Is Lane’s Promotion Portent Of Wakefern’s Leadership Direction?
Changes of leadership at Wakefern Food Corp. are few and far between. And it’s been the company’s management stability that’s been one of the difference makers for Keasbey, NJ-based wholesale grocery co-op which in the past 45 years has had only had two chairman/chief executives – the late Tom Infusino (the Vince Lombardi of the business), who served from 1971 to 2005, and current chairman and CEO Joe Colalillo, who has masterfully led the co-op to record sales and industry innovation.
Even at the president/COO level there has been little change – only four day-to-day leaders in that same time period – David Silverberg, Jerry Yaguda, Dean Janeway and Joe Sheridan, who assumed the responsibility when Janeway retired in late 2011. All men have served as great stewards to their unique organization by growing sales, helping to add new members, expanding geographies and helping to create new formats.
Earlier this month in typical Wakefern fashion – a news release was issued headlined: “Wakefern Food Corp. Names Executive Vice President” (without mentioning the person’s name). Well that person is Chris Lane, who has been a senior VP at Wakefern since 2011, first as head of non-perishables and most recently as supervisor of product divisions.
Why is Lane’s promotion important? Primarily because Chris Lane is one of the upcoming stars in the grocery business and that fact is being recognized by his bosses. He’s only 54, has been with Wakefern since 2003 and is a pharmacist by trade. Lane also is viewed by his peers and by the vendors as intelligent and fair with strong leadership skills.
“Chris has the smarts, the temperament and the overall leadership skills to become president of the company one day,” said one Wakefern member-owner. “His experience is well-rounded, both from within Wakefern and when he worked for Duane Reade, and he operates very effectively with the members. He’s a very good listener.”
Secondly, in what may be even more important than this current promotion is that the new job could be a precursor to possibly succeed Sheridan as president and COO of the co-op which serves as the distribution foundation for $15.7 billion of retail sales at Wakefern’s ShopRite and PriceRite stores and is the dominant market leader in both Metro New York and the Delaware Valley. There are no guarantees, of course, that this will happen and I don’t believe the dynamic Sheridan is going anywhere anytime soon, but if history repeats itself, Lane could become Wakefern’s next president.
And what history is that? In May 2011, Janeway announced that he would be stepping down as president, seven months before he left. Sheridan, having served as Janeway’s right hand man for years, was soon named as his successor. Obviously, succession planning is vital for a company that makes very few changes at the top and has had a stellar record of management chemistry for the past 45 years.
If nothing else, we wish Chris Lane all the best in his new role. However, if I were a betting man…
Ahold Delhaize Touts ‘Better Together;’ Not All Agree
December 7 – a day of infamy – and also the day that the newly combined Ahold Delhaize (AD) organization held its first “Capital Markets Day” in London. The purpose of the meeting was to apprise and update the European financial community which has been closely tracking the large international retailer since its merger was finalized in late July of this year. Speaking for Ahold Delhaize was CEO Dick Boer, chief e-commerce and innovation officer Hanneke Faber, deputy CEO Frans Muller and CFO Jeff Carr.
With the theme of “Better Together” the company told the audience that the combination of two complementary companies was created to “actively share best practices, learn from each other and to realize our benefits of scale,” said Boer who has been Ahold’s chief executive since 2011 and was named to the top job of the new organization when the merger was announced in June 2015.
As expected, much of the focus was on accomplishments, objectives and financial forecasting (“we have a clear plan to deliver euro 500 million by 2019” – Boer), as it’s been since the deal was first announced. However, surprisingly little time was spent on the importance of the company’s associates and the role they play in helping make the shopping experience a better one for Ahold Delhaize’s customers, particularly in the U.S. What we got was 155 slides, countless charts and a pledge to continue with aggressive cost discipline initiatives. And to be fair, Boer did note that the newly combined entity would be prioritizing sustainable objectives such as healthier eating, reducing food waste, and creating healthy and inclusive workplaces for its 375,000 associates.
Boer also addressed AD’s ability to compete against discount merchants, adding that it has had a successful track record when pitted against Wal-Mart and has grown market share in the Netherlands where it faces ongoing pressure from price-driven chains (Aldi and Lidl).
