Wakefern Gains Key Asset With Keptner Hire As SVP-Marketing
Wakefern just hired an all-star. With the announcement that the large Keasbey, NJ grocery co-op has named Erik Keptner as its senior VP-marketing, the already hugely successful wholesaler got a little bit better.
Keptner, who spent his entire career with Ahold USA/Ahold Delhaize USA, is simply one of the brightest young marketing minds in the industry, particularly in the area of consumer-centric shopping behavior. Moreover, he’s an excellent team player whose time spent at store level will be an asset when dealing with the geographic and demographic diversity that face all 50 Wakefern member/owners not to mention the personality nuances of those 50 families.
His talent will certainly improve Wakefern’s marketing presence for its primary brands – ShopRite and PriceRite – particularly as the industry shifts to a more digital focus.
In fact, in his new role at Wakefern, Keptner will oversee digital commerce and analytics, advertising, corporate merchandising, private label and own brand as well as the co-op’s social media and digital advertising divisions and report directly to Wakefern executive VP Chris Lane.
And Lane was instrumental in bringing Keptner aboard which leads to another somewhat apparent deduction: that as potential successor to the great Joe Sheridan as president and COO of Wakefern (no, we’re not predicting Sheridan’s retirement date yet), Lane is helping to create his own team at the company whose member/owners dominate supermarket retailing in the Metro New York and Delaware Valley markets.
If Keptner is the first key hire in a potential “changing of the guard” scenario at the $13 billion co-op, then Wakefern made an excellent choice.
“Erik came up in the grocery business at a pivotal time for the industry, and throughout his career has demonstrated an unwavering commitment to implementing consumer centric marketing and merchandising strategies,” said Lane. “He’s a proven leader, and we are very excited to welcome him to the Wakefern team.”
Poor Locations, Tough Competition Force More Store Closings For The Fresh Market
“A man’s gotta know his limitations,” said Clint Eastwood in the movie “Magnum Force (1973),” the second film in which the iconic actor played San Francisco police inspector Harry Callahan.
Sometimes supermarket organizations need to know their limitations, too. And in the case of specialty merchant The Fresh Market (TFM), failure to acknowledge its shortcomings has led to yet another round of store closures.
This time it’s 15 stores in nine states, including two in Virginia and one in North Carolina (North Charlotte), not far from TFM’s headquarters in Greensboro. Over the last three years, the perishables-driven retailer has closed its fledgling operation in California, withdrawn from the Texas market as part of shuttering 13 stores and closed five stores in the Mid-Atlantic, Midwest and Southeast (two in New Jersey, one in Virginia, one in Illinois and one in Florida).
In that short cycle, The Fresh Market has also been acquired for $1.36 billion by large private equity firm Apollo Global Management (2016) and 18 months later, named a new CEO, veteran retailer Larry Appel, The Fresh Market’s fourth chief executive or interim CEO since 2015. Appel has subsequently brought in other new senior executives in an attempt turn the company around.
Appel said of the decision to close stores: “Over the last eight months, our company has been executing a turnaround plan and we’ve seen great progress. However, for a variety of reasons unique to each retail location, that progress is not evenly distributed and, as a result, we have decided to close these long-term, underperforming stores. We will work to relocate as many impacted employees as possible to other stores within our footprint. Looking ahead, I am confident this move will better position The Fresh Market and enable us to continue delivering our great tasting meals, signature products and an incredible shopping experience.”
Really? Why am I still getting the same vibe as eight years ago when original owner Ray Berry, who founded the company in 1982, took the company public.
It’s not that TFM isn’t a good merchant. It’s just not good enough.
For many years as a privately-owned retailer, The Fresh Market was successfully opening 20,000 square foot upscale stores in small cities primarily in the Southeast where populations were growing and many shoppers hadn’t experienced the type of perishables and prepared foods selection and merchandising that TFM offered.
As the company continued to expand and move into new geographies, particularly in the Northeast and its short-lived foray into California, not only was TFM the new kid on the block, there were also other existing retailers who offered similar type fare. And in many cases, executed in a superior fashion.
