More Merchandising Instability For AUSA As Andrew Iacobucci Leaves Organization
The truth be told, Ahold USA hasn’t gotten its merchandising leadership right since Jeff Martin left the company in June 2012. It’s always difficult for any team to replace one of its stars, but after almost five years you would think a global organization such Ahold would have done a better job.
With the recent resignation of EVP-merchandising Andrew Iacobucci, the Carlisle, PA-based merchant is once again without an executive who possesses the prime time merchandising credentials you’d expect from a $26 billion company. Iacobucci reportedly left to become the chief merchandising officer at large foodservice distributor US Foods.
While it seems clear that the former Loblaw’s executive left on his own, could it be that Iacobucci felt that he might not have been the favorite if Ahold USA and Delhaize America choose one overall chief merchant later this year? Or, was he just frustrated after only nine months by the continuing dysfunctionalism of the merchandising department?
Named to replace Iacobucci is the venerable Don Sussman, who had been president of the company’s New York Metro Stop & Shop unit since November 2011. Sussman’s a true pro, having worked in almost every aspect of the supermarket business in his 37 years with Pathmark and Ahold USA. But much like another former AUSA merchandising chief, Mark McGowan (now president of Stop & Shop New England), Sussman will be playing out of position.
Of course, there are more than a few trade observers who believe that Sussman’s new role is that of a placeholder waiting for more integration changes to occur soon. And, one of those changes could be that AUSA’s largest banner – Stop & Shop – becomes one operating division (as it once was) with New York Metro and New England no longer separate entities.
Why does it seem so hard for an organization as large and powerful as Ahold USA to find the right leadership at arguably the most important position in its lineup? A nearly five-year run of incongruity like this one would adversely impact any retail organization.
In other moves related to Iacobucci’s departure, Bob Yager will be rejoining the Stop & Shop New York Metro division as senior VP and division lead where he will oversee day-to-day operations of the divisional leadership team. Yager, who spent many years in store operations in the Metro NY market, was most recently with Ahold Delhaize’s newly created Retail Business Services (RBS) division as senior vice president of supply chain.
Additionally, Nick Bertram, Ahold USA’s senior VP-merchandising strategy and support, will expand his responsibilities, including day-to-day merchandising operations, the ongoing integration work with Delhaize America and vendor collaboration. Bertram has been with Ahold USA for nearly four years and is a key component in the company’s merchandising operations and strategy.
Just before presstime, Ahold Delhaize released the sales portion of its fourth quarter trading statement. In the U.S., comp sales at its Ahold banners were down 0.2 percent (ex gas) while Delhaize America’s comp store revenues for its Food LIon and Hannaford units grew 2.2 percent. The full financial release, including earnings, will be out in about a month.
And there’s the promotion of Roger Wheeler to president of the aforementioned RBS unit which will support the local brands of Ahold USA and Delhaize America, including Food Lion, Giant/Landover, Giant/Carlisle, Hannaford, Martin’s, Peapod, Stop & Shop New England and Stop & Shop New York Metro. RBS was created last year several months after the merger became official in July by Ahold USA and Delhaize America to provide cost-effective, best-in-class support services to both organizations’ local brands. It is comprised of associates in various support groups within the organization and is a key service provider for the brands. In this new role, Wheeler will report to Kevin Holt, COO of Ahold USA, and Frans Muller, acting COO for Delhaize America.
Wheeler has an extensive background in the supermarket industry with more than 20 years of experience in retail operations, category management, supply chain and project management. For the past year, Wheeler has been the U.S. lead for the integration management office, helping to coordinate the merger of Ahold USA and Delhaize America. He has held a number of roles during his time with Stop & Shop and Ahold USA, including senior VP of supply chain and third party management, Oracle program leader, and VP of meat and seafood.
Wheeler is going to be a very busy man. At the end of the day, he will be the quarterback when further consolidation occurs in all departments excluding store operations and merchandising. And it will be largely on his watch that we will be able to gauge how much of the more than $350 million in anticipated synergy savings Ahold Delhaize can achieve over the next 12 months in the U.S.
At least he won’t be responsible for selling more stuff. That will be Ahold Delhaize’s biggest challenge.
