At Capital Markets Day, Ahold Delhaize Reveals Post-Merger Growth Platform
“The merger and integration of Ahold and Delhaize Group have created a strong and efficient platform for growth, while maintaining strong business performance and building a culture of success. In an industry that’s undergoing rapid change, fueled by shifting customer behavior and preferences, we will focus on growth by investing in our stores, omnichannel offering and technological capabilities which will enrich the customer experience and increase efficiencies. Ultimately, this will drive growth by making everyday shopping easier, fresher and healthier for our customers.”
Those were the words of Ahold Delhaize president and CEO Frans Muller to the investment and business community delivered at the company’s “Leading Together” themed Capital Markets Day held at the Citi Executive Conference Center in Manhattan on November 13.
Muller led a group of Ahold Delhaize executives that included Kevin Holt, CEO of Ahold Delhaize USA; Mark McGowan, president of the retailer’s largest brand – Stop & Shop; and JJ Fleeman, the company’s chief e-commerce and digital officer in the U.S. Jeff Carr, corporate CFO, and Wouter Kolk, CEO of Ahold Delhaize’s business in Europe and Indonesia also spoke at the meeting that was attended by more than 100 people.
“We worked very hard for two years on integration,” Muller said. “Now is the time to take us to the next phase of growth and market share gain.” He added: “Everything we committed to, we delivered. We deliver what we commit to.”
During his presentation, Muller also noted that he expects Ahold Delhaize to deliver comparable sales growth and market share gains as well as a doubling of net consumer online sales to around 7 billion euro ($8.02 billion) by 2021. While investing in growth, he stated that company will maintain a disciplined approach to capital investment and allocation, supported by a 1.8 billion euro ($2.06 billion) cumulative “Save for Our Customers” cost program through 202. Those programs will help produce and estimated free cash flow of around 2 billion euro ($2.29 billion) per year from 2019 to 2021. Capital expenditure will be around 3 percent of annual sales during the coming three years.
“Our commitment is to self-fund the investments needed to drive growth, as our new cost savings program will allow us to maintain a stable group margin through 2019. This will allow us to invest in our stores, omnichannel offering and technology, while we explore and seize new leadership opportunities in existing and adjacent markets,” Muller asserted.
For 2019, Ahold Delhaize expects a stable group margin and high single digit earnings per share growth, while buying back 1 billion euro ($1.15 billion) of its own shares. To fund investments in the repositioning of its largest U.S. brand, Stop & Shop and in the speed and coverage of its delivery and click and collect network, cap-ex is expected to be 2 billion euro ($2.29 billion).
Buoyed by the success of its recently completed third quarter which showed solid gains in overall sales, comp sales and earnings both in the U.S. and internationally, the giant merchant feels it is well positioned to ramp up its online strategy as well as adding significant capital to its approximately 1,960 U.S. stores, particularly at its large Stop & Shop brand.
At Ahold Delhaize USA, third-quarter sales increased 3.2 percent from $10.83 billion to $11.18 billion. The retailer’s U.S revenue comprised about more than 60 percent of Ahold Delhaize’s overall sales. Online sales in the U.S. rose 11.8 percent to $215 million. Same-store sales grew 3.3 percent (3 percent excluding fuel sales). Operating income increased 12.3 percent to $428 million while underlying operating margin in the U.S. jumped 10.1 percent to $453.5 million.
One of the recurring themes of Capital Markets Day was Ahold Delhaize’s focus on its e-commerce and digital strategy which the company believes will be a catalyst to grow market share.
“We are not just in the supermarket business,” Muller explained. “We are in the omnichannel business. It’s not just shopping but the preparation, the idea generation, how are you going to shop, how are you going to work with your products, what is the inspiration to cook a meal?”
During a later presentation, Fleeman, whose role within the $43 billion U.S. organization has seemingly become more important since Ahold Delhaize USA restructured its business last January, said he expects more growth from its online business which he believes will be aided by a new business that was recently formed – Peapod Digital Labs. That unit has developed a new media partnership program that will involve the retailer’s hundreds of vendors.
