With Save-A-Lot Sold, More Heavy Lifting In Store For Supervalu
The challenges that Save-A-Lot faces will now fall under the aegis of its new owner, Canadian private equity firm Onex which agreed to acquire the struggling discounter for $1.365 billion. The deal is expected to close on January 31, 2017.
There was a time not too long ago when SVU hoped to spin off and launch an IPO for its most monetizable asset. With the entire retail food sector financially flat and S-A-L’s recent sales and earnings performances weak (overall sales down 2.8 percent; comp sales down 5.2 percent; and earnings off 33 percent in its recent second quarter), Supervalu changed course, opting to seek either strategic or financial potential buyers for its nearly 1,400 store network. Sources told us that the Eden Prairie, MN-based wholesaler/retailer originally hoped that S-A-L could fetch in the range of $1.8-$2 billion. In the end no adequate strategic buyers could be found and reportedly Onex was the only PE firm to make a solid bid. And even that offer was well below what Supervalu was allegedly hoping for.
And therein lies Supervalu’s biggest problem – not being good enough. Because the company’s DNA remains deeply rooted in wholesale, it has slipped badly in recent years in both its corporate retail division and when competing with new and existing forces in the “extreme value” channel. It wasn’t too long ago that Save-A-Lot was at the top of pack among all limited assortment players (under the leadership of founder Bill Moran and his successor Bill Shaner). But in the last five years there’s been a cataclysmic landscape shift. Primary competitor Aldi has been growing at an extremely rapid rate, not only “filling in” stores in existing markets by organic expansion, but also through acquisition (Bottom Dollar Foods). And the German-owned discounter is also entering new markets (such as California) that had little overall representation in that channel. Even PriceRite (a unit of Wakefern Food Corp.) with only 60 stores garners about twice as much business as the average Save-A-Lot in areas where they compete in the Northeast. And the bar becomes higher next year when Lidl enters the fray. With approximately 150 stores planned for the Mid-Atlantic and Southeast over the next four years and a significantly larger operating model (roughly 35,000 square feet per store), S-A-L will certainly feel some pain from the newcomer’s entry into an already overstored channel.
New owner Onex and relatively new CEO Eric Claus are facing tremendous pressure to turn Save-A-Lot around. A top priority would be to listen to S-A-L’s licensees who not only operate nearly twice as many stores (896) as their corporate counterparts. These independently-owned stores represent the heart and soul of the entire S-A-L culture as well as its future. Claus has previously stated that he wants to give the licensees more flexibility, which presumably means creating a slightly more decentralized model thereby giving the licensees greater freedom to roam outside the S-A-L rules, which many of them deem too restrictive. As deflation begins to subside the new Save-A-Lot team also needs to hold the line on price increases and not be so smitten with inside margin. Moreover, look for S-A-L to explore selling many of its nearly 500 corporate stores to its existing licensee base.
Now that Save-A-Lot has been accounted for, the next priority for Supervalu has to be to aggressively look to sell and/or close its more than 200 corporately-owned retail units, which includes Shoppers, Farm Fresh, Cub Foods and Shop ‘n Save (both in St. Louis and the 22 Food Lion stores it recently acquired in Maryland, Pennsylvania and West Virginia). While the rumor that Supervalu would to dump its corporate retail division has been swirling for the last three years, SVU’s recent second quarter statement speaks volumes: an $8 million operating loss on about $1 billion sales and an even steeper comp-store sales decline of 5.9 percent at corporate retail. Supervalu has created this lame-duck perception for years by putting virtually no cap-ex into corporate retail and halting any real estate expansion. With most of the markets where it own units significantly overstored, it seems unlikely that the parent company can sell entire the division (Hornbacher’s aside) and might be faced with a combination of selling its best stores and closing other units. After years of serving as SVU’s red-headed stepchild, it’s unreasonable to think the outcome of disposing of this much-maligned unit would lead to a marriage proposal from the handsome prince.
