Weis Success Formula Driven By Steady, Sustainable Growth
Acknowledging the challenges of competing in a fierce landscape, executives of Weis Markets said they will continue the retailer’s path toward steady, sustainable growth that has proven successful over the past five years.
Five members of the Sunbury, PA-based regional chain leadership team – chairman and CEO Jonathan Weis; COO Kurt Schertle; senior VP-merchandising & marketing Richard Gunn; VP-center store merchandising Donna Banks-Ficcio; and VP-advertising & marketing Ron Bonacci – addressed approximately 700 vendors (a record) at Weis’ 10th annual strategic alignment summit held on September 18 at the BWI Marriott in Baltimore.
Kicking off the meeting was Weis who noted: “Weis Markets continues to make progress in a marketplace that is rapidly changing and at a time when customers are experimenting with the way they shop.” The 50-year old chief executive said those changes have resulted in growth and strategy shifts by other retailers, Weis’ approach has always been to invest for the long-term.
“Our goal is to operate efficiently while continually improving the in-store experience for our customers. At our core,” he added, “we are a locally focused operator that offers a strong combination of value, quality and service.”
Weis told the overflow crowd that in 2018, the company is investing more than $100 million on nearly 40 projects, including two new stores (Nottingham, MD in April and Randolph, NJ last month).
Schertle then provided the vendors with an update of the events of the past year and an overview of Weis’ upcoming plans.
“As I’ve said at every meeting – we may not be your biggest customer, but we want to be the one who delivers the best sales growth,” the nine-year Weis veteran said.
Weis’ 2017 sales were $3.5 billion. The retailer currently operates 204 stores in seven Mid-Atlantic states. For the first six months of this year, revenue was $1.7 billion, its year-to date (YTD) comp store sales have increased 1 percent and its YTD profit has increased a healthy 16.4 percent.
In a more detailed analysis, Schertle noted that Weis’ core legacy stores continue to perform well, the former Mars and Nell’s stores (part of a 44-unit acquisition in late 2016) are “delivering solid sales increases” and the former Food Lion units (also part of that acquisition) are beginning to get their “sea legs” in a process that continues to be digestive.
That 2016 acquisition, where other retailers’ store closures or divestments helped Weis add approximately 25 percent to its store base represents a strategy the company will look to pursue in the near future. And even if it doesn’t purchase other properties, Schertle said Weis will still look to fill the holes left by store closings or sales to others.
He pointed to the shifting food retail landscape in Lancaster, PA, Chambersburg, PA and Shippensburg, PA (where Supervalu subsidiary Shop ‘n Save has recently closed stores) as “potentially a million dollars a week” in increased sales opportunities.
Displaying a slide indicating recent comparable store sales of its primary competitors, only Walmart (at positive 4.5 percent) topped Weis in YTD performance. Schertle also emphasized the importance of Weis’ pharmacy and health and wellness initiatives, its steady growth with beer and wine cafes (62 currently in PA) and its growing fuel program. He added that Weis is investing in ecommerce, particularly its online ordering with curbside pickup (87 stores) and delivery programs, which will add mobile ordering to its offering later this year.
“While we will always be a brick and mortar operator, we recognize there is a growing segment of our customer base looking for the convenience of online ordering and home delivery. This is also a high spending segment,” Schertle stated.
In summary, the popular 46-year old executive touted Weis’ strong balance sheet, its stable ownership, its commitment and resources to grow, its steady sales growth and its responsive, “close to the market management” as key advantages that Weis Markets can claim going forward.
Richard Gunn, who joined Weis Markets in 2015 (after a long career at K-VA-T), focused primarily on the chain’s upcoming regionalization of its ad circular which will customize its weekly offerings in six operating areas where Weis’ stores are most heavily clustered – Delaware Valley; Baltimore, MD; Fredericksburg, VA; Binghamton, NY; New Jersey/Northeast PA; and Western PA/State College.
Gunn also broke down the individual departments within center store and fresh, noting that strong producers within center store (which comprises about two-thirds of Weis’ sales excluding fuel and pharmacy) included frozen, beer and wine and HBC/GM. Among Weis’ best sales gainer in “fresh” were bakery, deli and seafood.
