Lidl Blocks Kroger Attempt To Stop Sales Of Private Label Items; Trial Set For January
A federal judge in Richmond has denied Kroger’s injunction request for new market entry Lidl to stop selling items in its “Preferred Selection” brand. Kroger originally filed suit early last month, claiming that the German-owned discounter’s private label name too closely resembled its own “Private Selection” label.
Kroger asserted that the close resemblance of the names would cause confusion for customers and allow Lidl to compete unfairly with Kroger because customers could assume that the two brands are associated with one another.
However, late last month in Richmond, VA, U.S. District Judge John A. Gibney Jr. ruled that the logos look “somewhat alike” but said “private” and “preferred” have different meanings. In a response to the lawsuit, Lidl accused Kroger of trying to thwart its U.S. debut.
“I think the public interest lies in competition,” Gibney stated in court. “I don’t find they have an identical or similar meaning.”
In its counter-filing, Lidl stated: “Kroger is using this lawsuit to try to: disrupt the on-going launch of a new, emerging competitor that offers consumers high-quality products at far lower prices; distract from the positive reviews garnered by Lidl’s launch by painting Lidl as a copycat – when in fact Lidl is a decidedly different and (better) grocery experience; and drive up Lidl’s costs by having to defend against Kroger’s spurious claims.”
Judge Gibney set a January 11 date for a bench trial on the matte You can be assured that Kroger will be dogged in trying to defend its “Private Selection” trademark and other retailers have already begun to defend their turf more aggressively now that they’ve got a feel of Lidl’s operating style and go-to-market approach.
As for more current events concerning Lidl, four more Richmond area stores debuted on July 27, giving the most hyped new grocery entry in the last decade 18 stores now open. All stores are being serviced from the discounter’s Fredericksburg, VA-area facility.
We’re told that it should shortly start supplying other Lidl stores in the Carolinas from another DC in Mebane, NC. The company’s third distribution center located in Cecil County, MD should be completed by the end of this year. A fourth depot has recently been announced for Cartersville, GA which is slated to open in late 2018.
Once the Cecil County facility is finished, it is expected to begin supplying the first of about 50 Lidl stores that are planned for Pennsylvania, New Jersey and Delaware.
Our field sources noted that there’s still a wide variance of weekly volumes (measured from at least two weeks after a new store debuts) in all 18 stores that are currently open. Estimates range from about $230-$320K per week.
As previously noted, one thing to watch for when Lidl opens in Pennsylvania, New Jersey and Delaware (Maryland, too) is that those states do not allow wine and beer sales in grocery stores. It’s clear that the company’s wine department (as well as its bakery) is a key sales driver in its marketing strategy.
Lidl plans on having about 100 stores open by June 2018 in the New Jersey-to-Georgia corridor and recently set up a field office in suburban Dallas, TX where it reportedly has about 11 sites initially targeted.
