AmazonFresh Exiting Certain Suburban Areas; Expect Whole Foods, Prime Now To Fill The Void
Home delivery remains the most complex and costliest option for food retailers. To wit: Peapod and Fresh Direct, whoâve been in the business since the last millennium, have yet to become profitable.
So, it wasnât too surprising to learn that AmazonFresh is scaling back its coverage in several key markets, some of which it entered less than a year ago. But parent firm amazon.com emphasized that it is not giving up on its fresh delivery portal, it is merely reducing the number of zip codes it will serve in several states (in the Mid-Atlantic and Northeast, those include Maryland, Delaware, Pennsylvania, Virginia, New York, New Jersey, Connecticut and Massachusetts) while continuing to deliver perishables in parts of all those states.
Of note also is that amazon.com continues to build fulfillment centers to support fresh deliveries nationwide.
To this reporter, it seems that AmazonFresh isnât going away â itâs likely to be repurposed into other Amazon formats.
One of those up-and-coming portals is the companyâs Amazon Prime Now, which promises grocery and restaurant deliveries within a two-hour window and also offers perishables in its catalogue. Currently available in about a dozen markets including Baltimore, Washington, DC and New York City, Prime Now is also being tested in other markets, as well, including Richmond.
Itâs clear amazon.com believes that its $99 per-year Prime subscription service is one of the foundations of its go-to-market approach. And Prime Now is available to all Prime members, who now total more than 80 million nationally. Moreover, when compared to AmazonFresh, which charges an additional $14.99 per month on top of the Prime annual fee, Prime Now seems like it will be the perishables-driven silo that will be prioritized.
And then thereâs the future role of Whole Foods Markets, where amazon.com has barely scratched the surface. I had an opportunity to visit the busy and impressive WFM flagship store in Austin, TX last month and, other than point-of-sale signage marketing lower prices (fewer than 100 items), there wasnât much evidence that a new sheriff was in town. That will change soon.
Other than the utilization of selling a proprietary brand (365) through its vast distribution network, a bigger opportunity lies in utilizing Whole Foodsâ more than 450 stores as both mobile delivery hubs and click & collect centers. While Instacart has WFMâs delivery business currently, its contract expires in 2021. Look for that business to be integrated into a re-engineered AmazonFresh/Prime Now.
The entire integration of Whole Foods into amazon.com wonât be without its bumps given the ferocity of competition in a traditionally low-margin business.
However, amazon.com has the benefit of time, talent, seemingly unlimited funds with which to experiment, and a 44 percent share of all e-commerce business in the U.S. (according to eMarketer) as well as the adoration of Wall Street which thinks the Seattle juggernaut canât do much wrong. In fact, that reputation has been earned, because amazon.comâs âhitsâ over the past decade have significantly outweighed its âmisses.â
And if this current scaling back of its AmazonFresh grocery business can be counted as a âmiss,â Iâm betting that a new âhitâ will surface very soon.
Ahold USA Completes Integration Assignments; New Decentralized Model To Be Launched January 1
With the completion of its âWave Câ round of interviews and future job assignments affecting
associates in IT, legal, people systems and services, finance, supply chain and communications, Ahold USA is now ready to debut its new decentralized operating model on January 1, 2018.
The new structure places priorities on its brands (banners) and on its Retail Business Services (RBS) unit, which was created earlier this year to oversee administrative functions. Those who made the cut in âWave Câ will be part of RBS. At the brand level, âWave Câ focused on human resources, finance, fresh formats and quality assurance.
Last month, AUSA completed the largest (in terms of personnel) segment of its decentralized integration plan when it announced its category management and operations teams at its three divisions (brands) â Giant Food, Giant/Martinâs and Stop & Shop. Those changes become effective January 1, 2018 when the Dutch-owned merchant unveils its new go-to-business model featuring a more localized brand structure.
The announcement of its âWave Bâ decentralized plan structure applies primarily to Ahold USA. Delhaize Americaâs two operating banners â Food Lion and Hannaford â had already realigned over the past two years and AUSAâs new lineup (including job titles) resembles that which previously had been put in place in Salisbury, NC (Food Lion) and Scarborough, ME (Hannaford).
