an integral part of the retailer’s growth for the past 69 years. He will be succeeded by his son, Jonathan, who currently serves as both chief executive and vice chairman. With Robert Weis’ retirement, the company’s board will be officially reduced from six members to five when it convenes at its annual shareholders meeting at Weis headquarters on April 23.
“My father’s contributions to the growth and development of Weis Markets are far too many to detail,” said Jonathan Weis, adding that “throughout the years, I have relied on him for valuable advice, and he has always been available to discuss any detail or issue.”
At the upcoming meeting, the board plans on naming Robert Weis “chairman emeritus” in recognition of his many years of service to the company co-founded by his father, Harry, in 1912.
I first met Bob Weis in the late 1990s, shortly before he was named chairman, succeeding his first cousin, Sig, a dynamic firebrand who dominated every aspect of Weis’ business. The company had a great track record for many years under Sig’s leadership, going public in 1965 and gaining a formidable reputation as perennially being the most profitable publicly-traded grocery chain in America.
However, by the late 1980s and early 1990s, Sig’s autocratic, insulated management style began to adversely impact the company. The stores looked stale, little new talent was being developed and competitors, particularly Giant/Carlisle, began eroding Weis’ market share dominance in key markets such as Harrisburg, Lancaster and York.
Bob Weis’ approach was so much different from Sig’s. The bombastic and quasi-tyrannical style
of his cousin was replaced by analysis, praise of the associates and a new open door policy. Bob Weis also made a move that would also help raise Weis’ stature when he tapped Norm Rich, who joined Weis Markets in 1964 as director of quality assurance, to become president of the regional chain.
The chemistry between Bob and Norm clicked from the start and for the next 13 years they helped Weis modernize many of the company’s functions while also prioritizing the happiness and welfare of its more than 18,000 associates.
And Bob Weis’ calm hand and leadership skills were never more tested that in late 1999, when two directors who sided with Janet Weis (Sig Weis’ widow) accused Bob, Jonathan and Norm Rich of an “absence of a more pro-active strategy” to improve shareholder value.
Strongly disagreeing with that view (but never outwardly expressing emotion), Bob Weis remained resolute and vowed not to sell the company. He had the leverage and used it brilliantly, ultimately buying the dissenting group’s 35 percent stake three years later.
By 2008, Jonathan Weis’ influence was becoming stronger and, as Norm Rich was nearing retirement, Weis Markets began to search for his successor. The search was lengthy and arduous and resulted in former Price Chopper executive Dave Hepfinger coming aboard as president and ultimately CEO a year later.
For the first two years of his tenure, Hepfinger produced strong results, improving efficiencies in key areas such as operations, merchandising and IT. However, by 2011, Hepfinger’s persona seemed to change – he became more aloof and less team-oriented. It became clear that he could no longer function effectively in the Weis culture, something that’s always been of critical importance to Bob and Jonathan. This time, Jonathan took the lead with the full support of his father, and Hepfinger was bought out of his contract.
Hepfinger’s departure could have been a critical loss for Weis, but Bob and Jonathan never let the problem get that far. Much like his father did in 1995, after Sig Weis died, Jonathan stepped up and became chief executive; he entrusted Kurt Schertle (now COO) to serve as his right hand man and re-energized the leadership team. A new sales-driven merchandising program was unveiled and Weis is again humming on all cylinders.
It’s a wonderful story and one that Bob Weis played a seminal role in shaping. Besides his industry legacy, what you might not know about Bob is that he’s a highly educated man (he graduated from Yale), a world-class art collector and a very generous philanthropist.
More importantly, he’s a masterful leader and a great husband and father. I’m going to miss his presence in the industry.
C&S Announces New Organizational Lineup For AWI, White Rose Units
C&S Wholesale Grocers, which acquired wholesale co-op AWI and its White Rose voluntary division late last year for $288 million, recently announced organizational changes to its sales, merchandising and category management team.