Also providing key information was Muller, who in addition to his deputy CEO title, serves as chief integration officer and, on an interim basis, president of Delhaize America. As it affects business in the U.S., Muller unveiled a new business platform – Retail Business Services (RBS) – a separate unit encompassing both Ahold USA and Delhaize America which will oversee many administrative areas for the two retailers – finance, human resources, legal, IT, supply chain, own brands and retail operations support – leaving marketing, advertising and merchandising as remaining non-integrated areas for AUSA and Delhaize America.
RBS was created as a key service provider to assist the companies’ brands in accelerating their strategies, strengthening their operations and connecting more closely with local customers and communities. Associates in certain support functions at Ahold USA and Delhaize America will transition to this new entity by year-end, and other functions may be transitioned at a later date. Ahold Delhaize has not yet chosen an executive to lead RBS, which is slated to go “live” on January 1.
Muller stated that RBS’ priorities are to leverage scale and best practices; utilize the company’s “world class” support providing expertise and tools; create a “simplicity” mindset to operate and efficiently as possible” and enable brands to focus on growth.
AD’s number two executive also updated the financial analysts on its “trade equalization” progress (which he termed “harmonizing buying practices of A-brands”). Muller claimed that in Europe, 90 percent of vendor negotiations have been finalized and all should be completed by year’s end.
In the U.S., 35 percent of deals have been closed with a projected completion date of March 2017. Muller noted that the retailer was “on target” to achieve its goals.
That may be true, since we really don’t know what the company’s financial goals are (we hear $250 million in the U.S. with both branded and private label vendors). But I can assure Mr. Muller and Mr. Boer that they’d better bring their boxing gloves if they hope to achieve anywhere close to that reported amount in this country.
As many of you read in this column last month, vendors are furious at Ahold Delhaize for its approach and tactics in attempting to gain what they consider increased trade spending from virtually all suppliers who it believes haven’t funded AD’s U.S. groups – Ahold USA, Food Lion and Hannaford – equally.
Hundreds of vendors have been called in to meet with company merchandising executives and essentially been told that they owe the big retailer substantial monies based on its in-house analysis and research. If you don’t comply, be prepared to have items delisted and face financial penalties
Of course, since Ahold USA and Delhaize America are not revealing how they arrived at their “new math,” most vendors have found the entire process unfair, disingenuous and perhaps illegal.
In the past few weeks, my original list of vendor/broker/distributor sources has swelled from about 15 to nearly 75. I’ve received data and memos from the most unlikely of sources including several Ahold USA associates who also believe the company’s “equalization” practices are unjust and its approach to be bullying.
We’ve also heard from several (more than five) of those sources that category managers and some vice presidents were offered incentive bonuses (reportedly in the $15,000-25,000 range) if they delivered the financial objectives sought on a department-by-department basis. Three of those sources also said that CMs and VPs signed confidentiality agreements that they would not disclose that they were being paid a bonus.
Since Ahold USA and Delhaize America refused to answer specific questions about “trade equalization,” I happen to believe there’s some merit to those allegations.
From our original network of 15 large CPG companies we spoke to, most have said they have refused to pay any “equalization” fees and will continue to resist compensating AD until the retailer can prove the monies are legitimately owed. Half of those original companies said they have been threatened with delistments, but that has not yet occurred.
“If they want to discontinue some of some our items, that’s their prerogative. We’ll accept it and move on rather than be extorted,” said a senior VP from one of the country’s largest CPG manufacturers. “There are a lot of other retailers in the country that are much fairer to deal with than Ahold Delhaize and who have a better track record of incrementally moving more cases.”
I’ll have more to write about “equalization” next month.
So kiddies, what did we learn after Ahold Delhaize’s first “Capital Markets Day?” We learned that the company is a powerful organization, a financial machine of sorts, able to reach and often beat financial targets. We learned that it believes that combining two cultures will facilitate collaboration. We learned that the company claims that it really cares about healthy eating, reducing food waste and creating a better work environment for all of its associates.
What we didn’t learn is whether the international retailer really wants to sell more stuff (or continue to increasingly lean on “back room” process and strong-arm methods). We didn’t learn about whether we’ll see more labor in the stores, improved associate training and a better consumer perception in its U.S stores.
Apparently, some of those important intangibles can’t be measured by a financial table.