Those Ahold USA merchandising and operations decisions came after the big retailer held two weeks of âoutcomeâ meetings in late September reportedly involving about 2,000 merchandising and operations-related associates, both at current corporate headquarters in Carlisle and at the divisions, to ultimately determine if current merchandising and store operations associates would be offered positions in the new brand-centric structure and what those new positions would be.
At Giant Food, where Gordon Reid continues as president, the new merchandising and store operation lineup is: reporting to Tonya Herring, SVP-merchandising, will be: Rick Manzi, VP-category management for fresh; Michael Weinstock, VP-category management for center store; Erik Weenink, director-price and promotion; Frank Gallagher, director-merchandising planning; Paul Zvaleny, director-pharmacy ops; and Chris Carrado, manager-shrink.
Reporting to Manzi will be: Al Rivero, director-produce/floral (and his market manager-floral Dave Chisholm); Bill Campbell, director-meat/seafood (and his market managers Scott Grove-meat and Lisa Guinther-seafood); Paul Chapman, director-deli/bakery (and his market manager-deli/bakery Donna Souris).
Reporting to Weinstock will be: director-center store field Cipriano Andrade, director-center store Greg Bibbs (and his marketing managers-center store Monica Simmons-Dolce and Daniel Wiggington), director-DSD/ethnic Diane Couchman (and her market managers – Jeff Pygott-beer and wine, Eric McCormick-DSD and Cynthia Volk-ethnic/specialty); and one open position for director-GM HBC (reporting to the director-GM HBC will be Susan Beach-market manager for non-food).
Reporting to John MacDonald, VP-marketing will be: Gregg Dorazio, director-brand management; Felis Andrade, director-external communications and community relations; Kurt Guinther, director-marketing operations; and an open position for director-loyalty and digital. Reporting to Mark Adamcik, VP-brand strategy, will be two open positions for director-strategy and innovation and manager-consumer insights.
Reporting to the currently open position of manager-consumer insights will be Gregory Park, analyst-business insights.
Reporting to Ira Kress, SVP-retail operations, will be: Robert Belcher, VP-regional ops, and his district directors Timothy Baker, Jason Raborg, Clay Rolfe, Kevin Timmons and Jeff Lewis; Toni Judy, VP-regional ops, and her district directors Bob Hass, Mike Long, Amy McAllister-Flynn, Deanna Marion-Wilson and Betsy Myers; Mike Brenton, director-asset protection; Bob Bennett, director-store support; Gary Budd, director-deployment; Eric Smith, director-labor and productivity; Gary Stout, manager-inventory ops.
At Giant/Martinâs, where Nick Bertram will become president on January 1 succeeding the retiring Tom Lenkevich, the new merchandising and store operations lineup has been finalized as: reporting to John Ruane, SVP-merchandising, will be: Dave Lessard, VP-fresh; Denise Mullen, VP-center store; Leigh Shirley, director-pharmacy; Rebecca Lupfer, director-merchandising planning; Steven Kruger, director-pricing and promotions; Kelly Krutz, director-profitability; and Darice Fitzpatrick, administrative assistant.
Reporting to Lessard will be: Steve Allison, director-meat and seafood, and his category managers Bryan Beck, Jim Brinser and Patrick Sanagursky, as well as Dave Copenhaver, manager-field merchandising; Brian Lorenz, director-deli/bakery, and his category managers Dan Laviola, Taneya Clark and Rob Palmeri as well as manager-field merchandising Mike Strayer; and Chris Keetch, director-produce/floral, and his category managers Robert Backer, Josh Geyer, Matt Novosel and Kevin Prill, as well as Josh Erb, manager-field merchandising.
Reporting to Mullen will be: Sheila Kostiuk, director-center store, and her category managers Becky Shipp, Tracy Dabrowski and Henry Weber (there is currently one additional open position for category manager); Deb Kreider, director-center store, and her category managers Karen Brassel, Jennifer Scott, Summer Monnett, Megan Barrouk and John Boyle; Kyle Kirkpatrick, director-center store, and his category managers Darla Rieg and Chad Kyllonen (there are currently two open positions for category manager); and Morgan Shreiber, director-field center store.