‘Round The Trade
Former Microsoft COO Kevin Turner has joined AB Acquisitions LLC, parent company of Albertsons, as the vice chairman of its board of managers and senior advisor to CEO Bob Miller. Turner began his career at Wal-Mart in 1985 as a cashier and rose to become president of the company’s Sam’s Club unit in 2002…some color about Supervalu’s recently completed first quarter. With the company’s renewed focus on wholesale operations, sales grew 12.4 percent in that segment, primarily due to new customer sales. SVU’s corporate retail unit felt the most pain with a $4 million operating loss and plunging ID revenue. And you might be wondering why SVU initiated the unusual action of 1-for-7 reverse stock split. According to company, the move was designed to enhance the appeal of its shares to the financial community. Supervalu, like many other companies in the retail/wholesale sector, has experienced flat to declining stock prices over the past six months, which has been further exacerbated by the prospective Amazon-Whole Foods deal. The reverse stock split, which became effective on August 1, will reduce the number of authorized shares to 57.1 million while the number of issued and outstanding shares will be reduced from 268.5 million to 38.4 million. In his analysis, of his company’s Q1 performance, chief executive Mark Gross noted: “The results generated this quarter by our wholesale business were outstanding and demonstrate our ability to deliver on our strategy and commitment toward growing this segment. Additionally, we’re thrilled that we closed on the acquisition of Unified Grocers shortly after the end of our first quarter, and we’re now working together as one team to drive the business and integration efforts forward. We’ll begin reporting results in our second fiscal quarter that include the Unified business.”…and kudos to our buddy Anthony Hucker, former president of Giant Food, who was officially named CEO and president of Southeastern Foods (Winn-Dixie/Bi-Lo). Hucker, who joined the Jacksonville, FL merchant in March 2016 as chief operating officer, was named interim CEO on July 1 following the resignation of Ian McLeod, who left to become head honcho at Dairy Farm in Singapore. We wish Senor Hucker good tidings in his new gig…Hanover, NJ, the central New Jersey berg located approximately 30 miles from the Big Apple, experienced its first Wegmans opening on July 23, and what an opening it was. According to my sources, more than 2,400 customers visited the store the first day and opening day volume exceeded $600,000. With the buzz surrounding the opening coupled with Wegmans’ typical superior level of execution, we’re told first week sales surpassed the $3 million mark. And although it would not publicly comment on its role in helping provide relief to public safety officials and first responders after the tragic events of the white supremacist rally in Charlottesville, the following Facebook post about Wegmans penned by an unnamed responder from Metro Richmond fire department speaks volumes: “What transpired over the next 24 hours, as I found myself tasked with the greatest logistical challenge I’ve had yet, was nothing short of amazing. Store managers dedicated themselves and other staff to cooking for us. They fired up all their ovens, called in extra bakers and even emptied their freezers to cook boxed pizza for us when they ran out of dough. The night manager stayed till 1 a.m. The opening manager had carts lined up for us with breakfast, sorted by delivery location. The store practically refused to take a payment until we told them we wouldn’t leave until they did. More than 1,000 police officers and National Guard members were fed thanks to the donated food. It culminated in 500 Virginia State Police troopers walking into their location, bereft with grief, yet so thankful to see a 20-foot long counter lined with breakfast on Sunday morning. No matter what evil events take place in the world, there will always be acts of service and kindness that rise up and triumph over it,” the post read. Wow!… and while I try to be as apolitical as I can in this monthly column (there are plenty of other industry issues to address), I couldn’t help note and commend the CEOs who resigned from President Donald Trump’s Manufacturing Council and Strategic and Policy Forum earlier this month. In an obvious attempt to “save face,” the president disbanded those panels before even more members could bail. However, give those seven chief executives (including Campbell’s Denise Morrison; J&J’s Alex Gorsky; and 3M’s Inga Thulin) a lot of credit for standing up to the commander-in-chief, who seemed to give moral equivalency to both the hate groups and those attempting to protest their actions. “Racism and murder are unequivocally reprehensible and are not morally equivalent to anything else that happened in Charlottesville,” Morrison declared. “I believe the president should have been – and still needs to be – unambiguous on that point.” As the son of two Holocaust survivors, Trump’s verbal diatribes, his lack of focused leadership and his personal set of values disturb and sicken me. Wanna make America great again? Find a way to get this dangerous rank amateur out of office.