“We’re going to launch a new media partnership platform, and it will allow us to optimize media campaigns on any device and in-store,” Fleeman said. “The benefit that creates for our customer is that it allows us to take media and content and get it to her directly at the channel of her choice. And you would also imagine, this will generate new revenue streams for Ahold Delhaize that will help fund the new omnichannel strategy that we plan on launching here soon.”
Ahold Delhaize’s U.S. plans also call for improved digital content (recipes and planning tools) and an additional fulfillment distribution center that will include an automated center that utilizes robotics.
Kevin Holt focused on continuing to build Ahold Delhaize’s brands, which include Stop & Shop, Giant/Martin’s, Giant Food (Landover), Food Lion, Hannaford and Peapod. He noted several times that “selling stuff” remained a major priority.
“We know how to reposition a brand. Our brands have a leading market share position, despite the fact that we operate in a very fragmented market,” said Holt. “We have over 150 different operators that make up the total share across our marketplace. And that fragmented marketplace really provides a great opportunity for our brands as we strengthen our local presence, win in the local market and see other weaker performers leave the marketplace.”
Ahold Delhaize USA has invested heavily in the past three years on its Food Lion unit where 712 of the regional chain’s 1,030 stores have been remodeled and rebranded as “Easy, Fresh and Affordable.”
Additionally this year, the company’s Giant/Martin’s unit unveiled a $70 million cap-ex plan that includes six new stores, five new fuel stations and two major remodelings. The Carlisle, PA-based brand also recently acquired and opened a new Lancaster, PA location that was previously owned by the Darrenkamp family and next month will debut Giant Heirloom Market in Center City Philadelphia, its first small format model. And just last month, the division acquired five Shop ‘n Save stores in Maryland, Pennsylvania, West Virginia and Virginia from UNFI. Those stores were formerly Food Lion stores before the government ordered them to be divested as part of the Ahold-Delhaize merger in 2016.
The next big U.S initiative for the supermarket retailer is improving its 416 Stop & Shop stores. Last month, the New England juggernaut unveiled its new modernized fresh-oriented format at 21 stores in the Hartford, CT area. Holt described the expansion and improvement of prepared foods as one of the company’s best revenue growth opportunities.
Those changes are expected to provide a 4-6 percent sales lift, and according to McGowan, Stop & Shop’s more than 50 stores on Long Island are targeted for similar refurbishments beginning next year.
Subsequent improvements will be made annually at the rate of 60-80 stores per year with the total Stoppie improvement plans projected at $1.6 billion-$2 billion.
There’s no question, the Ahold Delhaize synergy plans that were first revealed after the merger agreement between two of Europe’s largest retailers in June 2015 have been effectively executed and the company’s recent third quarter financials provided a strong indicator of that success.
For the past three years, this reporter has urged the company to maximize its leverage by spending money on its stores to refresh and modernize them. I’ve also criticized Ahold Delhaize for understaffing and under training its associates at store level.
Clearly, the store cap-ex plan is evolving favorably. If the next phase of improvement also calls for better trained associates and more of them, Ahold Delhaize will be a virtually unstoppable force in the U.S.
Allegiance ‘Embraces Innovation’ At Record Setting Vendor Breakfast
It was another strong year for Allegiance Retail Services, the retailer-owned co-op that supports independent retailers who trade under banners such as Foodtown, D’Agostino’s, Shop ‘n Bag and Freshtown.
Under the leadership of president and COO John Derderian, one of the brightest minds in retailing, the Iselin, NJ-based company held its annual vendor breakfast meeting on November 8 at a new venue, the Hilton Meadowlands in Secaucus, NJ. The event drew a record crowd of more than 500 suppliers, brokers and distributors as Derderian, new VP and chief marketing officer Donna Zambo, VP-center store Mike Conese, and VP-perishables Dean Holmquist offered detailed views of their perspectives and priorities. Additionally, Allegiance’s director of advertising and marketing Patty Youchock presented awards to the company’s top vendors.