And then there were the locations. The Fresh Market paid premium prices for a lot of its real estate, especially in the Northeast and on the West Coast. Even more shocking were some of the specific markets that the company entered, where it was obvious to many that the demographics of the area most likely wouldn’t support the type of sales TFM needed to become successful.
The two soon-to-be-closed Virginia stores are an example of each problem.
The company’s store in Charlottesville, which opened in 2014, was a good demographic choice: plenty of millennials and Gen-Yers, living in a middle to upper-middle income college town. Sure, there was competition from existing operators Kroger, Harris Teeter and Giant Food, but TFM’s research indicated it could find a comfort zone among those larger chains. What they should have also known was that Whole Foods’ new replacement store, which opened in 2011, was generating much higher sales than its original store. Additionally, Wegmans announced in 2013 that it would be entering Charlottesville. Game over. “A man’s gotta know his limitations…”
In the case of the upcoming store closing in Winchester, VA, which opened only two years ago, it begs the question, “Why Winchester?” What inspired the company to target a market that’s got little affluence and lots of blue collar residents? To be fair to CEO Appel, the decision to enter Winchester was made by previous management. But then again, “A man’s gotta know his limitations…”
For 2018, The Fresh Market has acknowledged that no new stores will open and the status of 12 potential new units which were announced last year remains up in the air.
While Apollo Global might be providing some financial security for The Fresh Market (and also taking the retailer out of public financial scrutiny), the big PE firm hasn’t seemed to do much to improve the fortunes of its only supermarket property. Don’t expect much future help, either – it’s just not a PE thing.
TFM is stuck in that “mushy middle” of upscale merchants that aren’t quite good enough to compete in the big league of retailers that also operate in the Mid-Atlantic, Northeast and formerly Texas and California.
What’s effective in Macon, GA or Mobile, AL ain’t necessarily going to work in Glen Mills, PA or Montvale, NJ.
“A man’s gotta know his limitations.”
‘Round The Trade
Albertsons posted slightly positive comps (0.2 percent excluding fuel) during its recently completed (June 16) second quarter. However, the Boise, ID-based retailer, which hopes to merge with drug chain Rite Aid later this year, posted an earnings loss of $17.7 million. “Enhancing the customer experience, improving our digital marketing, loyalty and e-commerce efforts and innovations in own brands, coupled with successful cost reduction efforts, including continued improvements in shrink and completion of the fiscal 2018 synergies from the Safeway acquisition, should allow us to generate improvements in sales and achieve our target for adjusting the EBITDA $2.7 billion in fiscal year 2018. We expect to realize $375 million in annual run-rate cost synergies within three years and have the opportunity to generate $3.6 billion in annual sales synergies to fuel our future growth,” said Jim Donald, Albertsons president and COO. The fate of the merger could well be decided on August 9 when Rite Aid shareholders vote on whether to approve the deal. In other Albertsons-related news, the very popular Paul Gossett, who once served as chief merchant for Acme Markets, has been named president of the company’s Jewel-Osco division, the market leader in Chicagoland. He replaces veteran Albertsons executive and former Jewel president Doug Cygan who unexpectedly passed away earlier this month. Most recently, Gossett, who’s been with Albertsons for 41 years, was president of the merchant’s Shaw’s/Star Market unit in New England. Michelle Larson will take over the top leadership spot at Shaw’s/Star. A 23-year Albertsons associate, Larson served most recently as senior VP-marketing and merchandising for the company’s Southwest division based in Tolleson, AZ. And two years ago, it appeared that Albertsons had big plans to revive its once large Florida operation when it converted the three remaining Albertsons-bannered stores in the Sunshine State to Safeway and charged the retailer’s Eastern division with oversight of those three units which were located in disparate locations – Oakland Park, Largo and Altamonte Springs. Nearly $30 million was spent on remodeling those three large supermarkets and they were rebranded as Safeways. At the time, there was talk