Reporting to Matt Simon, VP-marketing, will be: Michael Raimo, director-marketing operations; April Mock, director-brand management; Chris Brand, director-external communication and community relations; Robert Welsh, director-loyalty and digital; Sarah Glunz, supervisor-nutritionists; and Sandy Weibley, administrative assistant.
Reporting to Manuel Haro, VP-strategy and planning, will be: Daren Russ, director-strategy and innovation; and Sharon Eiswert, manager-consumer insights.
Reporting to John Ponnett, SVP-retail operations, will be: Dave Liptok, VP-store support, and his team: Brian Wanner, director-deployment; Ron Hawes, director-labor and productivity; Mindy Miller-Dowling, director-asset protection; Bob Salvatori, manager-front end operations; Colin Heap, manager-inventory operations; specialists-fuel maintenance and regulations Carl Berlin and Laura Berghold; and Lynsay Danley, administrative assistant. Also reporting to Ponnett will be: district directors Luke Dreese, Rodney Allen, Sepideh Burkett, Steve Angle, Tim Santoro, Paul Madarieta, Ron Bagley, Wendy Zahradka, Fred Morgan, Bill Bruderer, Jim Mullen and Angie Heck.
At Stop & Shop, where Mark McGowan remains president, the new merchandising and store operations lineup is: reporting to Mark Messier, EVP merchandising, will be: Kerri Aguilo, SVP-category management for center store; Pat Dwyer, VP-merchandising planning; Brian Pavur, director- pharmacy operations; Loren Johnson, VP-price and promotion; Jack Keane, director-profitability; as well as open positions for SVP-category management of fresh and assortment analyst, which will report to SVP-fresh.
Reporting to Harry Giglio, VP-category management-meat/seafood, will be: managers-field merchandising Ken Mirando, Mike Ferrante and Alphonse Apuzzo; two open category manager positions in beef/lamb/veal and pork/poultry; Elizabeth Grant, category manager-seafood; and Wilson Dos Santos, category manager-frozen meat/seafood/packaged.
Reporting to Tracy Waterman, VP-category management for deli/bakery will be: managers-field merchandising Joe Cabral and Rob Harman, as well as one open field manager position; open positions for category manager-deli/cheese and ready-made meals; Mike Vachon, category manager-bakery; and Jolene Medeiros, category manager-specialty deli.
Reporting to Brian Fleming, VP-category management for produce/floral, will be: manager-field merchandising Brian Betesh, as well as two additional open field manager posts; Joe Connolly, category-manager-fruit; Lynn Perry, category manager-vegetables; Peter Quinn, category manager-convenience; and Jack Wilson, category manager-floral.
Reporting to Aguilo will be: VPs-category manager-center store Maria Ruisi, Natalia Torres-Furtado and Joel Brissenden; directors-field merchandising Mike Pauley, Bob Dodge and Rob McGuirl.
Reporting to Torres-Furtado: Jeremy Weldon, category manager-snacks/commercial bake; Randi Laflamme, category manager-DSD/warehouse beverages; Sam Andrade, category manager-liquor/tobacco; Paul Bender, category manager-ethnic and specialty; as well as an open position for assortment analyst.
Reporting to Brissenden will be: Tom Regan, category manager-main meal 1; Romina Rinaldi, category manager-main meal 2; Diana Sorafine, category manager-breakfast and baking; Christine McCormack, category manager-frozen; Michelle Merchant, category manager-dairy; and two open positions for assortment analyst.
Reporting to Ruisi will be: Jacek Bartoszewicki, category-manager pet/baby; Craig Souza, category manager-seasonal/candy; Guy Olson, category manager-household/paper; Ed Attubato, category manager-healthcare; Carolyn Walsh, category manager-beauty care; as well as an open assortment analyst position.
Reporting to Whitney Hardy, SVP-marketing, will be: open positions for VP-loyalty and digital and VP-marketing strategy and planning; Janine Mudge, director-marketing operations; and Phil Tracey, director-external communications and community relations.