Local Notes
After a year of criticism from me, Ahold USA and Delhaize America deserve credit for posting strong second quarter earnings. And those strong numbers seemed to energize deputy Ahold Delhaize CEO Frans Muller, who told the Dutch newspaper De Financiele Telegraaf that based on the company’s U.S. success, “We will open our eyes to opportunities for acquisitions to strengthen our position on the East Coast.” You’ve got to acknowledge the international retailer knows how to efficiently utilize process and systems that are designed to bolster profits. However, I remain concerned about two major issues that have yet to be confronted by the evolving organization: the state of the company’s U.S. culture and adding more store labor and training that would undoubtedly enhance the customer shopping experience at its more than 700 U.S. stores…also a tip of the hat to the folks at Weis for another excellent sales and earnings performance in its recently completed second quarter. Despite significant deflation (which thankfully has begun to subside) and highly competitive market conditions, the boys and girls in Sunbury, PA keep on keepin’ on – 13 straight quarters of positive comp sales. That’s impressive. And now that deflation has almost cycled, other retailer’s numbers are improving, too. Target rebounded from a nearly 18-month downward trend by earning $1.23 per share (up from $1.19 per share last year) in its second quarter. Even more encouraging for the Minneapolis-based mass merchant was a 1.3 percent gain in comp store revenue and a robust 32 percent jump in digital sales. Store traffic also increased by slightly more than 2 percent. At Target’s chief rival, Wal-Mart, its second quarter news was even better. Earnings improved to $1.08 per share, U.S. comp store sales (ex-fuel) grew 1.7 percent, digital revenue increased 60 percent and store traffic rose by 1.3 percent. Some internal changes of note at the “Behemoth” include a partial restructuring of its grocery management team, (perhaps in anticipation of the Amazon-WFM deal). Shawn Baldwin, who was senior VP-produce and global food sourcing, will now lead a new Hispanic initiative. Martin Mundo, a Wal-Mart veteran from its international unit, will fill Baldwin’s former spot. Additionally, Tyler Lehr will now supervise all of the Behemoth’s deli operations and Scott McCall will head the company’s GM unit…and speaking of Amazon, I’m surprised that “Godzilla” is getting a little more push back from a variety of analysts who believe that the FTC should not approve its $13.7 billion cash acquisition of Whole Foods, which posted disappointing profits for its second quarter. Even with the strong dislike President Trump has for CEO Jeff Bezos – and his independently owned Washington Post – I don’t believe that any government agency will deny the deal from being consummated. For the period ended June 30, the Seattle-based titan saw earnings decline 77 percent in its second period (from $857 million to $197 million). However, sales continued to grow at a robust pace (25 percent). Whole Foods, one of the few retailers that continued on a disappointing financial track, posted Q3 earnings where profits dipped from $120 million to $106 million. WFM’s sales continued in the opposite direction from its potential new parent, with ID revenue also falling 1.9 percent, marking the eighth consecutive quarter of profit decline. At Amazon, key drivers included a 51 percent growth in subscriptions from its Amazon Prime membership to $2.2 billion. Additionally, sales from Amazon’s annual “Prime Day” event held on July 11 reportedly increased more than 60 percent and analysts said that “Prime Day” (which is actually a 30-hour event) was the biggest sales event ever (topping any “Black Friday or “Cyber Monday” campaign). According to CNBC, Wal-Mart and its Internet delivery unit, jet.com, were aggressive in trying to match Amazon on “Prime Day,” but couldn’t come close to impacting the mighty sales clout of the “Big A” which has just begun rolling out pickup points near five college campuses where mobile app users can select from several hundred fast-selling items at each site (snacks, beverages, cell phone chargers). Amazon associates in a backroom then load the orders into lockers within two minutes and customers utilize personalized bar codes to access their orders… sadly, too many obits to report this month. Leaving us was Jeff Brotman who, along with Jim Sinegal, founded Costco in 1983. Brotman, who still served as the chairman of the club store giant’s board, was only 74 when he suddenly passed. Sinegal reflected on his friend’s passing by noting, “For over 35 years, he became not just a business partner, but a confidante and great friend. I’m not exaggerating for a second when I say I loved the guy.” Brotman’s spot as chairman will now be held by Hamilton “Tony” James, who has