And one further thought about one group of corporately-owned stores – the 22 supermarkets that SVU acquired from Ahold Delhaize: of all the new owners that have converted and re-opened stores (Weis, Acme, Big Y, Tops and Saubel’s – Publix has not yet reopened the 10 stores it acquired in the Richmond area) no new owner has performed as poorly as those Supervalu- owned Shop ‘n Save stores. Significant out-of-stocks (which have improved slightly in the last two weeks), labor understaffing, poor associate training and unaggressive pricing (based on several market surveys that I’ve conducted) make it clear that those Shop ‘n Save units are losing a lot of business to existing customers in those markets. I’m aware that Shoppers was handling a lot of the operational duties for the new acquisition and Supervalu Eastern division was supervising wholesale duties, but the overall result has been highly problematic. I wonder what reported potential owners Bill Shaner and Tom Jamieson are thinking now that sales and operating conditions have diminished so significantly which is hard to do considering that Food Lion wasn’t exactly knocking it out of the park (we’re told that SVU acquired and agreed to operate those 22 stores for at least six months – per FTC mandate – with the plan to sell them to Shaner and Jamieson).
With a lot of clouds swirling around Supervalu, there is one positive to report about the company. Its core wholesale business is improving, even if the numbers don’t yet indicate that. CEO Mark Gross, whose career background is in wholesale (he worked for C&S from 1997-2006), has done a fine job of attracting new business to SVU’s roster. In the past six months, Marsh Supermarkets, The Fresh Market and Metro New York independent Uncle Giuseppe’s have joined the Supervalu fold, and recently America’s Food Basket, a group of 47 stores that operate in Metro New York, Massachusetts and Connecticut, agreed to let SVU become its primary grocery distributor. And more than just adding new customers, existing independent retailers in the Mid-Atlantic have expressed great confidence in Gross’ ability to create a new and more relevant wholesale operating model which will better address the needs of the independent retailer – arguably the most endangered species in all of food retailing.
So, with Save-A-Lot to be acquired and the corporate stores likely to be sold and/or closed, that leaves only Supervalu’s wholesale division remaining. With PE firm Cerberus Capital Management calling most of the long-term strategic shots (Cerberus and its affiliated companies control about a 20 percent equity stake in SVU and a have a desire to reduce its holdings in the grocery business), is it logical that in the long-term Supervalu will remain a publicly-traded wholesale-only corporation with approximately $9 billion in annual revenue and an uninspired stock price that’s been trading in the $4-$7 range for the past year?
I can think of a few long term scenarios that would better serve Mark Gross and Supervalu. Stay tuned.
Vendors Enraged Over Ahold Delhaize ‘Equalization’ Money Grab
It started innocently enough with a phone call about three months ago from one of my industry friends who oversees sales at one of the largest U.S. CPG manufacturers. He called to warn me that the newly merged Ahold Delhaize organization was about to embark on a trade equalization program designed to align trade spending at its three U.S. operating offices in Carlisle, PA (Ahold USA), Salisbury, NC (Food Lion) and Scarborough, ME.
Then he got to the essence of the issue: the newly merged retailers were seeking a payback on trade dollars they thought were owed them because they could not compare trade spending at both companies to see where misalignments may have occurred.
I told my industry cohort that I pretty much have sworn off writing about merchandising differences because of the inherent adversarial relationship (usually in a professional manner) that is part of the buyer/seller process.
He urged me to pay more attention to this one: “They’re trying to gain more than $150 million from this program. It’s nothing more than a money grab,” adding that Ahold Delhaize is attempting to execute a similar scenario in Europe with many of the same vendors and was getting some pushback.
A few days later, I got another call from another senior level executive at another large CPG firm, followed shortly by several others. I then called a few other contacts at other CPG firms on my own, and talked to several brokers who had been contacted by Ahold and/or Delhaize to attend individual meetings or conference calls with senior VPs from Ahold USA, Hannaford and Food Lion.
Since the trade equalization plan was still in its early stages (it wasn’t due to be completed until mid-October) I didn’t feel I had enough input to write a balanced and complete story about this issue. However, I could tell this was pissing off a whole lot of vendors.
Another comment from that first manufacturing executive seemed to give the more clarity to the vendors’ concerns: “This is a near impossible task, in my opinion. How do you compare Food Lion’s modified EDLP model with Ahold’s high-low merchandising? How do you factor in the expense of doing business with C&S while also determining the cost of many Ahold internal programs such as EYC and RSI, which we are expected to support? Why don’t they stop being bullies and concentrate on moving more cases?”
That answer still isn’t known, primarily because Ahold Delhaize doesn’t really care to tell the vendors. In fact, they won’t even disclose how they arrived at the “equalization” fee, bluntly telling its suppliers and brokers that they’re not going to show their work.