‘Round The Trade
Lidl is continuing to build its infrastructure in the U.S. as it heads toward opening its first group of stores perhaps as early as April 2017. Earlier this month the company held two hiring “events” to attract stores managers for its North Carolina and Virginia stores. According to its website, “We have landed in America and we are searching for talented, friendly and dynamic people to grow with us. We are bringing a brand new fresh shopping experience to our American shoppers.” Lidl is currently advertising about 75 U.S. jobs on its website seeking talent for real estate and human resources. Having a valid passport is necessary for the store manager jobs as travel to Europe will be part of the discounter’s six-month management training program. Lidl has also inked a new lease on East Butler St. (near Aramingo Avenue) in Philadelphia, its first site in the big city. The German retailer paid $2.88 million for two parcels of land (about four acres in total) and will develop the property itself. The store should open in 2018. The discount retailer also signed its seventh New Jersey deal after getting approval to build a store in the Ocean County town of Lacey. Both stores will be in the 36,000 square foot range. More Lidl stuff: as the extreme value merchant gets closer to opening the first round of its planned 100 stores in the Mid-Atlantic and Southeast, the private-label oriented merchant’s U.S. headquarters in Arlington, VA has also posted job opportunities for store supervisors in the following areas: Middletown DE/Elkton, MD; Charlotte, NC; Goldsboro/Kinston, NC; Greenville, NC; Havelock, NC; Raleigh, NC; Rockingham, NC; Rocky Mount, NC; Shelby, NC; Wilson, NC; Winston-Salem, NC; Greenville, SC; Spartanburg, SC; Christiansburg, VA; Culpeper, VA; Manassas, VA; Fredericksburg, VA; Norfolk/Newport News/Virginia Beach, VA; Richmond, VA; and Woodbridge, VA. The store supervisor position at Lidl will report to the store manager and handle such functions as labor scheduling…one discount retailer that may very well feel the sting of Lidl is Save-A-Lot. The former Supervalu unit has now been officially acquired by PE firm Onex Corp. for $1.365 billion in cash. SVU will have some skin in the game, however, having signed a five-year service agreement with the Earth City, MO-based limited assortment operator. Next up for Supervalu: the disposal sale and/or closures of its more than 200 corporate stores, which have been a drain on the Eden Prairie, MN-based firm since 2006… also exploring expansion ideas for Philadelphia is Balducci’s. VP-retail estate Joel Chace recently told philly.com that his company is interested in Philadelphia because “it’s an underserved customer that deserves to be taken care of,” adding that Wegmans and DiBruno Bros. would serve as potential competition to the upscale retailer (whose new parent company – KB Holding/GSSG Capital – also owns 25 Kings stores in New Jersey, Connecticut and New York). BTW, Kings/Balducci’s CEO Judy Spires grew up in South Jersey and still maintains a residence in Center City. Balducci’s will be adding new stores in the next two years in Rye Brook, NY and Reston, VA…good to hear that both Giant/Landover and Safeway and UFCW Locals 27 and 400 put aside their differences (at least temporarily) and agreed to new three-year deals which will give Baltimore-Washington area clerks and meatcutters a $3.35 wage increase over the three years and keep in place current pension and health care benefits.. Labor negotiations have always been high-stress affairs, but with today’s market landscape which features so many non-union merchants and less than robust sales (for almost every merchant), bargaining new labor agreements is tougher than it’s ever been. And looming over most contract negotiations are many significantly underfunded pension plans whose shortfalls never seem to get directly addressed, just temporality patched. When those funds ultimately implode from the increasing weight of the underfunding, there’s going to be a disastrous repercussions that will severely impact both labor unions and unionized retailers who are part of those plans…a quick temperature check on sales during the Thanksgiving period from about a dozen Northeast retailers indicates that volume was slightly better than a year ago, but still lagging behind the halcyon years of a decade ago. One potential advantageous factor was that, except for a few markets (Central PA being one), most retailers priced turkeys in a more reasonable manner than in 2015…Springfield, NJ-based, Village Super Market Inc, the second largest ShopRite member and only publicly-traded retailer in the co-op, posted slightly lower earnings in its recently completed first quarter. Earnings for the period ended October 29 were $4.11 million as compared to $4.43 million in the corresponding period last year. Overall sales inched up from $38.53 million to $38.69 