Reinforcing and updating some of the same themes as last year’s “Path Forward” meeting, Derderian told the group that Allegiance is still focused on “intelligent growth” – assessing locations for store development based on demography, competition and lifestyle/life-stage indicators; staying disciplined in its locational approach when analyzing the many vacant retail storefronts which present growth opportunity; and utilizing a paced approach by balancing store development with existing members trade areas.
The latter point was exemplified by Allegiance’s newest large member, Gristedes, which came on board this past summer. Most of Gristedes’ 26 stores are in Manhattan, a trade area where Allegiance previously only had a small presence. With the addition of Gristedes and several other independents, Allegiance’s store count rose to 117 (a 28-store gain over last year) and its member/owners increased to 32 (up from last year’s number of 29).
Derderian also noted the importance of format alignment, adding that with the income distribution gap widening (haves vs. have nots), Allegiance has the market knowledge and flexibility (three co-op formats and banners including Foodtown, Pathmark and Food Basics) to provide each member with a unique go-to-market approach.
Donna Zambo, who first worked with Derderian 30 years ago at Pathmark and most recently was with Wakefern, joined the Allegiance leadership team in May. She focused on the embracing the “idea” of innovation, quoting the late Apple CEO Steve Jobs who said, “Innovation is the difference between leaders and followers.” Zambo stated that Allegiance’s continued investment in IT – a new loyalty system, headquarter launch, upgraded analytical platforms, new financial systems and a new vendor portal – is paying dividends. Additionally, this year the company updated its foodtown.com website, added a new mobile app and aligned with Instacart to serve 49 stores in the Metro New York market.
Zambo also emphasized the importance of personalization as a powerful marketing tool. She said that Apple’s iPhone is the ultimate example of personalization. “It’s not just a phone – it’s my phone,” she noted, adding that one billion devices have been sold in 11 years that are all unique to the owner. At Allegiance, those personalized offerings extend to its circulars, emails, digital coupons and several other specific opportunities that will enhance the customer experience.
Former Fairway Market veteran Mike Conese, who joined Allegiance in 2015, urged the vendors in attendance to “keep center store relevant.” He emphasized the importance of building partnerships to ensure mutual success and promised that those companies that reward Allegiance with incremental trade dollars will be rewarded with increased case sales.
Conese addressed the growing presence of e-commerce (especially with millennials) and Allegiance’s increased role in providing online opportunities. He cited his company’s new relationship with Instacart and its improved “click & collect” program which is now available at 32 Foodtown stores and growing. He also suggested a pro-forma on how traditional retailers can regain share of market. Among the items to consider: conventional merchants must think unconventionally; changing avenues to the customer’s wallet; and greater vendor support for e-commerce initiatives.
One of Allegiance’s most senior and most popular executives, Dean Holmquist, addressed the issue of “Saving the Dinner Hour.” One “save” component, according to Holmquist, can be found in deli and prepared foods (retail foodservice), where the growth trendline has flattened, but untapped opportunities remain, particularly in purchase frequency and spend per trip. While home-prepared meals have dropped slightly in the past year, according to research provided by Holmquist, families with children are still eating at home, but are seeking convenience when preparing dinner. And the argument for improving and enhancing prepared foods departments can be seen in recent consumer polling on the top reasons why shoppers seek out such products: saves time on cooking; allows for immediate consumption; saves time on meal planning; saves time on cleanup; and saves time on shopping. And while Holmquist acknowledged that channel choices are shifting, full-service supermarkets are still the leading shopping destination and even more so in the purchase of retail foodservice items. He also cited the importance of technology (websites, mobile apps, social media) in consumers’ choices about where and when to eat. And the statistics don’t lie, Holmquist noted, displaying a slide that indicated that young millennials are more likely to utilize technology in dinner planning (13 percent) than are boomers (4 percent).
On the operational side, Holmquist asserted that retailers with in-store production facilities have the best opportunities to leverage their prepared food potential, adding that his data indicated that 64 percent of consumers want a store to offer both grab-and-go and made-to-order capabilities while 32 percent preferred that all items be made to order. Only 4 percent of those surveyed said that only grab-and-go items should be offered. In closing, the 31-year Allegiance executive concluded that four ways to drive deli/prepared foods sales and loyalty were: understanding shopper behavior; creating a “top of mind” destination; providing real consumer solutions; and maximizing vendor partnerships.