Philadelphia Beverage Tax Now Law As Judge Dismisses Industry Suit
The Philadelphia Sweetened Beverage Tax (PBT) is now law, making the city the largest municipality in the nation whose residents will now have to pay a tax on sweetened soft drinks. Any hope for a delay or dismissal of the controversial law abruptly ended on December 19 when Philadelphia County Court of Common Pleas Judge Gary S. Glazer dismissed a lawsuit filed by the American Beverage Association (ABA) and other industry affiliates against the City of Philadelphia earlier this year.
The soda tax now adds 1.5 cents per ounce to the cost of most sugary and diet beverages. More than 1,000 products found in grocery stores would fall under the proposed tax including teas, coffee drinks, lemonade, juice drinks, sports drinks, enhanced water, mixers and energy drinks. Also included would be all artificially sweetened drinks.
However, the plaintiffs, Philadelphians Against Grocery Tax Coalition, claimed in that the tax was illegal because of an existing Pennsylvania sales tax that imposes a 6 percent sales tax on many of the same soft drinks that would also be affected by the PBT. The group led by the ABA also said that the PBT violated a federal mandate targeting Supplemental Nutrition Assistance Program (SNAP) funds that could impact the state’s ability to distribute and collect SNAP funds.
Dismissing the complaint in its entirety, Judge Glazer’s 14-page decision noted that the PBT did not violate the state Constitution’s Uniformity clause and did not duplicate the current Pennsylvania sales and use tax or affect the state’s ability to collect and distribute SNAP funds. Philadelphia Mayor Jim Kenney, the primary driver of the PBT, said in a statement following Judge Glazer’s ruling: “This is much more than a simple vindication of the legal principles on which the tax is based. It is victory for Philadelphians, who have waited far too long for investment in their education system and in their neighborhoods. I urge the soda industry to accept the judge’s ruling and do the right thing for the children of Philadelphia, many of whom struggle in the chilling grip of pervasive poverty. The industry has chosen not to challenge beverage taxes in other municipalities and there is no reason to continue pursuing it here. Regardless of their decision, the city will not stop pursuing what those kids need most – quality pre-K, community schools, and better parks, libraries and rec centers.”
The City Council and Mayor Kenney approved the bill last June and the plaintiffs’ original lawsuit was filed last September against the city of Philadelphia and Frank Breslin, commissioner of the city’s revenue department. The city said it hopes to raise $91 million from the soda tax.
The Philadelphians Against Grocery Tax Coalition also released a statement after the decision: “We are disappointed with today’s decision. More than 30,000 Philadelphians and more than 1,600 businesses and local organizations have joined together to say that this tax unfairly targets working families and small businesses. Families will face an additional tax burden even as the city has demonstrated that it has the resources to move forward with pre-K without this tax. We will continue to oppose this discriminatory and regressive tax, which is not a sustainable revenue source to support important initiatives like pre-K programs. Philadelphia families will be shocked in January when prices jump on more than 1,000 common beverages, including teas, soft drinks, juice drinks and no-calorie and low-calorie options. It will also become more expensive to see a movie, eat at a restaurant or attend a ballgame.”
Attorneys for the group vowed to appeal Judge Glazer’s ruling. And shortly after the new tax became law on January 1, the Philadelphians Against Grocery Tax Coalition website (nophillygrocerytax.com) was flooded with links to news stories about the tax, many of which were critical of the new law.
One example was a January 4 Philadelphia Inquirer story which noted that a case of Gatorade increased from $20 to $30 at Nicoletti Beverage Center in the Tacony area of the city. Michael Nicoletti, co-owner of the distributor, which also sells beer, said that given the store’s proximity to Bensalem in adjacent Bucks County, he would likely stop selling sodas and sweetened beverages.
“People can just go up the street,” Nicoletti said in the story. “It’s just a nightmare. I don’t know if they realize what they’ve done.”
Whole Foods Facing Two Class-Action Suits Involving ‘Gainsharing’ Program At Store Level
Whole Foods Market (WFM) is currently facing two class action lawsuits as a result of alleged improprieties in the retailer’s “gainsharing” bonus program. Under the program, Whole Foods employees can earn bonuses if the department to which they are assigned comes in under budget. Under the program, any budget surplus is to be divided among the department’s employees as a bonus.