million this year and the 29-store merchant said same store sales were flat. Village officials noted that revenue was helped by the closing of four competitors’ stores and the continued gains made by new replacement stores in Stirling, NJ and Morristown, NJ. However, those increases were offset by seven new competitive openings, including stores formerly operated by A&P, as well as meat and dairy deflation. At natural and organics distributor UNFI, sales and earnings were below expectations in its first quarter (also ended October 29). The Providence, RI wholesaler saw earnings dip 2.9 percent to $29.2 million on $2.3 billion in sales a 9.7 percent overall increase, nearly all of it due to recent acquisitions including Haddon House and Gourmet Guru. According to UNFI CEO Steve Spinner, who had predicted that natural and organic growth would be in the 7 percent range (vs. previous growth of near 10 percent): “This is happening for several reasons. The first is the law of larger numbers; we are no longer serving a retail niche, as many of our products are now mainstream. We also think lower levels of inflation, or deflation, are also having an impact on overall industry growth rates. In addition, same-store sales have slowed at many of our retail customers as they continue to operate in a highly competitive, consolidating and deflationary environment. What’s more, they are facing competition from more channels and food delivery options, such as e-commerce and meal delivery services.”…one of UNFI’s major customers, Whole Foods, has fired nine store managers in the Mid-Atlantic region for manipulating a bonus program in which they allegedly benefited from an internal profit-sharing plan at the expense of store employees. WFM was still investigating how much money was involved…it’s been another big year for Parsippany, NJ-based B&G Foods, which last month acquired Victoria Fine Foods (founded in Brooklyn in 1929) from Huron Capital Partners for $70 million. Earlier this year, B&G purchased the spice division of ACH Foods (Spice Island, Durkee, Tone’s) and in 2015 acquired Green Giant’s canned and frozen food business and Mama Mary’s Pizza Crust.…kudos to Gerry Castignetti, JOH’s EVP and sales manager for grocery, frozen and dairy on being named NorthEast Wholesale Frozen Food Distributors Association (NEWFDA) “person of the year” for 2016. “Over the years, Gerry has shown an unwavering commitment to NEWFDA and I can think of no person more deserving of this award than him,” said John Saidnawey, president and COO at JOH. “He is an integral part of NEWFDA and truly embodies everything that JOH stands for: ethics, integrity and passion. We are fortunate to have Gerry as a valued member of our leadership team.” I agree. Gerry’s an old school guy whose people skills are off the charts and someone who continues to work tirelessly even at his advanced age (whoops, he’s younger than me)…a tip of the hat to my man, Richard “Rick” Herrmann, who oversees sales for Bozzuto’s South Region. Rick will be retiring at the end of this month, having notably served the grocery industry for more than 40 years, prima
rily with Fleming (RIP) and for the last 13 years with the Cheshire, CT-based voluntary wholesaler. Despite dealing with some major health issues over the last few years, Rick has always been there for his customers and his associates at Bozzuto’s, where he serves as an unofficial mentor. Kind, talented, selfless, smart and altruistic are qualities that are hard to find in any one person – Rick Herrmann possesses them all. Good luck in all your future endeavors, my friend…in the past week alone, a lot has been written about “Amazon Go,” the company’s new 1,800 square foot bricks and mortar c-store that will feature “no lines, no checkouts, no registers” that is slated to debut in Seattle early next year. If you haven’t seen it, watch the video – www.youtube.com/watch?v=NrmMk1Myrxc. Let’s face it, this is potentially revolutionary game-changing retailing and you know Amazon will throw billions of dollars behind this platform because they’ve proven they can be the biggest disruptors in American business. But “Go” isn’t going to deliver a knockout blow to anybody, even if Amazon can build enough scale in the next 10 years. The technology will certainly have to be refined once it goes “live” and the model that Amazon appears to be shaping is a very urban one, which would limit geographical scope. Then again, who wants to bet against the 40 pound brain and competitiveness of Jeff Bezos?