been on Costco’s board since 1988 and served as the club merchant’s lead independent director for the past 12 years. James also serves as COO of private equity firm The Blackstone Group…from the world of show business, I’m sad to report the passing of Sam Shepard, the Pulitzer Prize winning playwright and actor who wrote such great plays as “Buried Child,” “Curse of the Starving Class” and “True West.” Shepard, 73, was also an accomplished actor and was nominated for an Academy Award for his role as Chuck Yeager in “The Right Stuff” (1983)…if you like French films, especially new wave cinema, you will be saddened to hear of the passing of Jeanne Moreau, the beautiful French actress who starred in such classic films as “Jules and Jim” (1962, directed by Francois Truffaut) and “Lift To The Scaffold” (1961, directed by Louis Malle). Moreau, 89, also turned down a part that would have surely enhanced her popularity in America: that of Mrs. Robinson in the Academy Award winning film “The Graduate” (1967)…Glen Campbell, 81, has also left us after a long battle with Alzheimer’s disease. While Campbell is best known for a string of late 60s and early 70s pop hits, including “By The Time I Get To Phoenix,” “Wichita Lineman,” “Rhinestone Cowboy” and “Southern Nights,” I’ll best remember the Arkansas born entertainer as one of the best guitar players of the past 50 years. In fact, he cut his teeth as a session player for The Wrecking Crew, a cracker jack ensemble of Los Angeles musicians who were featured on hundreds of hit recordings for artists including the Beach Boys, Frank Sinatra, The Monkees and Elvis Presley…June Foray is also dead. You may not know her by name, but you would know her by voice. She voiced characters in more than 1,000 cartoons, including episodes of “Tom and Jerry,” “Mr. Magoo,” “Yogi Bear” and “The Flintstones.” But Ms. Foray’s signature roles came in the great “Rocky & Bullwinkle” cartoon series. Foray was the voice of Rocket J. Squirrel (“Hey Bullwinkle, we’re in real trouble now!”) and sultry Russian villainess Natasha Fatale (“Boris, dollink.”). She was 99 when she left us…three sports notables I particularly admired have also passed away. Ara Parseghian, 94, the great Notre Dame football coach, is now finding peace way above the uprights. In his 11 seasons as head coach of the Fighting Irish, his teams won 95 games and only lost 17, placing him with other legendary Golden Dome coaches Knute Rockne and Frank Leahy. His 1966 and 1973 teams were voted national champions. I personally admired Parseghian for his grace and the leadership he provided to the young men who played for him. Leaving us too soon was major league baseball’s Don Baylor, the former American League MVP who began his career with the 1970 Baltimore Orioles. Baylor remains one of my favorite Orioles because of his aggressive and intimidating style. He was the epitome of the “play hard but play clean” player of past generations. In addition to his MVP award, he was part of the 1987 World Series champion Minnesota Twins team and managed th
e Chicago Cubs and Colorado Rockies. In 1985, Baylor won the Roberto Clemente Award as the player who “best exemplifies the game of baseball, sportsmanship, community involvement and the individual’s contribution to his team.” He had a reputation for being as tough as nails (he was hit by a pitch 267 times during 19 seasons as a player, which was a record at the time), but was one of the most beloved players of his era. Don Baylor was only 68 when he died. Also passing on was the Phillies’ longtime catcher Darren Daulton, a player cut from much the same cloth as Don Baylor. Daulton, who was a three-time All-Star in his 14 seasons in the big leagues, served as the Phillies’ inspirational leader for many years, including its 1993 World Series championship year. Daulton, only 55, played with constant pain due to two damaged knees (which required five surgeries), but always found a way to suit up and lead by example. “Darren was a true leader of men,” said Phillies chairman emeritus Bill Giles. “In addition to being an outstanding clubhouse leader, he was also a fighter. I really enjoyed watching him for 14 years in uniform. Darren was a super human being. His teammates loved him. I loved him like he was one of my own.”…and, finally, Godzilla is dead. No, not the fictional monster (who will apparently live forever), nor Amazon’s nickname, but Haruo Nakajima, who wore the Godzilla body suit in the first nine Godzilla films, from the original 1954 flick to 1972’s “Godzilla vs. Gigan.” BTW, the original Godzilla costume weighed about 200 pounds and was created from mostly concrete since commodities like rubber were in short supply after World War II. He was given little direction on how to portray the monster and formulated his character by conducting his own research at the Tokyo Zoo. Nakajima was 88.