“Just because they are now a combined entity does not allow them the right to extort us,” said one manufacturing executive who’s called on both Ahold USA and Delhaize America for more than 15 years. “I would have been fired many years ago if I didn’t treat our customers on a fair and equitable basis. You can’t take different merchandising plans and roll them into one barrel and expect to objectively find aberrations that are worth millions of dollars. And if they could, they’d show us how they reached that financial conclusion.”
Several sources have told us that McKinsey & Co. is the primary architect of this plan, which apparently includes seeking equalization for private label products, too, which now account for more than 40 percent of AUSA’s total sales.
We reached out to Ahold USA, seeking an opportunity to talk with an executive in its merchandising department familiar with this issue (whose name would not be revealed in our story) and sent these questions for them to review and prepare:
1) Vendors wonder how can you equalize trade spending when a company like Food Lion utilizes a modified EDLP go-to-market philosophy (with heavy use of off-invoice) while the AUSA banners operate in a high/low world that features multiple programs that they expect the vendors to participate in (EYC, in-store demos, ISE, RSI, charitable contributions, etc. and also includes paying the C&S fees which they usually include in their customers’ trade budgets. Isn’t this an “apples and oranges” scenario?
2) Why won’t Ahold Delhaize show the vendors how they arrived at the amount of money they’re seeking. Vendors are upset that by not “showing your work,” you are making arbitrary financial demands that they believe can’t be documented by fact. What’s your response?
3) What is McKinsey & Company’s role in this entire trade equalization process?
4) Suppliers and brokers have told us that private label items are affected, too, adding that they have had some private label contracts prematurely cancelled while Ahold Delhaize seeks new RFP bids to ultimately gain stronger new private label deals for the newly merged company. Any truth to that allegation?
5) Have vendors already had items delisted if they fail to comply with your demands?
6) Do the vendors have any right of redress if they disagree with your conclusions on money owed?
7) What is your financial dollar goal when this initial trade equalization effort is completed?
While we weren’t expecting answers to all the questions, instead what we received was this vanilla written response: “Ahold USA’s divisions share the same fundamental goals as their suppliers – to grow sales – and we view our vendors as key business partners. Our goal is to collaborate with suppliers on opportunities that the Ahold USA divisions can offer to them in a way that benefits all parties. We have already successfully concluded numerous agreements with vendors and discussions with most vendors have been extremely productive. We look forward to continuing an open dialogue with the supplier community and will continue to partner with them for the best short- and long-term decisions in the best interests of all of our businesses and, most importantly, the customers of the Ahold USA brands.”
We received a similar written response from Food Lion and Hannaford (Delhaize America): “At Food Lion and Hannaford, we share the same goal as our suppliers – to grow sales, which is good for our suppliers, our brands and most importantly, our customers. We view our vendors as key business partners and want to collaborate with them to grow our respective businesses, such as collaborating on new products and other innovative processes. As part of our vendor negotiation process, it is important to note that we have successfully reached a number of agreements with our vendor partners, both large and small. In addition, Food Lion and Hannaford remain committed to keeping an open dialogue with our vendors and will continue to partner and collaborate with them as we work to collectively grow sales, and ultimately provide value for our customers.”
Kumbaya.
On one level, I can’t blame them for being so evasive: perhaps this money grab effort is indefensible.
You can expect this issue is certain to linger for several more months. And while every supplier or brokerage executive I talked to promised some pushback, there’ll likely be a compromise, giving Ahold and Delhaize access to money that they may or may not deserve.
And while trade equalization may be the biggest sore point between vendors and Ahold Delhaize to date, you can bet there’ll be other financial demands from the retailer.
That’s because Ahold USA basically no longer functions as a merchandising and store operations organization. It’s a financial machine and a very good one at that.
Do you think the understaffing at its stores is an anomaly? How about the company’s associate training program (oh wait, the dog ate my training manual)? What about the state of the culture that currently exists at corporate headquarters in Carlisle (oh, I just remembered that former COO James McCann severely damaged it).
Creative merchandising programs? Beautiful new stores? I’m still looking, could you give me a hint? However, we know one thing about Ahold USA? They are great peddlers at selling their own programs – EYC, RSI, ISE, demos, ecoupon, “free Fridays,” VIP, etc. Whatever happened to “sell more stuff?”