Reporting to Glenn Hogan, VP-store support, will be: Jacqui Buckley, director-deployment; Dale Duquette, director-asset protection; Gary Pinto, manager-front end operations; Ken Silvia and Scott Lapham, specialists-fuel maintenance and regulations; Dave Picano and Rocco DiTullio, managers-inventory operations; Lynn Scavullo, director-labor productivity; Chris Aziz, manager-store communications; Lynne Damaschi-Gelineau, coordinator store communications; and Scott Logan, analyst-store support.
Reporting to Sonja Boelhouwer, VP-strategy and planning, will be: open positions for director-consumer insights and manager-store format; Melissa Hughes, director-strategy and innovation.
While the alignment of category managers, category directors, market managers, regional operations VPs and district directors is generally uniform among the three divisions, there are nuances that exist.
A few nuances of note: at Giant Food (Landover), there are fewer category managers and directors than at the other two divisions and sources have told us that Stop & Shop will support some of the merchandising functions for Giant Food from its Quincy, MA headquarters.
As Ahold has noted in the past, âWave Bâ represents an investment in the brands and commercial functions in order to become more brand-centric and ensure future success.
The retailer stated that Ahold USA and RBS are investing in and building organizations that support customer connected strategies and operations.
Most of the roles that were announced will generally not be effective until the beginning of 2018.
AUSA also revealed that with the âWave Bâ staffing and selection process for incumbent associates completed, there are some remaining open roles. These roles will be posted in the coming weeks.
For a number of the commercial teams, a sequenced phased transition approach is planned, with a small number of teams beginning soft launches in late October and the âstand-upâ continuing through Q1 of 2018. This approach, Ahold USA noted, will allow teams to continue focusing on delivering the day-to-day as associates and teams transition to new roles and ways of working. Timelines for the phased transition will differ by function, and information will be shared with the appropriate teams as decisions are made.
The retailer also noted that RBS will maintain functions in each of the current five key office areas (Quincy, Salisbury, Carlisle, Scarborough and Greenville), and RBS associates will also be located at other locations. The long-term goal is for RBS associates who are supporting specific brands, including those transitioning from roles currently in a support office, to be located at brand headquarters or regional offices close to their stores.
And in related news, Ahold Delhaize reported strong earnings and improved ID sales in its recently competed third quarter. Overall, the Amsterdam-based merchant posted a sales increase of 7.4 percent and earnings jumped 54 percent to $419.3 million. In the U.S., at Ahold USA, net sales declined 6.1 percent (the company operated 12 fewer stores), but comps (excluding fuel) grew slightly to 0.7 percent compared to negative 0.1 in the corresponding period last year. Earnings remained strong with operating income increasing 35.4 percent to $199 million and underlying operating margin rising to 4.1 percent from 3.9 percent.
At Delhaize America, net sales jumped 22.4 percent and operating profit also increased 28.2 percent to $132 million. Buoyed by its âEasy, Fresh & Affordableâ remodeling effort, comp store sales were 2.3 percent compared to last yearâs third quarter figure of 1.3 percent.
Thereâs no question that Ahold Delhaize is a profit beast and should produce stellar earnings for the next six quarters as it takes full advantage of the synergies created by the AD merger which was completed last year. But at AUSA, comps should be better and once again, I find myself wondering if the company will ever devote more resources to improving its stores and ultimately its customer engagement experience? With such great locations, strong programs like âProject Thunderâ and a well-developed strategy to maximize earnings it should be doing better with its top line revenue and could be doing a lot more to improve the morale of many of its associates.
Wakefern Food Corp. Announces $16.3 Billion in Sales
Like a well-oiled machine, Wakefern Food Corp. once again reported record retail sales of $16.3 billion for the 52-week fiscal year ending September 30, 2017 (a 1.5 percent increase from the prior year) at the companyâs annual shareholder meeting held October 26 in East Brunswick, NJ.
Chairman and CEO Joseph S. Colalillo, president and COO Joe Sheridan and executive VP Chris Lane addressed shareholders, store management and staff of the largest retailer-owned cooperative in the United States, also reporting that Wakefern and its members opened four new ShopRite stores, two The Fresh Grocer stores and two PriceRite Marketplace stores during the same period.