Derderian then took the stage again to close the meeting. He told the packed house that Allegiance has recently formed a task force to assess and design its “next generation” Allegiance stores by analyzing demographic shifts, technology advancements, merchandising concepts and product demand indices.
He also asked the audiences to remember three things: Allegiance’s recent efforts in the back-office technology will lead to enhanced customer-facing deployments in 2019; Allegiance’s merchandising divisions are embracing the new consumer so “partner with us and win;” and Allegiance’s philosophical approach to intelligent growth reaches all demographic segments through the its portfolio of formats and banners.
A quick poll of a dozen vendors indicated they found the meeting enjoyable and useful.
And why wouldn’t they? Derderian and his team packed a lot of information into 90 minutes that was concise and easy to understand.
Good job by all!
Integration, Debt Will Create Challenges for UNFI; Mark Gross Exits With More Than $21 Million
While it may have happened a bit sooner than many analysts predicted, the United Natural Foods, Inc. (UNFI) $2.9 billion acquisition (including debt) of Supervalu (SVU) was completed on October 22. The deal, in which the Providence, RI-based organic/natural/specialty/ethnic distributor agreed to pay SVU stockholders $32.50 per share, was first announced on July 25.
The UNFI acquisition of Supervalu was consummated in less than three months and UNFI’s integration plan is already underway.
“Today is an important milestone for UNFI. We will take the best from both businesses to create North America’s premier food wholesaler with significant scale, reach and choices for our customers. We are pleased to welcome our new colleagues from Supervalu as well as their customers and suppliers to UNFI. Our companies share customer-centric cultures and dedicated associates who are committed to continuous improvement, which will help drive our integration programs,” said Steve Spinner, UNFI’s chairman and chief executive.
“We are excited to continue to further build out the store to a more diverse customer base across the country, with both broad better-for-you natural, organic brands and fresh perimeter offerings, as we capitalize on opportunities to cross-sell and realize the benefits of the greater scale we now have as a combined company,” said UNFI veteran executive Sean Griffin, who will now serve as CEO of Supervalu and head of the integration committee. “Work has already begun for the company to realize the significant projected run-rate cost synergies associated with this transaction – more than $175 million by year three and more than $185 million by year four – and we are committed to improving profitability into the future. We believe that we can achieve these targets and leverage scalable systems to streamline our processes, more efficiently meet the needs of our customers and reduce future capital expenditures. We look forward to providing an update on our integration efforts at our January 16, 2019 investor day.”
As head of the integration committee, Griffin will oversee a management team that includes executives from both companies to drive the implementation of best practices from each company and delivery of synergies as well as a rapid and smooth integration.
Spinner will lead the combined entity, supported by these UNFI executives, who will continue to report to him: Chris Testa, president of UNFI; Danielle Benedict, chief human resources officer; Eric Dorne, chief administrative officer and chief information officer; Paul Green, chief supply chain officer; Jill Sutton, chief legal officer, general counsel and corporate secretary; and Mike Zechmeister, chief financial officer.
Among the Supervalu executives who will remain with the new organization and report to Griffin are Anne Dament, executive VP – retail, marketing and private brands, and Mike Stigers, executive VP- wholesale.
Supervalu CEO Mark Gross, as he stated previously, left the organization upon completion of the deal. But he certainly left with a smile on his face and a feeling of satisfaction having secured a great deal for SVU’s shareholders and not a bad one for himself. As part of the severance agreement, Gross will be paid more than $21 million for his efforts.
UNFI reiterated that the transaction will be primarily financed by debt. UNFI finalized new credit facility agreements including a $2.1 billion asset-based revolving credit facility, up to $1.475 billion of which will be made available at closing, and a $1.950 billion senior secured first lien term loan facility agreement consisting of a $1.8 billion term loan “B” tranche and a $150 million 364-day tranche. In addition, UNFI’s existing asset-based revolving credit facility was terminated upon close.