Donna Banks-Ficcio, who joined Weis last year after stints at A&P and Supervalu, addressed Weis’ center store priorities which included improved enabling of executional excellence; a focus on the company’s adult beverage category; the unveiling of a new and improved vendor portal (with software firm Aptaris); more efficient space planning and execution; a priority to “right size” Weis’ SKU assortment; and a targeting regional relevance and needs.
The final presenter at the concise yet detailed two-and-a-half hour session was VP-marketing and advertising Ron Bonacci, who also came aboard in 2017 after a long industry career that included pit stops at United Supermarkets and K-VA-T and Kroger. Bonacci highlighted “connection” opportunities with Weis’ CPG suppliers and brokers for a multitude of new and improved marketing programs. Those included participation in the retailer’s regional ad circular program; curbside and grocery delivery; Weis’ new loyalty server; its new club program; new data insights; branding and in-store marketing opportunities; and Weis’ expanding sports marketing partnerships.
As he did last year, Gunn, who is Weis’ chief merchant, urged vendors to consider his “big ask”: participate in the retailer’s new localized ad circular program; support its new vendor portal and work closely with Weis’ category managers to enhance its joint business plan.
After the management team completed its formal presentation, it announced Weis’ vendor achievement award winners for 2018. Sales awards went to: Huntsinger Farms, Worldwide Seafood, George’s, Inc., Village Candle, Clemens Food Group, Kraft Heinz, B&G Sales, Post, Hanover Foods, The Emerson Group and Table Talk Pie Co.
Service awards were handed out to: SAS Retail Services, Hallmark, Blackhawk Network and E&J Gallo Winery.
Jim Donald Prepared For Challenges As New Albertsons Chief Executive
Six months ago, I jokingly asked Jim Donald if he was crazy for accepting the job as Albertsons’ president and chief operating officer. The job was an important one and Donald, who’s held many high-profile jobs in his nearly 50-year industry career, wasn’t one to back down from a challenge. But he hadn’t had a full-time job since 2015, when he retired as CEO of Extended Stay America, having taken that once bankrupt lodging chain into profitability and publicly-traded status.
He certainly didn’t need the money or any more prestige and seemed very content to stay active on his terms – serving on boards and giving speeches that emphasized his “everyman” philosophy of business and life.
Then his lifelong friend Bob Miller called. Miller, who helped guide Donald’s career at Albertsons for many years (he joined the company as a night receiver in his native Florida in 1976 after beginning as a part-timer at Publix in 1968), asked Jim to return to the Boise, ID-based supermarket chain, as the company readied to consummate its merger with Rite Aid.
I had dinner with Jim in New Orleans in June and he said that the primary reason he jumped back in the saddle was to help Miller guide Albertsons through the merger process.
You know part of the rest of the story. Unhappy Rite Aid shareholders killed the deal forcing both sides to call off the merger and leaving Albertsons as still a standalone company with nearly $60 billion in annual sales, almost 280,000 associates, more than 2,300 supermarkets and an owner, Cerberus Capital Management, eager to divest its equity in a company that it has controlled since 2006.
Miller, 74, has arguably had the most notable supermarket career of any industry executive over the past 50 years. He loves the grocery business and the people who currently work with him or who have previously worked for him greatly admire his character, loyalty and talent. If the Rite Aid merger had succeeded, Miller would have become chairman and another member of his “family tree,” Rite Aid CEO John Standley would have been led the combined $83 billion entity.
Now, Miller has become chairman of Albertsons and Donald will helm the company and serve as its day-to-day chief.
I talked to Donald a couple of times in mid-September and told him my thoughts about doing this piece. Just as it was 25 years ago when he became president of Safeway’s eastern division, the pushback was immediate. “Go away, you’ve written enough already. Find somebody else to write about,” he bellowed.
I reminded him that I’ve heard his act before and that I could be as stubborn and caustic as he was. After a few more minutes of sparring, he said “what do you wanna know?”
I asked him about his perceptions about Albertsons since he returned in March and his future aspirations and goals.
“It’s not about me,” he instructed. “It’s about the team we have here and the talent that’s been assembled. That’s what excites me.”
The 64-year old, whose notable other stops have been at Walmart (where he helped develop the SuperCenter format under the tutelage of Sam Walton) and as Starbucks CEO, touted his team as the “most merchant-oriented” in the industry. He planned to emphasize the legacy of Albertsons 21 banners (many are over 100 years old) and capitalize on the chain’s share of market leadership in over 66 percent of its marketing areas.