that Albertsons would make a bid to acquire some or all of struggling Winn-Dixie’s (Southeastern Grocers) stores in Florida, which, of course, never materialized. Fast forward 30 months later and close that book. With the Rite Aid merger now on the front burner, Albertsons has sold those three units to (who else) Publix, which will reopen them by the end of 2018. If you live in Florida, the old joke about having a Starbucks on every corner would also apply to Publix, which now has nearly 800 supermarkets in the state. And this wouldn’t be the first time the two big retailers have done business. Ten years ago, as it was downsizing its Florida operations, Albertsons sold 49 of its stores to the boys from Lakeland…Giant/Martin’s will be turning one of the two stores it closed last month in Lancaster, PA (North Reservoir Street) into an ecommerce hub. The hub will encompass 38,000 square feet and allow for curbside pickup which will be delivered directly to a customer’s car. The converted store will bring about 150 jobs back to Lancaster. “We’re seeing double-digit growth in online ordering and grocery delivery, said Giant/Martin’s president Nick Bertram. “We are rededicating ourselves to the Lancaster market, and we want this cutting-edge facility to be unique – something the Northeast (Lancaster) neighborhood will be proud of while we meet this demand. We’re excited because the ecommerce hub will allow us to increase capacity quickly. Grocery shopping is changing and the pace is accelerating; as customer-centric company, the innovation is the cornerstone of our go-to-business strategy. Our ecommerce hub will drive growth while helping our customers to shop how they want, when they want, and most importantly, where they want.” This will be the fifth Giant unit that will partner with its digital grocery delivery affiliate Peapod in the Keystone State. And one more Giant related note: while there’s been virtually no attention paid to the status of its once promising small format division, we can confirm that plans are still in “go” mode at the Carlisle, PA division for its three stores that were planned for Philadelphia. We’re told that while revised plans are still being developed, the company plans to open those three stores which were first announced in March 2017. Another thing we can tell you is that they won’t be bannered as bfresh. And kudos again to Ahold Delhaize USA, Redner’s and Weis Markets on their respective golf outings which collectively raised millions of dollars for local charities. Great work by all three retailers…speaking of Weis Markets, the Sunbury-PA retailer cut the ribbon on its newest store on July 19 – a 54,000 square foot unit in Randolph, NJ (Morris County), the regional chain’s sixth store in the Garden State. The new store is Weis’ first to feature a CO2 refrigeration system…on June 28, BJ’s Wholesale Club officially launched its public offering. The stock opened at $17 per share, the high-end of its projected range, and in the two ensuing weeks it has spiked to $25.80 per share as of July 18…BJ’s biggest rival, Costco, continued its streak of impressive comp-store sales at its approximately 520 club stores in the U.S. where same-store revenue (ex-fuel) increased 7.7 percent. That’s a big number by any measure. And while Amazon’s “Prime Day” posted record numbers (Amazon would not provide a specific dollar amount), the ecommerce king shouldn’t be fully applauded. Yes, it sold 100 million products during the 36-hour event, topping Amazon’s sales for any “Cyber Monday,” “Black Friday,” or any previous “Prime Day” events, but for its website to crash and create a 45-minute shutdown is inexcusable, especially when you pride yourself as being one of the country’s leading technology companies. And Amazon’s weak apology for the breakdown felt far short of acceptable in my book. When a supermarket retailer is out of stock, the results are visceral and real. And while it’s likely that Amazon’s sales would have been higher if the crash hadn’t happened, the Seattle-based company seemed to suffer little pain. Whatever the final sales number is, it’s certain to break last year’s $2.4 million figure and by adding Whole Foods to its “Prime Day” mix, Amazon generated additional momentum (BTW, the best-selling WFM item during the event was organic strawberries). Additionally, beyond just selling products, the hidden asset behind the event was Amazon’s ability to sell a lot more “Prime” memberships ($119 annual fee). And while the company won’t say how many more annual subscribers it gained, it acknowledged that it signed up