Joy Sgro, who joined C&S in February, is now VP-merchandising for all perishable and non-perishable customers serviced from the company’s Robesonia, PA and New Jersey offices. Frank Puleo has been elevated to a new post as VP-of retail marketing and services for all customers serviced from Robesonia and New Jersey. Mike Tarloff has been promoted to senior director of sales for the former White Rose customers and Duane Nizinski will continue as senior director of sales for the former AWI customers. All will report to Bill Donovan, VP-sales and account management. Leading the team is wholesale industry veteran Christopher Brown, who joined C&S in September 2014 as senior VP-independent sales for the entire Keene, NH-based C&S organization.
Sgro began her food industry career with 16 years in buying and procurement positions at Richfood of Pennsylvania (now Supervalu). She spent nearly eight years with Nash Finch in merchandising positions of increasing responsibility, and most recently was VP-trade relations and margin management for Bozzuto’s. Sgro also serves on the boards of NEWFDA, NEFF, and NFRA.
Puleo joined AWI in March 2014 as director of center store after spending 13 years at Genuardi’s Family Markets in merchandising and category management and five years with Acme Markets in category management positions. Most recently, he served as VP- non-perishable category management at Nash Finch. Reporting to Puleo will be Fred Foose, Mark Semprini, Corey Quiring, Emilio Aritz, Barry Kriebel, and John Hoffman.
Tarloff joined AWI in June 2006 as senior category manager for specialty foods and was promoted to director of sales in 2009. Prior to joining AWl, Tarloff held positions of increasing responsibility at Millbrook Distribution Services for 12 years, last serving as director of its independent store division for the Mid-Atlantic region. Reporting to Tarloff will be Ned Costa and the company’s sales counselors and representatives for the former White Rose customers.
Nizinski joined AWl in June 2008 as director of sales after spending 27 years with Spartan Stores in merchandising and procurement positions; he then advanced to a position within category management and later to sales manager. Reporting to Nizinski will be Tom Laraia, Dennis Campbell, Paul Granger, DJ Reeves, Kent Winkleman, and the sales counselors and representatives for the former AWI customers.
In related news, Matt Saunders has departed C&S. Saunders took the helm at AWI/White Rose last summer after veteran CEO Chris Michael “retired” and he steadily navigated the ailing co-op through many difficult periods last year before the wholesaler was sold to C&S last November. He is a quality person and an extremely nice man, and I give Matt Saunders a lot of credit for handling an untenable situation with professionalism and grace.
Lidl Gathering Backroom Momentum With Aggressive Store Pursuit, New U.S. HeadquartersÂ
The track record of European retailers that have sought greater riches by entering the U.S. market either organically or through acquisition has been pretty dismal over the past 25 years. Successful merchants from the other side of the pond such as Tesco, the Tengelmann Group, Marks & Spencer, J. Sainsbury, Carrefour and Leedmark have tanked in the U.S. And even other mainstays like Ahold and Delhaize Group have been criticized for having “too much Europe (process)” in their game plans and not enough local initiative and entrepreneurial spirit in their go to market strategies.
Of course, the one exception to that historical accounting would be privately-owned Aldi and Trader Joe’s, both controlled by the Albrecht family, which has amassed one of the largest family fortunes in the world.
Not having to deal with external shareholders is a huge advantage, which has allowed companies like Aldi, Wegmans, H-E-B and Publix to more effectively deploy medium and long-range planning while also creating less pressure to “meet the number” every quarter.
In the case of Aldi and Trader Joe’s, let’s give the parent company credit. In 1979, when Theo Albrecht acquired Trader Joe’s it only operated 23 stores, all in California. Today, with nearly 425 stores, Trader Joe’s has carved out a truly American identity that has produced the best sales per square foot average in the retail food industry.
And sister retailer Aldi, which expanded to the U.S. in 1976, has proven that it can be flexible in store design and product mix and tenacious with its pricing (generally considered to be the lowest price retailer in the U.S.) while also using its financial might to grow faster than any other merchant in the U.S. (Aldi currently has 1,300 U.S. stores with a goal of 2,000 units by 2018).
In Europe, the most comparable model to Aldi is Lidl, which is slightly larger than Aldi -10,000 stores vs. 7,600 units. Both German-based firms operate stores in the 10,000 square foot range.