I hope new president Kevin Holt can help turn the big AUSA ship around. Perhaps if company sales were better, we’d all look the other way. But analyze the upper level of competitors which Stop & Shop, Giant/Carlisle and Giant/Landover face every day – ShopRite, Wegmans, Market Basket, Harris Teeter – all companies that AUSA said they could match or exceed. Remember the “good to great” aspirations? How about first reaching the “below average to pretty good” level? Certainly the potential is there with great locations and strong division leadership. But we’ve been hearing the same hype for almost four years.
And while I believe Holt can make a difference when it comes to cultural improvement, I’m not certain that Ahold’s dispassionate mindset that emanates in Amsterdam can be altered.
If Ahold was really serious about effectively competing against ShopRite, Wegmans, Market Basket, Harris Teeter and a few other high quality merchants in its peer group, it would adopt some of their core philosophies, beginning with enhancing their vendor relationships, and improving the bond with their associates, many of whom are the most important link to AUSA’s customers.
Mackey Back On His Own Horse As He Tries To Recapture Halcyon Days At Whole Foods
I was not surprised to hear that John Mackey is back at helm of Whole Foods, solo piloting the company he founded in Austin, TX (one of the coolest cities in America) in 1980. It’s not that his co-pilot for the past six years, Walter Robb, did a poor job, he just couldn’t balance WFM’s accelerated growth with the level of execution that was perhaps the most important element of its success for the first 25 years of its existence.
Part of WFM’s recent problems, I think is also what can be classified as the “Howard-Schultz-Never-Say-Goodbye” syndrome. That’s a condition that was described to me by former supermarket executive Jim Donald who served as CEO of Starbucks for three years, succeeding founder Howard Schultz who became chairman of the big coffee merchant. Donald said that he got along fine with Schultz, but never felt like he was captaining his own ship because Schultz, who wanted to devote more time to innovation and planning, never left the day-to-day scene.
One day in January 2008, Schultz fired Donald. Much like Whole Foods, the company’s stock price and its image had declined a bit, and as Jim said at the time, “ I understood – he was the innovator, the driver, the face of the company. I couldn’t blame him for wanting to take over the day-to-day operation, because in fact he was always heavily involved.”
Sounds like a similar scenario that Mackey is stepping back into. Only there are some more than subtle differences between the two –Schultz was 55 at the time of his re-coronation, Mackey is 62. And while Starbucks was having difficulties capturing the earnings successes of a few years earlier and was being hammered because of high prices (much like WFM), its store operations were solid and the Starbucks still dominated a non-overstored field.
Five years ago, Walter Robb said he could envision Whole Foods operating 1,000 stores in the U.S. at the time the company operated about 300 stores in America. It has added about 150 new stores since then and even that level of growth has seemed too quick.
At 62, does Mackey still have the stamina and the vision to change the company’s perception which is still seen as strong, but one that needs improved operation discipline and more entrepreneurial flair?
If Mackey is to succeed again as sole chief executive, he’s got to restore the high level of associate morale of the past while also being cognizant (but not overly so) of the pressures that come with being a high-profile publicly-traded company. And he better hope that the company’s fledgling “365” alternative model proves successful.
Wegmans Caps 100th Anniversary With Fourth New Store Opening
As it nears the conclusion of its 100th anniversary, it’s been another sensational year for Wegmans. On November 6, the Rochester, NY merchant opened its 92nd store and fourth of 2016 in Charlottesville, VA The debut of its 120,000 square foot unit marked the first time in company history that it has opened four stores in new locations in a calendar year. Those other openings took place in Midlothian, VA (May); Short Pump, VA (August); and Owings Mills, MD (September).
The ambitious, family-owned retailer plans to add to its store counts and expand its geographical map in the next three years. It is slated to open three new units next year – Hanover Township, NJ; Montvale, NJ; and Medford, MA. Stores scheduled to debut in 2018 include Lancaster, PA; Chantilly, VA; and Natick, MA. Stores also in the fold with no opening date yet announced will be located in Brooklyn, NY (Brooklyn Navy Yard) and Tysons Corner, VA.
In the past month Wegmans also confirmed that it has signed its fourth lease in the fast-growing Raleigh area of North Carolina. It first announced its intention to enter the Tar Heel state earlier this year with a store in Cary. In the next few months, a second Cary mega-store was added to its roster, followed by additional new stores in Chapel Hill and Raleigh in the last two months. The first of those “Triangle” stores could open in 2018.