Combined, UNFI and Supervalu reported fiscal 2018 revenue of about $24.5 billion. Of UNFI’s $10.23 billion in sales, its largest customer – Whole Foods Market – accounted for $3.76 billion, or roughly 37 percent of total revenue.
While UNFI’s purchase does give it the potential to be the country’s first full-service conventional, organics and specialty wholesaler, there are significant challenges for the company which acquired a distributor larger than itself while dealing with a new or differentiated customer base of independent retailers. UNFI’s debt alone is large and its recent earnings report where sales were up 10.7 percent but earnings tumbled 15.6 percent hopefully won’t be an indicator of things to come. In the meantime, the deal has come under criticism by financial analysts and UNFI’s shares have plummeted from $41.58 per share on July 24 (the day before the acquisition was announced) to $21.13 per share on November 5.
Walmart’s McMillon Believes SuperCenters Are Still Best Weapon Against Amazon
When you’ve been dominant as long as Walmart has, sometimes the brilliance of your leader is overlooked. To compare, in the 18 years he’s served as head coach of the Patriots how many times has Bill Belichick won coach of the year in the NFL? How about Greg Popovich whose 21-year record as coach of the NBA’s San Antonio Spurs makes him a first ballot Hall of Famer? What about Joe Torre, who helped take the Yankees to six World Series (winning four times) and compiled a better than .600 winning percentage during his 12-year tenure with the Bronx Bombers (answers coming later)?
That’s the case in my opinion with Doug McMillon, who in four years has turned around the biggest and once most bottom-heavy organization in U.S. retailing.
Every aspect of Walmart’s operation has improved – its stores are cleaner and better stocked; its investment in e-commerce has proven to be a big winner and most importantly, McMillon revamped a culture where the associates were apathetic because management saw many of them as movable pieces.
As I’ve said before, I believe McMillon’s greatest achievement was convincing the company’s board of directors (comprised of several Walton family members) to buy into shifting the company’s investment strategy away from bricks and mortar and into digital and e-commerce, especially seeking firms that drew a more affluent demographic.
That didn’t mean it would turn its back on the bellwether SuperCenters that made Walmart so feared for a 25-year period beginning in the late 1980s; it meant that the Behemoth needed to play catch up with Amazon if it wanted to maintain its dominance over the next decade and beyond. To begin its digital initiative, McMillon overpaid for jet.com ($3.3 billion) but with that purchase also acquired the talents of Mark Lore who has spearheaded walmart.com since the deal was consummated in 2016. Other niche acquisitions included Bare Necessities, Bonobos, Spark, Corner Shop, Parcel and Modcloth.
At the company’s annual investor’s day held at company headquarters in Bentonville, AR, McMillon said the digital acquisitions will continue, but reinforced the importance of its core SuperCenter presence and its low-price image.
With more than 3,500 U.S SuperCenters ranging in size from 105,000 to 210,000 square feet, the company’s combo stores are within a 10-mile proximity to all U.S. shoppers. In the past three years, Walmart has improved its once subpar perishables presence. Its vastly improved its private label offerings and the planet’s largest retailer has also introduced curbside pickup, which by the end of next year, will be available at more than 85 percent of its stores. It’s currently utilizing its own people and third-parties to deliver products to its loyal and growing customer base in areas such as New York City and the San Francisco market where it operates few or no stores.
And food is driving the equation – approximately 56 percent of Walmart’s $500 billion in annual revenue is derived from groceries.
“We’re adapting and transforming with speed to better serve our existing customers and reach new ones. We’re operating with discipline, balancing our short and long-term opportunities. While we’re excited about what we’ve done so far, we aren’t satisfied. As we execute today and build for tomorrow, our associates and unique omni-channel assets position us for success,”
McMillon told approximately 200 financial analysts who trekked to Northwest Arkansas to attend the half-day meeting.
Doug McMillon may be somewhat unsung, but he’s my choice for Retailer of the Year.