Since it announced nearly two years ago that it would be entering the U.S. market, Lidl has captured a lot of interest without a lot of substance. However, over the past nine months that has changed. Using its MGP Retail arm as its ramrod, Lidl has quietly begun assembling an infrastructure that’s been real estate focused. Real estate executives have confirmed to us that Lidl has scoured hundreds of potential sites in an area ranging from southern New Jersey to North Carolina. Sources have also told us that Lidl has consummated deals at more than 20 locations and hopes to have at least 100 stores open or ready to open by the time it officially begins operations in the U.S. in 2018. Additionally, MGP has reportedly targeted two locations – Aberdeen, MD and Hawfields, NC – as potential locations for distribution centers.
Over the past six weeks, the veil of secrecy seems to be lifting a bit. Earlier this month, MGP/Lidl acquired majority interest in a 217,000 square foot headquarters building in Arlington, VA complete with a quality assurance lab and a test kitchen. It has also been utilizing LinkedIn to search for talent, including meat, dairy and produce positions.
Real estate executives have told us that Lidl’s U.S. model will be significantly larger than its European one (25,000-30,000 square feet). That would also make it significantly larger than Aldi’s typical footprint of approximately 18,000 square feet.
So, the ultimate question remains: can Lidl succeed in a market where so many other European companies have failed?
On paper, they’ve taken the right approach to start, giving themselves plenty of time to develop a complete network, beginning with the most important component – real estate. Other questions remain to be answered such as: will Lidl truly act as an American company, or just another piece in a corporate growth initiative? And how will it fare as the “last man” to enter the highly competitive and overstored extreme value market.
As it does in Europe, Aldi will battle ferociously to protect its market share. However, this time Aldi has the advantage with an established strong image and an accelerated growth track of its own to stand on. And future competitors such as Save-A-Lot, PriceRite and hundreds of dollar stores have already shown they’ll protect their price images to the hilt.
This will be a fascinating story to watch, because Lidl clearly has the financial ammo to compete and is taking a measured, long-term approach in developing its foundation in the U.S.
‘Round The Trade
Three top former Safeway executives have landed at important merchandising jobs in the business. And all happen to be female, which is a very good thing. The most recent executive appointment comes at Target, which named Anne Dament as its new senior VP-merchandising, overseeing the beleaguered mass merchant’s strategic food business realignment. Actually, Dament comes from Pet Smart, but before that worked with Brian Cornell, Target’s CEO, as group VP-perishable strategy for Safeway. “Having previously worked alongside Anne, I know her industry expertise and proven ability to reinvigorate existing businesses make her the right leader to drive our reinvention,” Cornell noted. Other ex-Safeway executives with new Northeast jobs include Toby Noiles, who last month was named senior VP-chief merchandising officer for FreshDirect. She will be responsible for overseeing the Long Island City-based online merchant’s strategy including supervising all product categories, vendor relations, promotions and new product development. Noiles spent 29 years with Safeway, most recently as a senior VP. In February, we reported that Tonya Herring, another former Safeway senior VP, joined Ahold USA as senior VP-non-perishable merchandising…according to several large national CPG companies, Wal-Mart has been very vocal in seeking lower everyday prices from its suppliers. That message was also recently echoed by new U.S. CEO Greg Foran, who noted “…I’m not into gimmicks. I’m into simplicity ensuring that we negotiate the very best price, and then we pass it on to our customers.” And even when bad stuff isn’t the fault of the Behemoth, it somehow seems to share in some of the negative perception. To wit: a restroom at a Wal-Mart in Muncie, IN had to be closed indefinitely when an associate discovered a working meth lab inside. Huh? We’re not talking about someone ducking into the men’s room to smoke a joint, but rather a chemical lab large enough to potentially produce methamphetamine. Where’s Walter White when you need him?