Wegmans has also had some proposed deals fall through (usually because of developer issues). In the past year, the company confirmed that near or tentative deals in Washington, DC (Walter Reed); Marple, PA; and Newport News, VA had fallen through.
With the addition of a dozen new stores over the past five years, per store revenue ranks above every other supermarket merchant in the country and total sales this year surpassed the $8 billion mark. Currently, Wegmans employs more than 47,000 associates and earlier this month was named as the best workplace in America by Fortune Magazine.
Wegmans family ownership is now well into its fourth generation President Colleen Wegman and her sister Nicole serve as president and senior VP respectively. And their father, Danny Wegman is considered to be one of the best chief executives in the retail business. Danny Wegman, followed another great leader – his father, Bob Wegman – who passed away in 2006. It’s been an incredible 100-year run that began when Bob Wegman’s father, John and his brother, Walter, opened the Rochester Fruit & Vegetable Company in 1916.
Finally, we asked Jo Natale, Wegmans veteran VP of media relations, two questions: what makes the Wegmans brand so unique? And what has the company done in its 100th year that could be considered innovative?
“What’s the magic? There is just one answer: our people. Customers call us and send us thousands of letters and email each year to say how much they love shopping at Wegmans. Yes, they point to the selection, the quality, the beautiful stores and the low prices. But, what they mention most is our employees and the incredible service they provide, and they share amazing stories about things that employees have done to help them. The Wegman family’s philosophy has always been that great customer services starts with meeting the needs of employees, and it turns out, it works,” she declared.
“This year, in terms of innovation, I’d point to our E-Z Oven Meals, developed by our chefs. These are ready-to-cook entrees that can be put in the oven or in a slow cooker (right in their vacuum packaging). They check all the boxes for customers: easy preparation and clean-up, delicious, healthy, and affordable. I believe we are the only retailer offering these.”
‘Round The Trade
In what’s become one of the worst kept industry secrets, it appears it won’t that long before Amazon opens its first bricks and mortar locations. According to Business Insider, the Seattle based e-commerce juggernaut is planning to unveil a 20-location pilot program in 2018 which would carry the Amazon Fresh banner with locations in such widespread areas as Seattle, Miami, New York and Las Vegas. The story notes that Amazon is going to experiment with different size stores – 10,000 square foot drive thru locations and 30,000 square foot units which would offer a larger and more diverse product mix. If successful, the magazine piece adds, Amazon believes there is room for as many as 2,000 “multi-function” stores in the U.S. over the next 10 years. Meanwhile in its core e-commerce business, Amazon now operates approximately 95 re-distribution and fulfillment centers in the U.S – 10 of those being Amazon Fresh depots, a number that could double in the next 18 months as the mega-merchant looks to expand its perishable business…Wal-Mart, which is attempting to play “catch up” with Amazon on the digital side of the business (but will have a huge head start over Amazon in operating physical plants), is remaking its e-commerce management team after the Bentonville Behemoth acquired jet.com for $3.3 billion in September. Leaving Wal-Mart are Fernando Madeira, president and CEO of walmart.com, and Dianne Miller, senior VP-human resources. Last month Brent Beabout departed as head of walmart.com’s supply chain. He will be replaced by jet.com co-founder Nate Faust. Neil Ashe, who headed Wal-Mart’s global supply chain, will also be exiting Wal-Mart shortly. Marc Lore, jet.com’s co-founder, is spearheading the overhaul, in which the world’s largest merchant hopes to cut into Amazon’s huge e-commerce market share advantage…in other mega-merchant news, Walgreens has extended the closing date to acquire rival Rite Aid. The new acquisition date has been pushed back to January 27, pending FTC approval. And “pending” is the operative word here, because even if Walgreen sheds 1,000 stores to create an easier pathway towards government approval, there is no guarantee that the FTC will sanction this deal, considering that Walgreens and CVS would be the only remaining freestanding drug chains left if the purchase is allowed…as many of the larger national chains continue to struggle (in all channels), one of those “strugglers” is Target. Earlier