On December 15, Whole Foods announced that it had fired store managers at nine locations in Maryland, Virginia and the District of Columbia for manipulating the gainsharing program and said that the practice had been employed at only a small number of its 457 nationwide stores. Whole Foods said at the time that it would investigate how much money was involved and would make sure that employees who were affected would receive proper compensation.
Within a week, one current and one former Whole Foods employee at the chain’s P Street store in Washington, D.C. filed a class action lawsuit in U.S. District Court against the Austin, TX based retailer, alleging that they were cheated out of earned bonuses. The lawsuit contends that Whole Foods avoided
paying gainsharing bonuses by shifting labor costs to other departments. Additionally, the suit says, the grocer created “fast teams” of employees that “float from one department to another,” shifting labor costs without accounting for the changes. The suit also alleges that, with the knowledge of company executives, the retailer employs these practices chain-wide “…to strip hard-working employees of earned bonuses in order to maximize their own profit.” The plaintiffs, Michael Molock and Randal Kuczor, are seeking $200 million in punitive damages and triple unpaid wages. Kuczor estimated that at least 20,000 WFM associates could be eligible for compensation.
“Rather than pay plaintiffs (and other associates similarly affected) the bonuses they earned through the gainsharing program, Whole Foods retained the surplus for its own benefit and to increase profit margin,” the suit alleges.
The five-count lawsuit also charges breach of contract, unjust enrichment, failure to maintain accurate employment records and two counts of failure to pay wages.
In response to the lawsuit, Whole Foods spokesperson Brooke Buchanan said in a statement: “We are still in the process of investigating the issues raised in the recently filed lawsuit, and as we do with any allegations affecting our team members, we will continue to conduct a thorough inquiry.”
That suit has now been followed by a second class action filed in D.C. Superior Court by the nine fired store managers who claim they were wrongfully terminated and defamed by the retailer. Each manager is seeking $25 million in damages. The former managers, whose tenures range from nine to 25 years, were employed at units in Washington, DC (two stores); Arlington, VA; Bethesda, MD; Vienna, VA; Gaithersburg, MD; Reston, VA; Columbia, MD; and Charlottesville, VA.
The latest lawsuit also claims that shifting labor costs to avoid gainsharing bonuses is a “nationwide, corporate practice” which “effectively stole the earned bonuses for countless employees across the country.” In addition to losing their jobs, the former employees allege Whole Foods defamed them because of the resulting negative news coverage after it was reported that they acted on their own rather than with corporate guidance.
According to the suit, an employee at a Mid-Atlantic area store had complained of not receiving an earned bonus due to the labor shifting practices. During an internal investigation following that allegation, according to the lawsuit, the nine plaintiffs were fired after they would not agree to Whole Foods’ talking points that the practice of shifting labor among departments was isolated to only a few stores.
“Whole Foods, which touts itself as an employee friendly corporation, engaged in a nationwide practice to subvert earned employee bonuses. When confronted with systemic wage theft, Whole Foods attempted to cover up the corporate fraud by terminating the nine whistleblower plaintiffs,” the lawsuit from the nine fired store manager states.
It will be very interesting to see how Whole Foods Market (WFM) responds to the two class-action suits it must defend. Both filings deal with the company’s “gainsharing” store level associate bonus program, which some store managers and employees feel was manipulated illegally. We’ll let the courts adjudicate the legal issues, but the decline of WFM over the past two years lies primarily with company management. The Austin, TX-based merchant certainly has lost its store ops crispness, and other consumer perception issues (such as accuracy in weights and measures) are a direct result of sloppiness, not intent in my opinion. Perhaps that’s one reason Walter Robb is no longer co-CEO and John Mackey is back as sole chief executive. However, it’s going to take more than one person to fix WFM’s problems. The company has lost many talented managers and executives over the past five years and in its quest for accelerated expansion, it’s laser keen operational disciplines at store level as well as the morale of its associates have somewhat diminished.
These lawsuits will not help matters.