âOur family-owned-and-operated supermarkets and their dedicated associates supported by knowledgeable and innovative Wakefern staff make the difference in this business and serve as the foundation for our strength and success,â Colalillo told an audience of nearly 900 people at the Hilton in East Brunswick.
Colalillo announced the retirement of Neil Duffy, president of Price Rite Marketplace, a registered trademark of Wakefern with 64 grocery stores in nine states.
âNeilâs dedication and hard work helped grow the popular Price Rite brand over the last 12 years, and we thank him for his service to Wakefern,â said Colalillo.
He also announced the retirement of Larry Collins from Wakefernâs board of directors and the addition of Patrick J. Burns, CEO of Burnsâ Family Neighborhood Markets, to the board.
âWe thank Larry for his service and commitment to the board. He will remain active in the cooperative and his own company, Collins Family Markets, which operates ShopRite stores in Philadelphia, Eddystone and Glenolden, PA,â noted Colalillo. âWe welcome to the board Patrick Burns, who brought The Fresh Grocer stores into the cooperative in 2013. We look forward to working with Pat and the rest of the board to shape future success.â
Sheridan recapped the companyâs accomplishments over the last year, including its expansion of ShopRiteâs popular Wholesome Pantry line of products made with simple, clean ingredients, and the introduction this year of its newest own brand, ShopRite Trading Company.
âWakefern Food Corp. and our supermarket banners continue to innovate and elevate the customer experience with great new brands, our store dietitians, digital platforms, and a real focus on fresh,â noted Sheridan.
âWe are committed to providing great community stores and delivering exceptional experiences with each of our four brands. Itâs a time of great change for the supermarket industry, and I am excited for what we will achieve over the course of the next year and for generations to come,â added Chris Lane.
Wakefern shareholders re-elected to the board of directors at the meeting include: Joseph Colalillo, chairman and CEO; Larri Wolfson, Irv Glass and Dominick J. Romano, vice chairmen; Lawrence Inserra Jr., treasurer; Jeff Brown, assistant treasurer; Richard Saker, secretary; and Ned Gladstein and Nicholas Sumas, assistant secretaries. Sheridan was also re-elected as president and COO, and Chris Lane was elected as executive VP.
âRound The Trade
Lidl will open its first New Jersey store on November 16 in Vineland, the same day it cuts the ribbon on three other discount units including one in Virginia Beach, which will be Lidlâs most heavily concentrated market with nine stores. Earlier this month, the privately-held German firm, whose U.S. headquarters are based in Arlington, VA, began its holiday season promotional program. That effort includes adding about 200 premium food and wine items and more than 300 gift items and holiday decorationsâŠWal-Mart held its annual âinvestorâs dayâ last month at its corporate headquarters in Bentonville, AR. Perhaps the key announcement during the meeting with financial analysts was that the âBehemothâ said it will be opening fewer than 15 new SuperCenters next year. While Wal-Mart has been reducing the number of combo units it has built over the past few years (only 40 this year), the predicted bricks and mortar expansion (which also includes fewer than 10 new Neighborhood Markets) is a stunner. The planetâs largest merchant said it wonât be reducing its cap-ex budget (about $11 billion), but will instead redeploy those funds into continuing to grow its e-commerce. Doug McMillon, Wal-Martâs CEO, noted ââŠwe are making a deliberate choice that we are going to win e-commerce. If you think about the SuperCenters, they are largely built out. There will still be a few opportunities to do a few here and there.