this month, Anne Dament, the former Safeway merchandising exec (who worked with CEO Brian Cornell when oversaw marketing at the Pleasanton, CA supermarket chain) said she is departing after about 18 months of attempting to revamp Target’s sagging grocery image. Target’s problems with food are easily recognizable – bland, boring and stuck in “no man’s land” – but very tough to fix. However, one format that Cornell seems highly committed to is its small store footprint, which is aggressively signing leases into the more urban areas. The metro Philadelphia and New York markets, in particular have caught Target’s interest. This past summer, the second largest mass merchant in the U. S. opened new downsized stores (21,000-46,000 square feet) in Freeport, NY: Elmont, NY; and Closter, NJ; near Rittenhouse Square in Philadelphia and last month cut the ribbon on its Tribeca store in Manhattan. Next year, new mini-Targets will debut in Roxborough, PA; near the Art Museum in Philly and in the new City Point development in Brooklyn. Beyond that Target plans urban units near Union Station in Manhattan (2018) and just announced another new Manhattan unit on 10th Avenue between W. 44th and 45th Streets (Hell’s Kitchen) that is slated to open in 2019…another company that has been operating in no man’s land, but is trying to reinvent itself, is The Fresh Market (TFM). Late last month at three remodeled Raleigh, NC area stores, the company unveiled at least part of its improved offering – lowering hundreds of prices and adding 1,300 grocery items to its mix. The company has also ramped up its health and wellness initiative with new items and improved labeling offered in a segregated section of the store. The fortunes of TFM will certainly improve in the short-term with PE money behind it (Apollo Global Management) and strong leadership with Rick Anicetti at the helm. But its biggest challenge in my opinion remains – can they succeed in bigger, more sophisticated markets? We know that TFM can make it in Macon, GA, Destin, FL and Birmingham, AL. But if it really wants to be considered a prime-time player it will have to do better in the Mid-Atlantic and New England and consider re-entering the West Coast where it got its clock cleaned in less than a year…four years ago, Hostess Brands was left for dead after it filed its second bankruptcy in less than eight years. Part of the company was acquired by New York turnaround investor Dean Metropoulos – Metropoulos & Co.- which recently acquired a minority stake in Utz Quality Foods. (Apollo Global Management was also an investor). Earlier this month, things came full circle as the maker of Twinkies, Ding Dongs and Ho Hos sold a majority stake in the company to Gores Holdings, a publicly-traded arm of the Gores Group, a Los Angeles based PE firm, for $725 million, a $315 million gain for Metropoulos and Apollo in less than four years. Order me a bottle of Dom Perignon the next time I have a Twinkies jones…the state of Washington has fined the Grocery Manufacturers of America (GMA) $18 million for violating the state’s campaign finance laws. In this case, a Washington Superior Court Judge found the large Washington, DC trade group guilty of concealing the role of its members in a hotly contested referendum about the labeling of GMOs in 2013. The court ruled that GMA should not have provided a buffer between itself and some of its members who did not want to potentially receive criticism for attempting to defeat the initiative, which indeed did happen by a narrow margin. GMA said it will appeal…Publix is finally getting its Richmond store debut plans under way. The Lakeland, FL chain has received building permits for three of the 10 Martin’s stores it agreed to acquire from Ahold USA as part of its store divestiture agreement prior to the completion of the Ahold Delhaize merger. The three stores are located on Staples Mill Road, John Rolfe Parkway and Laburnum Avenue. Renovation costs for those three units are estimated to be slightly more than $10 million. No reopening dates were announced, nor was a schedule as to when Publix will take possession of the remaining seven units. Martin’s is slated to close those stores by November 28, resulting in the loss of 438 jobs…Giant Eagle announced last month that it would offer separation agreements to about 340 associates at its corporate office in Pittsburgh. The family-owned regional chain acknowledged that difficult market conditions necessitated the move, which will affect about 1 percent of its workforce. It’s tough out there, folks – too many stores, a lot of diverse retailing styles, deflation and the growing impact of e-commerce. There are no more layups – there’s a hand in your face with every shot!