Out Of The Blue, Fred’s About To Enter Competitive, Overstored Northeast Market
For many months, trade analysts expected that Kroger would be the winning bidder for the hundreds of Rite Aid stores that the Federal Trade Commission (FTC) would mandate for divestiture by Walgreens Boots Alliance if it were to successfully complete the $9.4 billion acquisition of the Camp Hill, PA drug store chain first announced 15 months ago.
Not only would such a deal add to Kroger’s HBC, GM and pharmaceutical business, it would provide the industry’s largest pure-play supermarket operator with an entry into the Northeast, the largest remaining empty geography for the Cincinnati-based merchant.
Several of our Wall Street sources alerted us before Thanksgiving that Kroger was rethinking about moving forward, leaving an opportunity for another bidder to emerge.
When the smoke cleared and the curtain opened, Fred’s Inc., a regional drug chain based in Memphis, came away with the prize that would include 865 stores for $950 million in cash (about $1.1 million per store).
The proposed deal would more than double the size of Fred’s, which currently operates Fred’s 647 general merchandise discount stores located primarily in the Southeast that include 371 full-service pharmacy departments within its stores. Many of its stores are located in small towns. Additionally, the deal requires Fred’s to buy additional stores if the FTC requires the divestiture of more than the 865 units.
While neither party would reveal the specific locations that were to be acquired before the merger is approved by the FTC, many of the overlapping Rite Aid and Walgreens stores are located in the Northeast. And that alone would give concern to how successful can any new operator be in the most overstored, competitive marketing area of the country.
“This will be a transformative event for Fred’s Pharmacy that will accelerate our health care growth strategy through our acquisition of 865 new stores located in highly-attractive markets,” Fred’s Pharmacy CEO Michael K. Bloom said. “We believe that this transaction will also create tremendous opportunities for both our new and existing front of store and pharmacy team members. We look forward to realizing the considerable benefits this transaction will bring to our customers, patients, payors, supplier partners, team members and shareholders.”
Bloom knows the Northeast well. For 20 years he served as a senior executive at CVS and prior to joining Fred’s in 2015 was president and COO of Family Dollar (which was acquired by Dollar Tree in 2014).
Not only will Fred’s be competing against larger and superior operators CVS and Walgreens, it will likely end up with the stores that Walgreens deemed inferior to the overlapping stores that the Deerfield, IL chain will keep. Additionally, the competition from other high-volume HBC, GM and prescription retailers not in the drug channel (i.e. Wal-Mart, ShopRite, and all the AUSA banners) will certainly be a lot different from the competitive landscape in Hueytown, AL.
Fred’s will also have to deal with other challenges such as logistics and culture integration. Part of the agreement calls for Fred’s continue to operate the stores under the Rite Aid banner for two years and would continue to employ all store associates and certain field and regional associates related to operations. That alone might create some short-term stability, but remember it’s only been a couple of years since Rite Aid has progressed to “sea-level” status and it is still a distant third to drug chain leaders Walgreens and CVS. The integration of 3,600 Rite Aids will likely be easier for Walgreens than it will be for Fred’s to absorb 865 stores (and has never operated on either the East or West Coasts).
It’s a big opportunity for the company that began as a single store in Coldwater, MS in 1947. That opportunity comes with big risks.