ââŠHanneke Faber, chief commerce and innovation officer for Ahold Delhaize will leave the company next month to pursue another career opportunity, reportedly with another Dutch firm â Unilever (she formerly worked for P&G). She joined Ahold in 2013. A search has begun for Faberâs successor who will likely oversee the chainâs rapidly evolving digital model⊠now that Walgreens has finally gotten the best Rite Aid deal that the FTC will allow, it announced late last month that it would be closing about 600 overlapping stores in the next 12-18 months. The majority of those stores will be Rite Aid units. The reasons are rather simple: with the soon-to-be-closed stores all within a mile of existing Walgreens, the FTC would not allow that level of overlap. Moreover, with Walgreens reporting negative comps of 2.1 percent in its recently completed fourth quarter, it certainly wouldnât want that much cannibalization as it moves forward with a new corporate strategyâŠanother sad chapter in the Sears saga â it is planning to close the last of its 130 stores in Canada. Like its American cousin, Sears Canada has been failing for many years (Sears Holdings CEO Edward S. Lampertâs ESL Investments holds a majority stake in Sears Canada). The company could face liquidation if no rescue deal be found by later this month. As for this monthâs foreboding Sears Holdings news, âSlow Eddieâ has reportedly personally loaned the troubled retailer $160 million to enable it to survive through the holiday season. That brings ESLâs tab to about $500 million in loans over the past few years to help Sears survive a little longer (or die a little slower). Meanwhile, the ailing merchant is reportedly paying Samsung and LG Electronics, on a COD basis and Levi Strauss is no longer selling womenâs jeans to the company. Tick, tick, tick!…âPapaâ John Schnatter, founder and CEO of Papa Johnâs pizza wins this monthâs âbe careful what you wish forâ award. The already overexposed pizza promoter criticized the National Football League and its players for protesting the national anthem which he claimed has dragged down pizza sales because of declining ratings. The fun began when Greg Creed, chief executive of Yum! Brands, which owns rival Pizza Hut, said his chain has not felt any impact on its pizza business and then DiGiorno, owned by Nestle, responded on Twitter by exclaiming âBetter Pizza. Better Sales. Itâs DiGiorno.â That was a clear spoof of Papa Johnâs tag line â âBetter Ingredients. Better Pizza. Papa Johnâs.â Papa Johnâs took the bait and countered with âFrozen pizza = equivalent of a participation trophy,â which was later changed to âBetter Ingredients. Better Pizza. Better Tweets.â I would disagree with two of those statements from Papa Johnâs, giving the nod to DiGiornoâs for having the better tweets and the better pizza.
Local Notes
On November 7, Weis Markets reported its 14th consecutive quarter of comparable-store sales gains, but said net income for the third quarter was down by 58.1 percent, compared to a year ago. The Sunbury, PA-based retailer reported comp-store sales gains of 1.5 percent for the 13-week period that ended September 30. Total sales were up 15 percent, to $854.3 million, compared with the year-ago results, reflecting the acquisition last year of 38 Food Lion stores in Maryland, Delaware and Virginia, plus the acquisition of one Nellâs Family Market store in East Berlin, PA. Net income for the third quarter was $4.4 million, compared with $10.6 million in the year-ago period. Weis attributed the decline to aggressive promotional and pricing programs; price deflation in produce, deli/foodservice, bakery and seafood; and inventory management challenges at some of the acquired stores. For the 39-week, year-to-date period, Weis said its net income fell 24.5 percent, to $34.8 million, on a 16.8 percent increase in sales, to $2.6 billion, compared with year-ago results. Comparable-store sales through the first three quarters were up 1.6 percent. The closely-held publicly-traded regional chain operates 204 supermarkets in seven Mid-Atlantic states. Weis also recently issued its 2016 Sustainability Report, stating that it has reduced its carbon footprint by 25.4 percent since it began measuring sustainability level in 2016. Among other milestones attained last year were: increasing recycling by more than 8.3 percent over the previous year. The company recycled more than 25,600 tons of cardboard, 607 tons of mixed paper, 786 tons of plastic bags and 170 tons of recycled pharmacy bottles; being recognized by the EPAâs Green Chill program, which encourages reduced refrigerant usage to help lower the overall environmental impact on the ozone layer and climate change. Awards in 2016 include the 2016 Superior Goal Achievement, the 2016 Exceptional Goal Achievement, and 2013-2017 Store Re-Certification Excellence; expanding its fleet of energy-efficient vehicles, hitting its goal of leasing 30 vehicles with âclean dieselâ exhaust technology.