Local Notes
It looks like Mrs. Green’s Neighborhood Markets is in “blowup” mode again. The Irvington, NY-based organics retailer, a unit of Natural Markets Food Group (which is owned by Canadian hedge fund Catalyst Capital Group) recently closed stores in West Windsor, NJ, New Canaan, CT and Winnetka, IL, and an examination of several of its remaining stores in the Metro New York revealed massive out-of-stocks. Now comes word, just before presstime, that it will close all but five of its remaining stores. That means that Mrs. Green’s units in Manhattan’s Greenwich Village, Fairfield and Stamford, CT and Westchester County stores in Rye and Tarrytown will all be shuttered shortly. Going forward, the company said it would refocus on its five remaining Westchester County stores in Yorktown Heights, Briarcliff, Mt. Kisco, Eastchester and Larchmont. Another casualty in this meltdown was CEO Pat Brown, who is exiting the company three years after he was recruited from Oregon’s New Seasons Market to replace Robin Michel. This debacle isn’t Brown’s fault, however, and even though Michel’s erratic leadership was problematic, it wasn’t her fault either. The blame should be leveled at Catalyst Capital CEO Newton Glassman and managing partner Gabriel de Alba, who seem clueless about the rules of the road of the grocery business in the U.S. (remember Fresh & Green’s – if you blinked you may have missed it). The new CEO, Mr. “Existing Management” will take over those duties while the company searches for Brown’s replacement. We wish “Mr. Management” well in his interim role…Weis Markets, the largest buyer in the Ahold Delhaize store divestitures, has completed the conversions of those 38 stores. The Sunbury, PA chain also announced that it had finished six more store conversions at other recently purchased properties – five Mars stores in Baltimore and a former Nell’s Family Market in East Berlin, PA (“tear down that wall”). Weis also announced that its third quarter earnings dipped 16.7 percent partly because of those store operations and partly because of “sales-driving initiatives to offset deflation.” Focusing on selling more product was evident in the regional chain’s 4.4 percent overall revenue gain and its 2.7 comp store increase, a strong number when compared to many other retailers that have been fighting significant headwinds for the past nine months…one such company which is finding sales harder to come by is Albertsons. The Boise, ID chain which is attempting to launch an IPO (that has been delayed for more than a year), posted 28 week (ended September 10) ID sales of 0.1 percent, while its loss widened from $323 million to $371.7 million…Food Bazaar (Bogopa) has opened the former A&P store in Fairview, NJ and the former Food Basics unit North Bergen, NJ, about a year after the Brooklyn, NY-based independent acquired those units at the A&P auction. Of the six supermarkets, Food Bazaar acquired from A&P only the former Pathmark on Flatlands. Avenue in Brooklyn has not opened yet…Aldi opened new Mid-Atlantic stores in Rio Grande, NJ, Camden and Middletown, DE and Chambersburg, PA on November 17, part of 30 new units the discounter debuted nationally on that day. In about 18 months it could be the welterweight version of Ali-Frazier when Lidl and Aldi duke it out in the battle of discounters in the market. Should I pre-order the hospital room for Food Lion in anticipation of battlefield damage?…at C&S, Frank Puleo, one of the hardest working dudes in food biz, was recently promoted to VP-marketing and retail services in its Mid-Atlantic division based in Robesonia, PA. Other changes at the former AWI headquarters include our buddy, Fred Foose now having national responsibility for marketing and advertising for the wholesaler’s independent retailers. Also given broader national responsibilities were John Hoffman and Kathy Marrs (category merchandising and in-store execution (based in Robesonia and Keene, NH respectively); Dennis Campbell (retail development); and Corey Quiring (senior director of corporate retail services), who now will also supervise retail pricing on a national basis. Good luck to all. Another hard-working C&S executive, Joy Sgro (VP-merchandising and marketing), was elected chairman of the National Frozen & Refrigeration Association (NFRA) at the trade association’s annual meeting held in Washington, DC late last month. I’ve know Joy for about 30 years – she’s savvy, hard-working, has great people skills and is a real team player – and I’m sure she’ll do a great job for the NFRA, a group she’s been affiliated with for many years…a tip of the hat to Jim McCaffrey III on being named this year’s Pete Manos Retail Executive of the Year award recipient. Jim fits all the categories that made Manos, who died late last year, the first awardee when he retired from Giant/Landover in 1999 – leadership, integrity, success and community giving. Jim McCaffrey is a most deserving winner…speaking of winners, how about Bob Dylan winning this year’s Nobel Prize in Literature? I have had numerous discussions with