Other areas where Donald believes he can lead Albertsons forward are in further development of its own brands (“we want to be the industry’s undisputed leader”), leveraging the assets of its 24 distribution centers and 19 manufacturing plants and utilizing the benefits of its decentralized structure which allows those closest to Albertsons’ consumers to make the proper marketing and merchandising decisions.
Over the past two years, the big merchant has spent considerable time and capital building its e-commerce business. Donald noted that he believes Albertsons is now at a point where the company can effectively blend its brick and mortar physical stores with its diverse e-commerce offerings to create the right environment for its consumers.
He stressed that it is extremely important for Albertsons to “create an environment for our customers to shop when, where and how they want to and to continue to provide an opportunity and development for our associates at every level.”
I asked Jim to reflect on some of his business philosophies that have guided him along an exceptional career path.
Again, he credited many of his achievements to the people who work with him. “I really enjoy seeing the successes that people can attain with the right leadership. I take satisfaction from people embracing risk-taking when given the opportunity,” he proclaimed. “I’m a firm believer that the more that you give the better the returns will be, both with people and in business overall. When leaders go last, results always go up.”
His basketball skills might have waned a bit and his 18-hour days are not as frequent, but I’m still betting on Jim Donald.
‘Round The Trade
A huge opening for the new 120,000 square foot Wegmans store which debuted on September 23 (its 98th store) in Lancaster, PA. While its first unit in Lancaster County might cannibalize some sales at its Downingtown, PA and Mechanicsburg, PA units, the opening will be more disruptive to the entire Lancaster marketplace which currently includes supermarket chains Giant/Martin’s, Weis and Whole Foods (which opened in March); mass merchants Walmart and Target; and a host of independents including Musser’s, Stauffer’s of Kissel Hill, Yoder’s, Oregon Dairy and Shady Maple Market. We also learned that the uber-retailer is close to securing a new site in Annapolis, MD at the site of the AT&T building on Riva Road. We know that Wegmans has explored the Annapolis area for years and if this deal is consummated, this location would wreak havoc on one of the most demographically favorable markets in the Mid-Atlantic…more Weis news: the regional chain will be expanding its Shipt same-day delivery program on October 11 to include stores in Chambersburg, PA; Reading, PA; State College, PA; Stroudsburg, PA; Sunbury, PA; Williamsport, PA; York, PA; Frederick, MD; Hagerstown, MD; and the St. Mary’s peninsula in Maryland. Other stores that will utilize Shipt services include units in Binghamton, NY; and in Mercer County and Morristown, NJ. Weis began its relationship with Shipt on September 6 with same-day delivery services available in Baltimore; Lewes, DE; Millville, DE; Millsboro, DE; Rehoboth Beach, DE; Allentown, PA; Lancaster, PA; Philadelphia, PA; Scranton, PA; and Wilkes-Barre, PA…B. Green & Co., which plans to open its third Green Valley Marketplace in Timonium, MD (a former Mars store) in early December, has expanded its redistribution business to the Delaware Valley. According to COO Rick Rodgers, the plan to move northward began when “we started out with the idea we would we would fill the void for Murry’s in the Baltimore-Washington market when they discontinued their DSD operations. However, we had numerous requests to move north into Philly, so we put a salesman in place and have created two routes that have continued to grow. B. Green has always been strong in the candy, tobacco and beverage categories, but what most people don’t know is we have really evolved and now have access to over 80,000 items and can deliver to a customer in as little as 48 hours. While most wholesalers are reducing SKUs and increasing turnaround times, we are expanding our variety and improving our delivery times. Our fresh poultry, frozen seafood and foodservice business has really picked up over the last year and customers have been pleasantly surprised at how competitively priced we are. We are really excited about rolling out our new e-commerce platform around the first of the year. With the diverse customer base that we serve this new system/portal is really going to enhance the customers experience when it comes to ordering, promotional activity, product sourcing, custom reporting as well as timely, relevant and interactive customer messaging and updates. Vendors and retailers that are not doing business with B. Green might want to see what opportunities they could be missing, we are evolving as a