‘Round The Trade
Two retailers with even bigger worries than the aforementioned Whole Foods are Sears/Kmart and Macy’s. The former merchant continued its race to the bottom by announcing it will shutter 108 Kmarts and 42 Sears units over the next three months, meaning that the Hoffman Estates, IL-merchant will have closed more than 200 stores in its current fiscal year and has suffered a store decrease of nearly 60 percent since 2011. Many of the soon-to-be closed stores are located in the South, but the casualty list in the Mid-Atlantic and Northeast will include 10 in Pennsylvania (6 Kmarts, 4 Sears); four in New Jersey (all Kmarts); five in New York (1 Kmart, 4 Sears); two in Connecticut (1 Kmart, 1 Sears); three in Massachusetts (2 Kmarts, 1 Sears); two in Maine (1 Kmart, 1 Sears); one in Rhode Island (Sears); and one closure in Maryland (Kmart). Additionally, Sears Holdings CEO “Slow Eddie” Lampert has personally guaranteed a $500 million line of credit (through his own hedge fund – ESL Investments) to maintain the company’s current liquidity levels. The ailing retailer reportedly has only $258 million cash in hand. Another sign of imminent demise is the dumping of key assets such as the recent sales of its Sears’ Craftsman business to Stanley Black & Decker for $900 million. Sears will still carry Craftsman merchandise at its stores in a deal in which the iconic retailer can sell those products royalty-free for 15 years. And, while it hasn’t yet sunk to the depths of Sears/Kmart, Macy’s is descending pretty quickly. Early this month, the department store provided clarification of its August announcement that more than 100 stores would be closing and more than 10,000 jobs would be lost. About 6,200 of those jobs will be lost through management riffing, with another 3,900 impacted by upcoming stores closings. All told, 16 Macy’s units in Mid-Atlantic and Northeast are on the closure list. Clearly both merchants have been severely impacted by the growth of ecommerce, but that’s only part of the problem. Whether it be Kmart, Sears or Macy’s, the condition of the stores, the amount of labor on the floor and the level of associate training have all waned significantly in recent years…another retailer that announced store closings is Giant/Eagle. The Pittsburgh-based regional chain said it would close six stores in Ohio (five Giant/Eagle supermarkets and a Get-Go convenience store) and two more Get-Go locations – in Altoona, PA and Frederick, MD…more Whole Foods news: the retailer will open a 365 unit near the Barclay’s Center in Brooklyn in 2018. The 43,000 square foot store will occupy two levels of a 35-story building (currently under construction) next to the Brooklyn Academy of Music. Currently, there are only three 365 stores in operation – all on the West Coast – but another 22 are planned to open over the next 18 months, including several on the East Coast. Additionally, WFM has begun to roll out its new centralized merchandising model, in which many national brands will deal directly with national category managers based at WFM headquarters in Austin, TX. There will still be room for local buying at the retailer’s 11 regional offices, but make no mistake, the ball will be controlled from Austin. More WFM streamlining – the retailer announced that it has closed three food prep facilities on the East Coast. Units in Landover, MD, Everett, MA and Atlanta, GA have ceased operations as the organics chain will now utilize outside suppliers. It’s noteworthy that Whole Foods has held on to its regional model for so long, and clearly the move to a national procurement system and a greater reliance on outsourcing fall in line with most other larger retailers (can you spell s-y-n-e-r-g-i-e-s). But, we’ve seen countless times that internal cost savings do not make for an improved operation at store level…among those Mid-Atlantic retailers that are participating in the USDA’s recently announced on-line SNAP benefits pilot are ShopRite, Fresh Direct and Safeway…Kroger announced last month that it offered voluntary buyouts to about 2,000 associates who have until March to accept the buyout proposal. “Kroger would not be the successful company it is today without the incredible efforts of our associates. We believe a generous voluntary retirement offering is in line with our company values and recognizes the long careers many of our associates have had with Kroger. Kroger is committed to our operating model of lowering costs to invest in areas that matter most to our customers,” said CEO Rodney McMullen. The company currently employs approximately 430,000 associates…Duncan Mac Naughton has a new job. Earlier this month, the peripatetic retail executive was named president and COO of Family Dollar Discount Stores, a division of Dollar Tree Stores. Mac Naughton has had no problem gaining employment at the executive level. However, keeping a job long-term might be an issue. In the past 20 years, he has worked for Kraft, H-E-B, Albertsons, Supervalu and Wal-Mart. Most recently, he served as CEO of Mills Fleet Farm, a family-owned company based in Brainerd, MN and Appleton, WI. Replacing Mac Naughton as CEO is his old buddy from Supervalu, Wayne Sales. Wayne Sales? It’s amazing to me that so many former grocery executives with questionable leadership skills find prominent jobs at other companies…one of Mac Naughton’s former employers, Supervalu, had another tough earnings period. In its third quarter ended December 5, the Eden Prairie, MN wholesaler/retailer posted an $11 million loss from continuing operations while suffering another huge identical stores sales decrease (5.7 percent) at its corporate retail stores which also saw a 3.8 percent decline in customer count and a 1.9 percent dip in average basket size. Supervalu’s wholesale business was somewhat healthier with a sales increase of 0.2 percent, to $1.91 billion, although administrative expense adversely impacted profits. Wholesale operating earnings were $52 million, or 2.7 percent of net sales