Receiving LEED Silver Certification from the U.S. Green Building Council for the companyâs Fogelsville, PA store. The design features now serve as the gold standard for all future store remodels and new buildings; expanding its 1.2 million square-foot distribution center that streamlines the companyâs supply chain while minimizing its environmental impact through use of an ammonia refrigeration system, and also expanding the Weis Recycling Center; committing to reduce food waste in Weis operations 50 percent by 2030 as one of five grocers for the inaugural class of the U.S. Food Loss and Waste 2030 Champions, convened by the EPA and the United States Department of Agriculture (USDA)âŠI had a chance to visit the new Save-A-Lot corporate store on Merritt Boulevard in Dundalk, MD. My immediate first impression was that it looked just like a Lidl, which shouldnât be surprising since the current leadership team of CEO Kenneth McGrath and chief investment officer Kevin Proctor spent most of their business careers with the German discounter. To be blunt, Save-A-Lot has a lot of work to do before they can catch up to Aldi. And while it is far bigger than fledgling Lidl in the U.S., it doesnât have the long-term capital resources available to its that Lidl has (itâs owned by Canadian PE company Onex). Furthermore, weâve been hearing some criticism from S-A-L licensees (which control about 70 percent of the companyâs business) that the new management team is too process-oriented and inflexible to be effective. âWeâre not in Europe and we donât work for Lidl,â said one frustrated licensee. âFollowing the debacle that (former owner) Supervalu created, I appreciate the need for better control and improved systems, but we donât need a bunch of programs shoved down our throats that I donât believe are going to help us (the licensees) in an increasingly competitive channel.ââŠTurkey Hill Minit Markets, the Conestoga, PA (Lancaster County) convenience store chain owned by Kroger, could be on the selling block soon. Cincinnati-based Kroger acknowledged that it is considering selling its entire c-store unit which includes other banners such as Quick Stop, Tom Thumb, Kwik Stop and the tantalizing Loaf âN Jug. As it continues to evaluate its overall portfolio, which has been adversely impacted by falling share prices, the merchant believes that it could receive greater value for its 784 c-store from an outside buyer or investor. âOur convenience stores are strong, successful and growing with the potential to grow even more,â said Mike Schlotman, Krogerâs executive VP and CFO. âWe want to look at all options to ensure this part of the business is meeting its full potential. Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake this review.â Turkey Hill Minit Markets alone operates about 250 c-stores whose estimated annual sales are approximately $350 million. âOur convenience store management and associates are an important part of our success,â Schlotman continued. âThey put our customer first every day. We value what they do and thank them for what they will continue to do as we conduct this evaluation.â More Kroger news: perhaps to counter a decision made by Whole Foods to centralize many of its merchandising functions, Kroger has unveiled a new portal to its website â kroger.com/wearelocal â to emphasize the importance of carrying local and regional brands. The companyâs announcement, in part, noted the retailerâs longstanding, 365-day-a-year commitment to support local farmers, ranchers, food producers, wineries, breweries and product makersâŠas reported by us a few months ago, Sprouts Farmers Market will open its first store in the Mid-Atlantic market early next year in Ellicott City, MD. The Phoenix, AZ natural and organics merchant, posted extremely strong third quarter financials earlier this month. Highlights include: earnings of $31 million, a 32 percent gain; and comparable store sales growth of 4.6 percent, and two-year comparable store sales growth of 5.9 percent; overall sales of $1.2 billion, a 16 percent increase from the corresponding period last year. The perishables-oriented merchant expects to open 30 new stores next year. In addition to its Ellicott City debut, the company said it would expand into Pennsylvania in 2018. And while it would not specify store locations, we feel confident in our previous reporting that Sprouts will open in a new major commercial development in Philadelphia – (Broad Street & Washington Avenue) – and in the Moorestown, NJ Mall where it will occupy some of the space of previous tenant, Macyâs…itâs been quite a month for Hanover, PA-based Utz Quality Foods. First, the fast-growing snack foods manufacturer agreed to acquire Inventure Foods, Phoenix, AZ, for approximately $165 million in cash, which includes the assumption of approximately $75 million in Inventure debt. Inventure makes company-branded and licensed snacks under such brands as Boulder Canyon, Nathanâs Famous and TGI Fridayâs. Then, within days, the company revealed it was also buying out the minority stake (believed to be just over 20 percent) made by private equity investor Metropoulos & Co. just over a year after the investment firm took a minority interest in the family-owned snack maker to help complete its purchase of Alabama-based snack food manufacturer Golden Flake Foods.  