wholesaler and are looking to build great partnerships. You can’t be in business for over 100 years if you don’t deliver as promised and maintain strong relationships,” the veteran, but still youthful industry executive proclaimed…and speaking of Philadelphia, Sprouts Farmers Market in made its official debut Philly debut on 1000 S. Broad Street on September 19. Led by hometown boy (and former Acme president) Dan Croce and another former Acme president, Dan Sanders, the Phoenix-based perishables-focused merchant experienced big crowds during its entire opening weekend. We’re also hearing that Sprouts has signed deal for a store in Marlton, NJ and is eyeing a site for a potential new unit in Upper Dublin, PA…Amazon Go opened its first unit outside of Seattle earlier this month. The 2,000 square foot upscale and cashier-less c-store in Chicago offers salads, snacks, sandwiches and meal kits. In what was thought to be a test project (other units were planned for New York City and San Francisco), Bloomberg is reporting that “Godzilla” plans to roll out as many as 3,000 “Go” c-stores nationally by 2021. Meanwhile back in NYC, Amazon has opened a 4,000 square foot unit in the Soho section of Manhattan that features only highly-rated, best-selling merchandise. The “Amazon 4-Star” unit offers about 2,000 items – electronics, books, kitchen gadgets and toys – and includes an area of the store called “Trending Around NYC” featuring products popular in the Big Apple. These guys are reinventing the whole “speed to shelf” concept…Lidl, the most disappointing retailer of the past few years, finally restarted its store opening engine in the Washington, DC area with ribbon cuttings in Bowie, MD (its first Maryland unit) and in Dumfries, VA. There are still approximately 50 sites that Lidl controls (including multiple sites in Delaware, New Jersey and Pennsylvania) and it’s anybody’s guess how many (or few) of those stores will ever open…there’s nothing like pressure from a well-capitalized hedge fund to spur a company to change direction (ask Supervalu). If you were wondering what activist investor Dan Loeb and his Third Point LLC hedge fund thought about Campbell’s decision to its sell international operations (Arnott’s, Kelsen) as well as its once prized refrigerated foods business (Bolthouse Farms) which combined account for more than $2 billion in annual sales, the answer is not much. Loeb has called for a complete turnover of the company’s current board of 12 directors. “Unfortunately, this board’s persistent failure to discharge its current fiduciary duties leaves us no choice but to seek to replace the entire board with our shareholder slate,” the hedge fund entrepreneur wrote in a letter. In a separate letter, Loeb also blasted Campbell’s board for allowing ousted CEO Denise Morrison to collect more than $60 million in compensation during her seven-year tenure. One particular bone of contention was Morrison’s appearance earlier this year at the World Economic Forum in Davos, Switzerland. “In the midst of the company’s crisis, the board authorized Morrison to hobnob in Davos at the World Economic Forum with the global elite – at shareholders’ expense – rather than stay home and run the ailing company,” Loeb asserted. Notable nominees on Third Point’s slate include recently retired Hostess CEO (and former Campbell’s exec) Bill Toler; former Blue Buffalo pet food CEO Kurt Schmidt; and George Strawbridge Jr., a major shareholder and part of the Dorrance founding family… according to market research firm Price-Trak, grocery prices have increased over the last six months as compared to the deflationary trend of the past two years. According to the Rensselaer, NY-based company, key categories where increases were most pronounced included eggs (15.4 percent), frozen fruit (14 percent), shelf-stable desserts (14 percent) and pet products (8.7 percent). Price-Trak monitored 150 grocery categories in all…the Hershey Co. has agreed to acquire Pirate Brands (Pirate’s Booty, Smart Puffs, Original Tings) from B&G Foods for $420 million. Hershey will fold those brands into its Amplify snacks division (Smart Pop is its biggest brand) which it acquired earlier this year for $1.6 billion. Parsippany, NJ-based B&G, whose current portfolio contains more than 50 brands (including Green Giant, Ortega, SnackWell’s and Spice Island), will use the proceeds to pay down debt and utilize the cash for other potential acquisitions…Supervalu announced that it has agreed to sell 19 of its 36 Shop ‘n Save stores in the St. Louis area to Schnuck’s, the family-owned regional chain that has been a dominant player in the St. Louis market for nearly 80 years. Fourteen of the stores are in Missouri and five are located in Southern Illinois. The deal is expected to be cons