Oh, and here’s the answer to our trivia questions in the first paragraph. Belichick was named NFL Coach of the Year only three times; Popovich also won the NBA Coach of the Year three times and Torre won Manager of the Year (American League) only twice. Combined, these three coaching greats have won 3,132 games, led their teams to 14 world championships and compiled a career winning percentage of .615.
‘Round The Trade
Amazon finally made it official – it will be opening two additional HQ locations: Crystal City, VA and Long Island City, NY which will add a combined 50,000 new jobs. Obviously, this is great economic news for those municipalities, but just imagining the increased traffic issues already associated with two of the busiest areas of the East Coast could make a person throw up in their mouth…it looks like investor Dan Loeb and his Third Point LLC hedge fund’s attempt to overhaul Campbell Soup’s board and potentially sell the company may come up short. Loeb is now saying that the Camden, NJ packer should consider splitting the company into two units – snacks and meals/beverages – instead of a sale. He also suggested that former Campbell’s exec and recently retired Hostess chief executive Bill Toler be named CEO. Campbell’s has rejected Loeb’s efforts from the outset and said in a statement that “Third Point’s campaign to seize control of the board can be summed up as follows, ‘vote for us and we’ll think of something.’” November 29 is showdown day – that’s when Campbell’s will hold its annual shareholder’s meeting. Loeb’s animated efforts to change the direction of a company that has significantly underperformed for a decade are not off base, but as is the case with many hedge fund takeover plays, it’s hard to believe that Loeb’s first priority isn’t a quick money grab. And sometimes that strategy works, as it did for Blackwells Capital which reaped a gain of $75 million when Supervalu ultimately sold to UNFI. And speaking of those latter two distributors, I’m still not hearing good things about the company’s recently opened distribution center in Harrisburg, PA where several customers said that service levels remain in the 80-85 percent range. Just a thought: I wonder how many Supervalu/UNFI retailers have “change of control” opt out clauses in their contracts?…National Grocer’s Association CEO Peter Larkin will be retiring from that post at the end of next year. Since he took the helm at the nation’s largest independent retailer trade association more than eight years ago, NGA’s retail and wholesale membership has doubled. The group will be holding its annual convention in a new location, San Diego, from February 24-27… in the wake of Sears’ Chapter 11 filing last month, the company’s board has hired investment bank Evercore to examine business and real estate deals made by former CEO Eddie Lampert. Lampert will also face scrutiny from Sears’ unsecured creditors’ committee, which includes vendors, landlords and a watchful eye from the Feds who will be looking after the interest of Sears’ remaining pensioners. Have fun, Eddie…Wegmans will be adding a fifth store to its expansion plans for the Raleigh-Durham-Chapel Hill area of the Tar Heel state. The Rochester, NY-based merchant will build a 100,000 square foot unit in Wake Forest, NC, adding to previously announced new stores in Raleigh (which debuts next year), Chapel Hill and two in Cary. In 2019, the family-owned regional chain will also cut the ribbon on new stores in Virginia Beach and in Brooklyn, NY…Publix, which will be duking it out with Wegmans in the Research Triangle and is already going toe-to-toe with the uber-retailer in Richmond, will be further expanding its store count in the capital of the Old Dominion. The Lakeland, FL supermarket firm, which opened its 10th Richmond-area store on November 14 at Otterdale and Hull Street roads in Chesterfield County, has signed a lease to open the former Martin’s store on Midlothian Turnpike and Charter Colony Parkway. That 74,000 square foot store was Martin’s largest and only new “from the ground up” unit that Martin’s built in Richmond after acquiring the Ukrop’s operation in 2010. I always found it curious that Publix didn’t opt for that site when it acquired 10 other Martin’s in 2016. Also on the slate for this year is a new Publix store that will open on Mechanicsville Turnpike in Hanover County. The highly-profitable chain has four other Richmond-area stores targeted for development: Huguenot Shopping Center; Carytown; Three Chopt Road and West Broad Street (Westpark)…Instacart, one of today’s hottest grocery-related companies, said it has raised an additional $600 million in new financing and claims its market value to be $7.6 billion…and the big K has also released its food trend predictions for 2019. Hot trends include increased consumption of regional flavors and plant-based food; healthier and more convenient lifestyle foods (including vegetarian, keto and paleo); the offering of more “gut healthy” foods including products that are rich in probiotics; and the promotion of low-sugar and naturally sweetened products (including honey and agave). I reviewed the list closely, and sadly, did not see the word cheeseburger mentioned once.