It was thought at the time that Utz could utilize Metropoulosâ expertise in the food and beverage industry (Hostess, Pabst, Bumble Bee) and its financial acumen to help the snack food firm with its strategic direction and future acquisitions. According to chief executive Dylan Lissette, that wasnât necessarily so. While not wanting to disclose much, the 45-year old CEO said that Metropoulosâ interest in the Utz was never to be interpreted as a must have long-term marriage, but confirmed that Metropoulosâ investment was an important one at the time of the Golden Flake deal as Utz was looking for both capital and expertise and Metropoulos was able to provide exactly that. In a short time, Utz was able to dramatically improve earnings and set in place the proper future structure for continued growth. Lissette detailed how the company has restructured its senior leadership team over the past year and has also re-evaluated its future financing needs and growth plans. He added that while Utz is adding more debt to its balance sheet to accomplish these core objectives, it can still maintain its healthy expansion objectives while using the sales growth of its newly acquired companies and the synergy savings from those purchases to continue to seek more growth and success â both organic and via M&A.  In addition, the Rice-Lissette family will own 100 percent of the company. When Lissette began with Utz 22 years ago, the firm was doing about $105 million in sales; it will exceed $850 million in sales next year with this acquisition and will be very close to the third largest branded snacking company in the U.S. Also, according to Lissette, Utz has improved its core metrics each year for the last five years, showing the strength of the Utz platform. Itâs been a very strong run for Lissette since he was named CEO in early 2013. Besides the Golden Flake and Inventure deals, the company has acquired Dirty & Zappâs, Bachman, Good Health, Keystone Pretzel Bakery, Condor Snacks and some distribution centers from Shearerâs Snacks in Ohio. While Lissette is relatively quiet, and flies under the radar, Iâd be careful not to bet against himâŠJustin Dye, former chief administrative officer at Albertsons, has joined financial advisory firm and investment bank Peter J. Solomon Co. as a senior advisor in its food retail and restaurant group. Great to see Justin, one of the brightest and most talented young executives in the business, back in the saddleâŠa tip of the hat to our buddy Fred Morganthall, who is retiring as executive VP retail operations for Kroger at the end of this month. As many of you kno
w, Fred served as president of Harris Teeter from 1997 to 2013, when Kroger acquired the Matthews, NC-based regional chain. He then joined the parent firm, first as a senior VP then to his current role in 2015. All told, Fred spent 44 years in the grocery biz. He leaves with a stellar reputation and served as a great mentor to many people and a wonderful ambassador for the industry. A true first ballot Hall of Famer, I wish him all the best in his future endeavorsâŠfrom the obit desk this month, Iâm sad to report the passing of Dave McElroy, former executive for Golden Grain Inc. (now part of Quaker). You may never have heard of Dave, but on a personal level, he not only served as a mentor to Dick Bestany and me when we worked for The Griffin Report in Boston, he served as a key advisor to us when we moved to Maryland and acquired Food World in 1978. Iâll miss Daveâs generous heart and wonderful sense of humorâŠalso passing on recently was Kay OâHare, 92, mother of food broker Chip OâHare and grandmother of Matt OâHare, JOH. Another memory from my New England past, Kay and her husband Harry, founder of JOH, were two of the nicest people Iâve met, dating back to when I began my food industry career in 1973âŠfinally, another great music legend has passed. Antoine âFatsâ Domino, an early rock & roll pioneer and one of the greatest piano players in popular music, died late last month at the age of 89 not far from his New Orleans birthplace. His boogie-woogie style of piano playing was off the charts and was the foundation of almost every big hit Domino ever recorded, including âBlueberry Hill,â âAinât That A Shame,â âIâm Walkinââ and âBlue Monday.â In a seven year period in the late 50s and early 60s, Domino sold 65 million singles and had 23 gold records. He was inducted into the Rock & Roll Hall of Fame as part of the inaugural class in 1986.