ummated late next month. With new owners UNFI unwilling to be burdened by SVU’s declining corporate store performance, all four remaining retail banners are on the sales block. Earlier this month, the company closed eight Shop ‘n Save stores in Western MD, Central PA and West Virginia and has also been actively marketing its Shoppers Food & Pharmacy stores (about 50 units) in the B-W market. Six months ago, Supervalu sold 23 Farm Fresh units and closed 15 others in the Tidewater region of Virginia. Likely last to be sold/closed will be its eight-unit Hornbacher’s division in North Dakota and its largest and most desirable banner – Cub. UNFI CEO Steve Spinner told analysts after the company’s Q4 financials release (a mixed bag in which profits decreased 15.6 percent and sales grew 10.7 percent) that he wanted to be at the “front end” of more industry consolidation, adding that consolidation is especially important in the grocery distribution segment because it drives scale. He acknowledged that the decision to divest Supervalu’s retail assets could result in the loss of some supply agreements. That’s almost guaranteed; if the combined entity is going to be successful, the level of customer defection will have to be minimal because UNFI will be adding more than $1.6 billion of new debt to its organization. In a related announcement, UNFI COO Sean Griffin, who was set to retire a few months ago, has been named incoming CEO of Supervalu. Griffin has supervised the UNFI transition since the acquisition was first announced in late July. The deal is still expected to close before the end of the year. BTW, multiple Supervalu independent retailers have complained to me about unacceptable service levels that have emerged at the wholesaler’s new distribution center in Harrisburg, PA that is now up and running. SVU shifted to the refurbished warehouse (the former Super Rite facility) after it “lost its lease” at its old distribution center in Denver, PA that Acme (Albertsons) now controls and owns…at Rite Aid, a company that Albertsons wanted to merge with (until the drug chain’s shareholders blew up that deal), chief executive John Standley will no longer also serve as the Camp Hill, PA drug merchant’s chairman of the board. Current board member Bruce Bodaken will assume that title. According to the Central Pennsylvania Business Journal, Bodaken stated that “fresh perspectives will be significant assets as we continue to oversee the development and implementation of our strategy to best position Rite Aid to create long-term value for stockholders.” Bodaken, who once served as CEO of Blue Shield of California, will have to summon all his experience, business prowess and personal “pookie dust” from his collection if he hopes a board shakeup will revitalize Rite Aid.…Kings/Balducci’s has named Stephen Corradini as its senior VP-merchandising and marketing for the upscale merchant. Corradini previously served as VP-South region for Whole Foods…Publix, which continues to struggle in the Richmond area, will open its 11th store in Virginia on October 17 in Williamsburg at the site of an original Ukrop’s (and later Giant) store. Corporately, the Lakeland, FL-based regional chain announced plans to expand its company headquarters. Approximately 700 new jobs will be created, and the highly profitable, employee-owned service-oriented merchant will add about 190,000 square feet of space to its HQ facility. The $25 million investment is expected to be completed by 2027…in other headquarter news, the nation’s largest dollar store operator, Dollar Tree, said that as part of its continuing integration of Family Dollar’s organization and support functions, the discount retailer plans to consolidate its store support centers in Matthews, NC (Family Dollar) and Chesapeake, VA (Dollar Tree) to Dollar Tree’s newly-completed office tower in the Summit Pointe development in Chesapeake. “Leadership from both banners has continued to work together to integrate our two organizations and invest in future growth,” said Gary Philbin, Dollar Tree’s chief executive. “By bringing our teams together into one location, we will further improve our ability to support our stores more effectively through enhanced collaboration, communication and teamwork. The completion of our expanded headquarters in Virginia will facilitate the most important phase of the integration and we are excited about the opportunities ahead for the Dollar Tree and Family Dollar banners.” The company has communicated plans to all associates and expects the store support center consolidation to be completed by fall 2019. While Family Dollar’s headquarters facility in Matthews will be closed following the consolidation, the distribution center in Matthews will remain open to serve Family Dollar stores…yet more new headquarters news: McCormick has officially opened its new global headquarters in Hunt Valley, MD. The new facility features a renovated 350,000 square foot office building and brings together 1,000 associates who were formerly housed in four separate buildings. “Our move to one global headquarters is a transformative step for McCormick – it exemplifies our continued commitment to the Baltimore region and the future of our truly global company. Our new location fosters greater collaboration and innovation, while also enhancing McCormick’s sustainability, improving employee health and wellness and bringing our passion for flavor to life. We are thrilled to be in this new space and I look forward to the great work we’ll do here together,” said McCormick chairman, president and CEO Lawrence Kurzius.