Just a few quick thoughts about the Best Market/Lidl deal. It was pretty clear that Best Market had been seeking a buyer for several months (you don’t hire an investment banker and issue a prospectus if you’re just fishing) and Lidl’s consolidated bid was probably the best one offered, but I’m a bit puzzled about Lidl’s promise to keep all employees while changing the fresh food- oriented merchant to a discounter. When compared to Lidl’s store staffing at its other locations, the numbers don’t seem to match up very well. And what about the executive team? Are president Rebecca Philbert, CFO Jeff Yonkers and other corporate team members staying for any length of time? And then there’s Lidl’s ongoing disappointing sales in the U.S. Why should we expect things to change just because of a new geography? To wit: earlier this month (on a Friday), I went to Lidl’s newest store in Richmond (W. Broad Street). Beautiful store with some of the best in-store conditions of any Lidl unit I’ve visited over the past 17 months (I’ve been to about 80 percent of Lidl’s 59 units). The problem remains the same: few customers with baskets only 25-50 percent full. The unconventional product mix and uncomfortable store layout make it less than a pleasurable shopping experience. Pricing aside (which remains strong), will entering a new marketing area already inhabited by established discounters Aldi and Walmart in addition to market leader Stop & Shop (which plans to spend upwards of $100 million early next year to upgrade its 51 stores) and fast-growing ShopRite make Lidl’s chances for success any greater than in other markets? Stay tuned…Ahold Delhaize USA’s Retail Business Services arm (RBS) is seeking “cleaner” private label products from its vendors. That means offering products at its nearly 2,000 supermarkets that don’t contain synthetic colors, high-fructose corn syrup as well as artificial flavors, preservatives and sweeteners by the year 2025. It’s the right thing to do and a move that other retailers are also implement or considering. So, if Ahold Delhaize USA wants to upgrade its private label program., here’s a suggestion to think about: you’ll get better execution from your private label suppliers if you offer them a bit more loyalty. Issuing RFP’s every 6-12 months to save a penny isn’t a long-term formula that’s effective. If you want more consistency and higher productivity from your vendors, take a page from Wegmans’ or H-E-B’s books. Corporately, Ahold Delhaize (AD) is planning to roll out small automated mini-warehouses to cut delivery times and accelerate order picking that AD hopes will expand its online presence and execution. The international retailer is working with e-commerce tech company Takeoff. More ahold Delhaize news: Selma Postma has been named president of the company’s Peapod online grocery delivery service. Postma, who most recently headed e-commerce for sister AD brand Albert Heijn in the Netherlands, will begin her Chicago-based duties on January 1. She replaces Ahold veteran Walt Lentz, head of supply chain and operations, who also had been serving as Peapod’s leader on an interim basis for the past 14 months…lots of retailers reporting quarterly sales and earnings – here are a few of note. Weis Markets posted a comp sales increase of 0.7 percent and its profits soared 219.3 percent to $14.2 million in its third quarter. Sprouts, which is still producing strong sales at its three Mid-Atlantic stores (Ellicott City, MD; Towson, MD; and Philadelphia) enjoyed a 1.5 percent gain in comps and a 19 percent profit increase in its third quarter. In Albertsons’ second quarter, the Boise, ID-based chain posted a 1 percent comp store growth and the retailer said that comparable store revenue would fall in the 1-1.3 percent range for its full fiscal year, below previous expectations. The company said its earnings loss diminished from $355.2 million to $32.4 billion. While Amazon’s two-city supplemental headquarters was “Godzilla’s” biggest news items of the month, the Seattle-based juggernaut also enjoyed another strong quarter. Revenue in Q3 jumped 29 percent to $56.6 billion and profit skyrocketed from $256 million to $2.9 billion. The company added its Prime Now delivery service to include Annapolis. Prime Now is currently available in 63 cities. Additionally, curbside pickup, unveiled in August in Virginia Beach, has now expanded to 14 markets. Despite