versus adjusted operating earnings of $60 million, or 3.2 percent of net sales in the year-ago period. Things should get better in that department next quarter as SVU assumes primary grocery supply responsibility for all 178 The Fresh Market stores and an additional 50 America’s Food Basket units in the Northeast. CEO Mark Gross commented on the company’s wholesale and retail status, while also addressing the recent Save-A-Lot (S-A-L) transaction: “The successful sale of Save-A-Lot early in the fourth quarter provides Supervalu with additional flexibility to operate and grow our business. Additionally, our wholesale team has done a tremendous job delivering for our customers. It is a significant accomplishment that we increased wholesale sales compared to last year given the sales lost at the end of fiscal 2016. Unfortunately, in our retail segment we have not been able to overcome persistent deflation, competitive impacts, and other factors. It takes time to change customers’ shopping habits, but our team is dedicated to improving our results.” Gross’ assessment is accurate and he knows that rebuilding Supervalu as solely a wholesaler is going to take time. However, the shakeout process is difficult to watch. Everybody knows that the company’s retail stores need to be sold and/or closed. But are there viable buyers to attract? To make matters worse, as SVU continues to invest less capital in its more than 200 corporate units, the rougher they look, which further devalues those banners and stores in markets that continue to be overstored and are ultra-competitive… just before we went to press, SVU announced that it hired Anne Dament as senior VP- merchandising and marketing for its retail stores. She previously held senior management posts at Safeway, Pet Smart and most recently Target. A native Minnesotan, at least she won’t have to move very far in her new job, but her challenges will be enormous. With heavy speculation that Supervalu is looking to sell its 200-plus store retail unit, Dament must find ways to re-energize a disparate
store base that has been essentially cap-ex starved for more than a decade. Making Shoppers, Farm Fresh, Cub, Shop ‘n Save and Hornbacher’s relevant again will be a supreme challenge. There was one additional pearl in reading the agate type in SVU’s recently filed 10-Q report. The company revealed that it paid only $17 million for the 22 former Food Lion stores it acquired last year. That more or less confirms that Ahold Delhaize sold its 85-store divestiture package for less than $1 million per unit, an indication of how anxious the big Dutch retailer was to dump those locations in order to complete the merger. The downside for those Supervalu acquired units in Maryland, Pennsylvania and West Virginia (trading as Shop ‘N Save) is that they are performing worse than any of the other former Food Lion, Martin’s, Stop & Shop and Hannaford stores that other retailers purchased. Furthermore, we’re hearing that a potential sale of those stores to a group led by former S-A-L president Bill Shaner and Western PA independent operator Tom Jamieson is in jeopardy…Wal-Mart announced that it will be riffing 1,000 corporate jobs at its Bentonville, AR headquarters, using the trimming to also realign some of its bricks and mortar and online operations so they become more integrated. At store level it’s a different story as the Behemoth will add 10,000 jobs and provide skills-building training to approximately 250,000 store associates. More Wal-Mart news: Rosalind Brewer, the 23 year Wal-Mart veteran who for nearly the past five years has led a generally unsuccessful turnaround of the Behemoth’s Sam’s Club division, is out as CEO. She will be replaced by John Furner, 42, who was named chief merchandising officer for the club store unit in 2015. Furner is also a Wal-Mart lifer, having started as an hourly store associate in 1993…more club store news: word on the street indicates that Costco may shortly be increasing its membership fees. Costco CFO Richard Galante hinted at a price increase during his analyst conference call last month. The club store leader last raised its membership fees in November 2011. One of the strengths of Costco has always been its affiliated credit card program (first with American Express before switching to Visa last June). It appears that Godzilla (Amazon) is about to launch a new credit card – Amazon Prime Rewards Visa Signature – that will rival or exceed the benefits of Costco’s rewards card. The new card offers Amazon Prime members 5 percent back on all amazon.com purchases as well as 2 percent back at restaurants, gas stations and drugstores, and 1 percent back on every other purchase. In order to get the full reward value from the card, holders must join Prime for $99 a year. Non-Prime members who get the card still receive 3 percent back at amazon.com, 2 percent back at restaurants, gas stations, and drugstores, and 1 percent back on every other purchase. “We are adding even more value to Prime by offering rewards on Amazon and everywhere else you shop,” said Max Bardon, an Amazon VP. The new card also offers other benefits, including no foreign transaction fees, travel protection, and 24/7 concierge service. While the card could be a modest game changer, I’m hoping that an Amazon drone drops off a package on my front porch or maybe Godzilla will build me one of those new Amazon tunnels. With a tunnel leading up to my house, then I’d really know why my cable reception isn’t so good. And just before presstime, Godzilla announced that will build a 1.2 million square foot fulfillment center in North East, MD (Cecil County). The new DC, Amazon’s third in the state, will employ about 700 and carry larger items such as televisions and patio furniture…Bain Capital Private Equity Co. (60 percent) and Chinese supermarket chain Yonghui Superstores (40 percent) have acquired Stamford, CT-based Daymon Worldwide, the private label development and retail merchandising services company, for $413 million.