…and how about the continuing sad saga of “Slow Eddie” Lampert, Sears Holdings CEO, who’s blaming his company’s decade-long failures on the significant expense of funding Sears’ pension plans. There’s no question that retirees’ pension funds are costly (he knew this when he acquired the flagging company in 2004), but to blame the historically abysmal management of Sears and Kmart on pension-related issues is like Richard Nixon blaming Watergate on bad “plumbers.”…according to many reports, the nationwide shortage of truck drivers has reached 180,000 and as many in our business who are directly associated with logistics and distribution know, this is a critical and worsening situation. The country’s largest retailer, Walmart, has unveiled a plan to attract new drivers by offering referral bonuses of up to $1,500 and will also accelerate the training process for new drivers. Additionally, the “Behemoth” will launch a national television ad that will highlight its 7,500 truckers, who comprise one of the nation’s largest fleets…there are several notable obituaries to report this month. I was saddened to hear of the sudden passing of Bill Donovan, whose grocery career spanned nearly 40 years. Beginning at Acme after graduating from the University of Delaware in 1978, he rose steadily through the ranks and, along with his compadre Bernie Ellis, headed the big Malvern, PA-based chain’s merchandising department in the 1990s. The “Bernie & Bill” show then moved to Giant/Landover and ultimately to AWI/C&S. Bill stayed there until he retired in 2015. I can’t remember anyone whom I had more industry “debates” with than Bill. Some were philosophical, others more heated, but that’s what I admired so much about him – he passionately believed his viewpoint was correct and didn’t easily back down. Bill Donovan also had a king-sized brain. He knew a lot about a lot of things, especially the grocery business where he was a deep thinker and a creative merchant. Many people knew Bill as the ultimate tough guy. However, if you really knew him, that wasn’t the case. If he trusted you, you’d realize that he could be very compassionate and caring. Bill, you’ll be missed – rest in peace…also passing on were two very underappreciated musical talents. Marty Balin, co-founder of the legendary San Francisco band Jefferson Airplane, has died of the age of 76. In the early 1960s, Balin co
-owned a nightclub, The Matrix on Fillmore Street, where he met Paul Kantner. Together, they formed the original Jefferson Airplane, which included guitarist Jorma Kaukonen, singer Signe Anderson, drummer Jerry Peloquin and bassist Bob Harvey. Peloquin and Harvey were quickly replaced by Skip Spence and Jack Casady. Anderson performed on the Airplane’s first album and then was replaced by Grace Slick. Balin possessed a beautiful tenor voice and wrote many of the band’s best (but not most popular) songs including “Comin’ Back To Me” and “Volunteers.” He left the band in 1971 and later joined its second incarnation “Jefferson Starship.” Since 1978, he had performed as a solo act…Otis Rush, one of the great and unsung Chicago blues guitarists, has passed away at 84. Born in Philadelphia, MS, Rush moved to Chicago in the late 1940s and began to make a name for himself playing at local clubs on the city’s Southside. Rush’s guitar style was more jazzy than raw, and, while he wasn’t as well known as B.B. King, he was greatly admired by the next generation of blues players who followed him, including Jimmy Page, Stevie Ray Vaughn and Eric Clapton. “At the time I was growing up, there were a handful of people who made that kind of mark: Freddie King, Buddy Guy, B.B. King, Otis Rush and Magic Sam. Otis, he was fantastic – a great player,” Clapton said…and Peggy Sue has also passed away. Yes, that Peggy Sue, from the great Buddy Holly song of the same name. Peggy Sue Gerron Rackham, 78, went to high school with Holly in Lubbock, TX and became friends with the great singer and songwriter. And here’s the back story about the song: Jerry Allison, who was the drummer in Holly’s band, The Crickets, persuaded Holly to change the original name of the song – “Cindy Lou” – so that he could impress Peggy Sue. It must have worked, because Allison and Peggy Sue ultimately got married.