more new members on July 16 than on any other day in its history. And one other statistic that seems to prove that Amazon can do no wrong despite the website glitch: Amazon’s stock price rose from $1,813 per share on Friday July 13 (the last full day before “Prime Day” began) to a whopping $1,843 per share on Wednesday July 18 (the first full day after the event ended)…J.M. Smucker has sold its bakery business (Pillsbury, Martha White, Hungry Jack) to private investment firm Brynwood Partners for $375 million. The Orrville, OH manufacturer plans to use the proceeds from the deal to further develop its pet food, coffee and snacking businesses. Two months ago, Smucker acquired Ainsworth Pet Nutrition (maker of Rachel Ray’s dog food) for $1.9 billion…jet.com, a unit of Walmart, will open a 200,000 square foot distribution center in the Bronx this fall that will help accelerate same-day and next-day deliveries (including groceries) in the metro New York market. While pressure from a lot of fronts (labor unions, local politicians) has prevented Walmart from building bricks and mortar stores in New York City, the world’s largest retailer is
slowly gaining traction in the five boroughs through use of its ecommerce businesses. Walmart has also teamed up with Microsoft to enhance the “Bentonville, AR company’s “cloud” platform which is expected to provide shopping experience convenience and efficiency to its customers. In other words, the “Behemoth” is engaging the services of one of the world’s biggest and most respected technology companies to better compete against “Godzilla” (Amazon)…Wegmans and Teamsters Local 118, both based in Rochester, NY, have agreed on a new five-year contract at the company’s general merchandise warehouse. The new pact includes wage increases of 16.5 percent over the length of the contract and a $500 ratification bonus. Next year, the two parties will bargain over new deals for Wegmans’ primary grocery warehouse and for its transportation workers…a few obits to report this month, including two from the animal kingdom. But first, our sincerest sympathies to the Sumas family, who operate Village Super Markets (the second largest Wakefern member with 30 stores), on the death of one of their patriarchs, James “Mr. Jimmy” Sumas who passed away earlier this month at the age of 84. Jimmy Sumas, along with his father, Nick, and his uncle, Perry, worked in the family’s grocery store in Newark, NJ which originally opened in 1937. The success of that store led the Sumas family to become one of the early members of Wakefern and Jimmy was one of the prime reasons for the rapid expansion of Village ShopRite beginning in the late 1950s. The company went public in 1965. In 1999, he was elected as chairman of the company and in 2002 he was named CEO. Jimmy Sumas was a man who truly loved the business and will be remembered for his dedication to the employees of the company where he commanded both love and respect…Tab Hunter, once a Hollywood heartthrob in the 1950s, has passed away. Hunter, who appeared in more than 75 film and television roles in a career that spanned more than 60 years, will probably be best remembered for his role as baseball player Joe Hardy in the 1958 movie “Damn Yankees.” In 1981, he unexpectedly became popular once again when he appeared in John Waters’ absurdist comedy “Polyester” that also featured 300-pound transvestite Divine. Hunter was 86….and both Duke (the dog) and Koko (the gorilla) have moved on to animal heaven. Duke (real name Sam), who gained fame as one of the first Bush’s Beans company mascots, died late last month in Apopka, FL. Of course, Bush’s has had several golden retrievers play Duke over the years, but his passing was acknowledged by spokesman and company executive Jay Bush (who appeared with him in the company’s commercials) who stated, “While Sam has not worked with us in years, we are saddened by the news of his passing and are grateful to have him depict Duke.” Koko is dead, too. The 46-year old gorilla died last month at the Gorilla Foundation’s preserve in Woodside, CA. Koko first gained fame in 1978 for her ability to communicate with humans using sign language. In 2012, with help from her trainers, Koko learned how to play the recorder, proving to researchers that primates could learn to control their breathing, something that had been assumed to be beyond their abilities…and stay tuned next month when I’ll be discussing some “creative” new retailer money grabs including Ahold Delhaize’s “fair share” program, Kroger’s 90-day payment terms and Whole Foods’ new vendor fee structure.