Local Notes
Last month we reported that Chris Lane had been promoted from VP-grocery divisions to executive VP at Wakefern, giving industry analysts reason to believe that he is the likely candidate to someday succeed current president and COO Joe Sheridan. In his new post, Lane didn’t waste any time in restructuring his new team. Those changes include promoting Paul Patten to group VP-center store (from VP-grocery division); elevating Parag Shah from sales manager, grocery marketing to VP-grocery; naming Cathy Magistrelli VP-HBC (she was grocery procurement manager); Steve Henig, who was VP-corporate merchandising, will now move to a new vice president post in Wakefern’s digital commerce and innovation division where he will oversee ecommerce and data analytics; Chris Skyers, most recently VP-HBC, becomes VP-corporate merchandising; Kelly Schaefer-McSpirit now becomes director of corporate advertising (she was advertising manager); Charlie McWeeny has been promoted from director of the computer information services division (CISD) to VP-CISD; Bob Cerullo, formerly Wakefern’s “appy/seafood” manager is now director of seafood; and Natalie Menza-Crowe, who was manager of health and wellness, has been elevated to director of that department. Those reporting directory to Lane are Bill Mayo, senior VP-logistics, technology and engineering; Jeff Reagan, senior VP-marketing; Dave Howlett, VP-dairy/frozen; Geoff Wexler, VP-foodservice; Terry Murphy, VP-fresh bake; Terry Sharkey, VP-appy/seafood; Joe Gozzi, director of distinctive products and the aforementioned Patten and Menza-Crowe. More Wakefern/ShopRite news: despite strong pushback from some local residents, it appears that there will be a new 70,500 square foot ShopRite in New Milford, NJ (Bergen County). Opposition forces argued that developing the 14-acre site would create additional traffic problems and that its proximity to the Hackensack River could cause flooding problems…one of the busiest Fresh Grocer stores, on 40th and Walnut Street in Center City Philadelphia (on the campus of the University of Pennsylvania) is fighting to retain the rights to renew its lease. According to published reports, a Penn spokesman said that Fresh Grocer did not renew its lease (which expires on April 1) in a timely fashion in accordance with terms of the lease, adding that the college is now working on a “smooth and orderly transition” to a new operator (believed to be Acme). Fresh Grocer is fighting back, however. A groundswell of local support through social media has arisen from Penn students and residents who live near the store. There’s a facebook page devoted to the effort facebook.com/TheFreshGrocerWalnut) and a Twitter hashtag (#SavePennFroGro) for those wanting the Wakefern member to continue operating one of its signature stores. Additionally, the Burns Family (Pat Burns is the company’s CEO) has distributed a flier stating: “The more people who voice their support for our store to the University, the more likely it is that they will work with us to renew the lease.” This sounds like it’s headed for litigation…interesting piece in the New York Times recently about how Met Food owner Paul Fernandez was essentially forced to close his Mulberry Street location (in Manhattan’s SoHo neighborhood) on New Year’s Eve because he could not work out terms for a new lease. When the store opened in the early 1990s the rent was $9,000 a month. Now the landlord is seeking $90,000 a month, a price that Fernandez could no longer afford. It’s a sad but accurate snapshot of the challenges that most independents face, particularly in urban areas…Michele Buck has been promoted from COO to chief executive at The Hershey Co. Buck, who’s been with the big Central, PA chocolatier for 11 years, succeeds John Bilbrey, who will remain on Hershey’s board as non-executive chairman…a tip of the hat to one of my industry buddies – Rick Morse – who recently retired after 35 years with McCormick. Rick has held a variety of sales posts at the big spice maker including VP-sales. For the past six years, Rick, who now resides in beautiful Charleston, SC, has been VP-global customers. A talented salesman and a