…Consumer Reports has released its annual supermarket ranking and Wegmans has been judged (by 60,000 readers) as the best place to buy groceries in the U. S. Other merchants that fared well included Publix, Trader Joe’s, Market Basket, Costco, Whole Foods, Aldi, and The Fresh Market. At the bottom of the ocean were Wal-Mart and three Tea Company affiliated banners – A&P, Pathmark and Waldbaum’s (that kind of reminds me of a tasteless joke from “Blazing Saddles” when villain Hedley Lamarr is recruiting criminals to destroy the town of Rock Ridge)…now that the marathon to acquire Family Dollar has finally ended, winning bidder Dollar Tree will have to divest 340 stores, according to the Chesapeake, VA-based discounter. That seems like a big win for Dollar Tree, which will have about 13,000 units when the FTC grants final permission of the deal later this year…ever since Kraft split into two separate operating companies (Kraft and Mondelez) in late 2012, industry speculation was strong that one of those two entities would be targeted by private equity interests. It may have taken a bit longer than expected, but Brazilian investment firm 3G Capital, headed by entrepreneur Jorge Paulo Lemann, is reportedly close to acquiring the stalwart packer whose brands include Maxwell House, Oscar Mayer, Planters, Cracker Barrel and Jell-O. The final price could exceed $40 billion. If such a deal happens, look for 3G to combine that business with Heinz, a company it bought (along with Warren Buffet) in 2013 for $23 billion. 3G also owns Burger King…President Barack Obama has rejected legislation that would have canceled a new National Labor Relations Board (NLRB) rule to accelerate and streamline the union organizing elections process. As such, the new rule, which allows certain documents to be filed electronically and limits employers’ legal challenges, went into effect on April 14…
Local Notes
Not a lot of new ground was covered at Ahold’s annual shareholders meeting held on April 15 in Zaandam, the Netherlands. In the U.S., CEO Dick Boer again noted the improvement in the economy which has led to lower gas prices and increased consumer confidence and better purchasing power. Boer reviewed the gains made by the retailer’s “Thunder” program, which he claimed has led to lower prices, improved consumer perception, better training and enhanced product quality. Boer also mentioned AUSA’s new training program, designed to produce better customer engagement with the company’s associates – “the skills they (the associates) are learning drive both customer and associate satisfaction.” Also at the meeting was Jan Hommen, who temporarily stepped down as chairman of Ahold’s supervisory board last June to accept an interim post as CEO of accounting firm KPMG. Hommen recently resumed his role at Ahold. Rob van den Bergh, who filled in for Hommen, remains on the supervisory board, serving on the remuneration, and selection and appointment committees. More Ahold news: the company’s Giant/Carlisle (Martin’s) division announced that, effective June 7, it is setting its starting associate wage at $9 per hour as part of the company’s commitment to providing competitive wages. The Central PA based division of AUSA will also increase the hourly wage for current associates to a minimum of $9 an hour. “Our associates are the foundation of our success, and we have always believed in paying competitive wages to attract the best talent,” said Tom Lenkevich, Giant/Carlisle president. The change applies to the 197 non-union affecting approximately 10,000 part-time employees. Giant/Carlisle employs about 33,000 associates, approximately two-thirds of whom are currently paid more than $9 per hour, the company noted. “We believe that this is the right thing to do,” continued Lenkevich.  “Our goal is to continue to be an employer of choice by offering a competitive total compensation package, a work environment based upon respect, an emphasis on personal excellence and opportunities for career advancement.” Giant/Carlisle joins Wal-Mart, Aldi, Whole Foods, Costco and Trader Joe’s as food retailers who have recently raised (or had already in place) a starting wage of $9 an hour…good news for our friends at Burris Logistics, the large provider of customized retail distribution services specializing in temperature controlled supply chain solutions. Burris has recently renewed its supply agreement with The Fresh Market, the Greensboro, NC specialty grocery retailer with revenues of more than $1.7 billion and stores in 27 states across the U.S. Since establishing a partnership with Burris, headquartered in Milford, DE, The Fresh Market has added more than 100 stores. In turn, Burris stated it has maintained a reliable and highly efficient supply chain in the midst of this rapid growth by adding a second distribution center, expanding its dedicated fleet and enhancing all aspects of technology to make the supply chain seamless and simpler for both retailer and distributor. Donnie Burris, CEO said, “Our custom distribution solution – unlike the traditional wholesaler model – provides a transparent procurement service. The Fresh Market has full control of the buying process and an understanding of the exact cost of goods. This allows the Fresh Market team to focus on selecting healthy choices and unique offerings that inspire and engage the consumer.”