friends about this achievement, with some of friends believing that Dylan’s greatness should not be placed in the literature category. I couldn’t disagree more. Is there an artist over the past 50 years whose words (lyrics) have been more noteworthy for such a long period? And I don’t want to sound too xenophobic about this, but isn’t Dylan a more meaningful recipient of the most prestigious literature prize in the world than some Chinese short story writer? The next question surrounding the very private and mysterious Mr. Zimmerman is: will he show up at the awards ceremony in Stockholm, Sweden on December 10? I’m betting that he will…some high profile deaths to report this month. …I was very sorry to hear of the passing of Rick King, 72, the former president of Utz Quality Foods for 20 years. I first met King in 1986 after he joined the snack food company from the Hanover Shoe Co. He soon brought over another Hanover Shoe alum, Tom Dempsey (who later served as president of Utz), and the two former shoe peddlers proved to be a great tandem for next two decades. King, who graduated from Dartmouth, was highly intelligent, intense, wry and a great family man who deeply understood the rules of business, but never lost the human touch. Simply stated, he was a great leader…another great leader, who certainly made a mark on my life, was John Paterakis, patriarch of his family’s business H&S Bakery, which started as a small bakery in Baltimore and became one of the largest family-owned businesses in the Mid-Atlantic. “Mr. P” passed away last month at the age of 87. Some may have known John Paterakis for his vast Baltimore real estate holdings (Harbor East) and others might have been aware that his company was the largest baker of rolls nationally for McDonald’s, but John Paterakis, the simple, selfless humanitarian is what will always be etched in my brain. To meet John, you wouldn’t if he was worth a dime or many millions – he was that unassuming. So here’s one of many Paterakis stories that is most reflective of his persona: in 2002, Whole Foods opened its first downtown Baltimore store on Fleet Street. It was one of the first projects to open in Harbor East and my retired partner Dick Bestany and I visited the store to celebrate its grand opening. It was a cold and rainy winter’s day and as we arrived at the store we immediately noticed “Mr. P” huddled in the corner in a raincoat that looked like it was borrowed from the “Columbo” TV series. He was all by himself and he stood apart because he clearly wasn’t one of the many 25-year-old store associates who were preparing to get the ribbon cutting under way. When Mr. Paterakis spotted Dick and me, he was happy to see a couple of old familiar faces. He asked me if the store served coffee. I said, “Yes they have a coffee bar – follow me and we’ll get some.” I then asked Mr. Paterakis if he’d like some cream or sugar in his
coffee. “Just two Sweet‘N Lows,” he stated. When I told him that this was kind of a health food store and didn’t sell artificial sweeteners, he quickly responded: “Oh, the hell with it. With what these guys are paying in rent, I don’t need any damn Sweet‘N Low.” That was John Paterakis, the Greek baker that got “lucky.” I’ll miss him a lot…two great musicians have also left us. I was very saddened to hear of the passing of Leonard Cohen, 82, the brooding and brilliant songwriter, musician and poet (sometimes called the “Canadian Bob Dylan”). Cohen’s song “Hallelujah,” an introspective view of love, sex and music, is rightly considered his greatest work, but he wrote so many deep, meditative tunes including “Bird on A Wire,” “Suzanne,” “I’m Your Man” and one of my unheralded favorites – “Tower of Song.” Cohen’s last album, “You Want It Darker,” released earlier this year, seemed like the perfect title to describe his persona. Also passing away was Leon Russell, 74, a man who seemed to have multiple musical careers dating back to the late 1950s. The Oklahoma native moved to Los Angeles while still a teenager wherehe became a much in demand sessions piano player and also joined The Wrecking Crew (the vaunted LA group of studio musicians who were the musical force behind hundreds of hit songs during the mid-60s to mid-70s. A great documentary – “The Wrecking Crew” – is available on video, wreckingcrewfilm.com) .By the late 1960’s Russell re-invented himself as a rock & roller. Organizing the British 15-person band Mad Dogs & Englishman to back Joe Cocker, Russell became a star in his own right, writing and singing such classic hits as “Delta Lady” “Superstar” and “A Song For You,” with which other artists had even bigger hits than Russell. He even managed to co-found Shelter Records, which signed such well known artists Tom Petty and J.J. Cale. While he never stopped touring (his last gig was July 10 of this year), Russell had a major comeback in 2009 when joined Elton John (Sir Elton claimed he learned much of his early piano style from the long-haired and bearded performer) in creating a new album – “The Union” – and playing in the subsequent road tour.