gentleman of intelligence and passion, we wish Rick all the best in his future endeavors. …in a year with too many notable people passing on, our December obituary list includes mother and daughter Debbie Reynolds and Carrie Fisher. Reynolds, 84, once termed “America’s Sweetheart” for her wholesome girl-next-door look, died a day after her daughter succumbed to a heart attack. Reynolds’ film breakthrough came when she was 19, in the 1952 mega-hit “Singin’ in the Rain,” co-starring Gene Kelly and Donald O’Connor. All told, Reynolds appeared in 82 film and TV roles in addition to numerous Broadway appearances. Her daughter, Carrie Fisher, may not have had the stellar career of her mother, but certainly led a very interesting life, too. Her name and character became iconic after she played Princess Leia when the first “Star Wars” movie was released in 1977. Fisher also appeared in such popular movies as the original “Blues Brothers,” (1980) and “When Harry Met Sally,” (1989). Fisher, whose father was popular 1950s crooner Eddie Fisher, also displayed a great affinity for writing. Her first novel, “Postcards From the Edge,” (1987), drew on her real life battles with drug addiction, bipolar disorder and her often fractious relationship with her mother, and was later developed into a film starring Meryl Streep and Shirley Maclaine. In 2008, she wrote another highly personalized book, “Wishful Drinking,” which continued to chronicle her ongoing personal demons and dysfunctional family life (watch the HBO special of the same name “on demand;” it’s both hilarious and sobering). Fisher was 60 when she passed…we are also sorry to report the death of Robert Hulseman. Robert Hulseman? He was the former CEO of the Solo Cup Company, who succeeded his father Leo, who founded the company in Chicago in 1936. It was Robert Hulseman’s invention of the 16-ounce red Solo cup in the mid-1970s that changed the drinking habits of many Americans. “Nobody was drinking 16-ounce beers at that point,” said his son Tom. Other smaller sized cups and different colors were developed, but it was the 16 ounce red that stuck. If I’m not giving you a complete picture of the importance of the red Solo cup in American society, perhaps some of the lyrics from Toby Keith’s 2011 song can convince you: “Now a red solo cup is the best receptacle; For barbecues, tailgates, fairs and festivals; And you sir do not have a pair of testicles; If you prefer drinking from glass; A red solo cup is cheap and disposable; And in 14 years they are decomposable; And unlike my home they are not fore-closable; Freddie Mac can kiss my ass woo; Red solo cup I fill you up; Let’s have a party let’s have a party; I love you red Solo cup I lift you up; Proceed to party proceed to party; Now I really love how you’re easy to stack; But I really hate how you’re easy to track; ‘Cause when beer runs down the front of my back; Well that my friends is quite yucky; But I have to admit that the ladies get smitten; Admiring how sharply my first name is written; On you with a sharpie when I get to hittin’; On them to help me get lucky; Red Solo cup I fill you up; Let’s have a party let’s have a party.” (www.youtube.com/watch?v=BKZqGJONH68)…and I’d be remiss if I didn’t shed a tear for a notable grand finale – the closing of “The Greatest Show on Earth” – Ringling Bros. and Barnum & Bailey’s Circus. After a run of 146 years, the big top will be coming down in May for good. Although attendance has been declining for years (even more so in the past year after elephants were eliminated from the show), there was always something special about the entire circus experience – taking your kids to see the gymnasts, clowns and animal acts – as our parents did. Even though I know it is politically incorrect to sing the praises of seeing elephants parade in formation, bears on r
oller skates and roaring lions and tigers jumping through flaming hoops for their trainers, there was a certain electricity and family bonding experience that was forever memorable. As P.T. Barnum once said: “To me, there is no picture so beautiful as smiling, bright-eyed, happy children; no music so sweet as their clear and ringing laughter.”