…just before presstime, it was announced that longtime Coca-Cola CEO Muhtar Kent, 64, will be stepping down from that leadership post on May 1, 2017. James Quincey, 51, a 20-year Coke veteran who is currently Coca-Cola’s president and COO, will take over as chief executive of the Atlanta-based beverage giant. Kent, who joined Coke in 1978, will stay on as chairman…from the obit ledger this month, we are sad to report that three unsung musicians have passed away. Sharon Jones, who arguably could be considered the best R&B singer since Aretha Franklin, died last month at the age of 60. A former New York City prison guard, Jones tried for years to get a record contract without success. Finally, in 1996, she was “discovered” by record producer Gabriel Roth, who founded Daptone Records and served as Ms. Jones’ bass player until her death. Blessed with a booming, soulful voice, she finally achieved fame over the last 10 years. I had seen Jones several times in concert and can attest her shows were exhilarating. Worth seeing is a documentary made about her life – “Miss Sharon Jones!” which accurately depicts the hardships and disappointments she endured, her joy of singing and being around her band, and her painful battle with cancer, which ultimately took her life. Another underrated singer, songwriter and pianist has left us. Mose Allison, 89, whose modern jazz and delta blues musical style influenced many current blues and rock artists, including John Mayall (“Parchman Farm”); The Who (“Young Man’s Blues”); Elvis Costello (“Your Mind Is On Vacation – And Your Mouth is Working Overtime”); and Bonnie Raitt (“Everybody’s Cryin’ Mercy”). The Mississippi native recorded his first album in 1957. Also passing on was Greg Lake, singer, guitarist and bass player for the ‘70s progressive rock group Emerson, Lake & Palmer (ELP). Lake’s strong voice could be heard on ELP’s hits such as “Lucky Man” and “Karn Evil 9.” Lake was 69. With death of keyboardist Keith Emerson earlier this year, that leaves drummer Carl Palmer as the only surviving band member…an obit from the world of sports to report as well. Earlier in this column I referred to December 7 as a day of infamy. To the fans of the old Brooklyn Dodgers baseball team, October 3, 1951 was another day of infamy. Late in the afternoon on that day, in the Polo Grounds in New York City, Bobby Thomson hit a walk-off three-run home run against the Brooklyn Dodgers that clinched the pennant for the New York Giants (“The Shot Heard ‘Round the World”), who had made up a 12 and-a-half game deficit, against their archrival in the last two months of the season. The man who threw the gopher ball was Ralph Branca. While Branca will always be a part of baseball folklore for that one pitch, the truth is he was a very good hurler in his own right, posting a record of 88-68 in a 12-year career, winning 21 games in 1947 and being selected to three all-star teams. After he retired, Branca became a great ambassador for the game, helping former ball players who fell on hard times. Branca passed away late last month at the age of 90. “I was closer to Ralph than any other Dodger. We travelled around the world and became very good friends. He carried the cross of the Thompson home run with dignity and grace. I was grateful for his friendship and I grieve at his death. He was a great man,” said Vin Scully, legendary Dodgers announcer who retired two months ago after 67 years of broadcasting the team’s games…also dead is Joe Esposito. Joe wasn’t an athlete or a singer, but he paid a key role in the life of one of America’s greatest vocalists – Elvis Presley. Esposito, who met Presley while they were both in the Army in Germany in 1959, became “The King’s” right hand man and road manager for nearly two decades and was one of the leaders of the “Memphis Mafia,” Elvis’ entourage. Esposito, 78, also had small parts in several of the singer’s movies – he played a carnival man in “It Happened at the World’s Fair” (1963) and the gambler in “The Trouble With Girls” (1969)….lastly, just before presstime, we learned of the death of a truly great American – John Glenn. War hero, Marine colonel, U.S. Senator and the first American to orbit the earth, Glenn died in his native Ohio at the age of 95. In his wonderful book, “The Right Stuff,” author Tom Wolfe wrote that Glenn became “the last true national hero America has ever made.” As a Marine fighter pilot in World War II and the Korean War, Glenn flew 149 combat missions and was hit 12 times during those flights. He joined Mercury 7, America’s first group of astronauts, and in 1962, Glenn’s space capsule – Friendship 7 – circled the Earth for the first time. He was hoping to be the first man in space, but his fellow astronaut Alan Shepard was chosen ahead of him. President Obama succinctly captured the essence of John Glenn: “John spent his life breaking barriers, from defending our freedom as a decorated Marine Corp fighter pilot in World War II and Korea, to setting a transcontinental speed record, to becoming at age 77, the oldest human to touch the stars. John always had the right stuff, inspiring generations of scientists, engineers and astronauts who will take us to Mars and beyond – not just to visit, but to stay.” An announcement from NASA added: “Godspeed, John Glenn. Ad astra (to the stars).”