…Amazon has recently expanded its “Prime Now” service (delivery in two hours for free and or one-hour delivery for $7.99) to Baltimore and Miami. Baltimore is also a market where, sometime later this year, the big online juggernaut will roll-out Amazon Fresh service…A&P, a company not to  be confused with Amazon, has combined its Pathmark and Waldbaum’s weekly circulars on Staten Island. That’s interesting because A&P has always segmented the two banners, marketing Pathmark as price-oriented and Waldbaum’s as more service and perishables driven. At presstime, A&P appears to still be offering two separate circulars in other Metro New York areas where both banners operate. Currently, the Tea Company operates five Pathmarks and two Waldbaum’s units in Richmond County…Rite Aid continued its recent run of improved earnings and sales. In its fourth quarter ended February 28, earnings at the Camp Hill, PA-based drug chain rose to $1.84 billion, or $1.79 per share, versus $55.4 million, or $0.06 per share, in the year-ago period. The latest quarter results included $1.67 per share in income tax benefit. Its revenue for the quarter climbed to $6.8 billion from $6.6 billion with same store sales increasing 4.5 percent in the quarter, including a 5.7 percent gain in pharmacy sales and a 2.0 rise in front-end sales. “In the fourth quarter, our strong growth in same-store sales and prescription count as well as strong cost control helped drive continued profitability,” said Rite Aid chairman and CEO John Standley. “These positive results contributed to a successful year in which we took significant steps to further position Rite Aid as a retail healthcare company.” By the way, there’s been a lot of street chatter recently that Walgreens is prepared to make a run at Rite Aid, now that the company’s fiscal health has been restored… I’m sad to report the death of Percy Sledge, the great R&B singer with a distinctive plaintive and smooth southern voice, who passed away this month at the age of 74. Sledge, whose first and greatest hit, “When A Man Loves A Woman (WAMLAW),” was written in 1965 when he was a hospital orderly in his native Alabama (he also picked cotton). While his other songs never matched the popularity of WAMLAW, he remained active recording and touring until 2013. He was elected into the Rock and Roll Hall of Fame in 2005. James Wood, former A&P chairman and CEO for 21 years (1980-2001) has also passed away. Wood, 85, presided over A&P during one its darkest periods (not entirely created by him) that led to massive store closures and consistently negative earnings and sales. Born in England, he cut his teeth with now defunct food retailer Cavenham (a company founded by Sir James Goldsmith – remember him?), which at the time owned another misguided U.S. chain, Grand Union (RIP, too). Wood was a smart guy and a nice guy, but could never seem to transition from the process-world to one that demanded more hands-on leadership and street smarts. Of course, he wasn’t helped by the limited supermarket skills of Christian Haub (co-CEO for a time and son of the owner of parent company, Tengelmann Group). Wood’s legacy may not be associated with success, but you’ve got to give him credit – he survived for more than two decades at a company which was perceived as one of the worst run in the industry – a perception that still exists today. It is with great personal sadness to report the recent death of Mike Coyle, 73, retired VP-marketing for White Rose. “Mickey” was truly an original. A Philly guy (he began his career at the old Frankford Quaker Grocery Company and went to the University of Pennsylvania) with a New York accent.  Coyle had his own street language to colorfully describe situations or people. Mike was a great storyteller and a man with a warm and generous heart, truly the type of person that I learned a lot from and one who added so much color and personality that his legacy will always be considered special. May you rest in peace, my friend…two of my favorite people at Ahold USA have announced their upcoming retirements. Larry “The Dean” Stover will be departing in July as senior VP-operations for the retailer’s Giant/Carlisle unit after an amazing 47 years with the company. Larry is simply one of the most outstanding ops guys in the business and has guided and trained thousands of associates, many of whom have flourished at Ahold USA. A gentleman, a teacher and great team player, Larry’s knowledge of how stores and how people operate are going to be missed. Also, a big tip
of the hat to Tracy Pawelski, VP-external communications and community relations for Ahold USA, who will be retiring next month after 10 years at the big retailer. Prior to joining Ahold in 2005, Tracy worked for many politicians, both in Pennsylvania and on the national scene. I’ve been writing about the grocery business since 1973, and Tracy is among the finest communicators that I’ve ever dealt with. I’m going to miss her enthusiastic personality, accessibility (never backing away from the tough questions), knowledge of her craft and top shelf professionalism.