the strong numbers, very little growth came from its physical stores (Whole Foods). To be honest, after 17 months of ownership, the significant changes at WFM have been underwhelming. Some prices have been lowered and there are more Amazon products being offered. But Whole Foods’ new centralized merchandising plan has reduced the number of regional offerings and the morale at store level has also diminished slightly…in the “bad time to get a raise” category, Rite Aid CEO John Standley stands alone. For a company that failed to get merger agreements with Walgreens and Albertsons and said it could lose as much as $485 million this year, Standley received a compensation package of $9.32 million this year, an increase from $8.07 million last year. Obviously, shareholders are incensed and rightfully so, since the drug chain’s shares have plummeted more than 70 percent this year and were trading at $1.12 on November 7… from the monthly death desk come these tragic passings: one of the great minds of the past 50 years has died. Paul Allen, co-founder of Microsoft and one of the most generous philanthropists of his generation, passed away last month. Allen and his partner, Bill Gates, met each other when they were teenagers attending the same private school in Seattle. Allen and Gates both dropped out of college to pursue their dream of creating a personal computer company in 1975. Within five years, they had become fabulously wealthy and household names in American business and culture. By the early 1980s Allen stepped away from his daily duties at the Seattle firm to pursue other interests. Much like Gates, Allen’s generosity was prodigious. He donated more than $2 billion towards non-profit groups involved in science, technology, education and the environment. Paul Allen also owned the Seattle Seahawks and Portland Trail Blazers. He was only 65…James Karen, 94, has also left us. Karen, born Jacob Karnofsky in Wilkes-Barre, PA, was a classic “that guy” character actor having appeared in about 200 films and TV shows. However, you might remember the serious looking man in glasses as “Mr. Pathmark” from his 28-year career as spokesman for the now defunct grocery chain. “I go to New York every two weeks and run off twenty 30-second commercials at a time. This is the best job an actor can have,” Karen said in 1984. “It pays very well and it is steady.”…one of my favorite Americana artists, Tony Joe White, he of the gritty voice and swampy guitar playing, has passed away. White is best known for his 1969 classic hit “Polk Salad Annie.” The Louisiana native was still performing and recording albums up until his death at age 75. Singer Brook Benton had a hit with White’s “Rainy Night in Georgia” and Elvis Presley and Ray Charles also recorded White’s songs. White was a true Americana original…another great picker has also passed away. Roy Clark, an underrated guitar player and singer whose image suffered from being co-host of TV’s long-running country variety show “Hee Haw” (along with the late, great Buck Owens), died earlier this month at the age of 85. Clark was born in rural Meherrin, VA and received his first guitar at the age of 14. By the mid-1950s, he was playing regularly in clubs around Washington, DC. He signed his first recording contract in 1962 and appeared on dozens of TV shows prior to a 24-year run on “Hee Haw” that began in 1969. As an instrumentalist, he was a virtuoso, playing guitar, banjo, fiddle, mandolin and harmonica. He was inducted into the Country Music Hall of Fame in 2009…Wally Triplett, 92, one of the first African American
players drafted by an NFL team, passed away earlier this month, too. Triplett, born in La Mott, PA near Philadelphia, was a three-sport athlete at Cheltenham High before entering Penn State. Triplett and his teammate, Dennie Hoggard, became the first African Americans to play in the Cotton Bowl in 1948. The following year he was drafted as a running back by the Detroit Lions. All told, he played three seasons in the NFL with the Lions and the Chicago Cardinals…and one of the true icons of the past 50 years has also died. Stan Lee, the legendary writer, editor and publisher of Marvel Comics who created such characters as Spider-Man, X-Men, Thor, Iron Man, Black Panther and The Fantastic Four has passed away at 95. He was born Stanley Martin Liber in the Washington Heights section of New York of his immigrant parents who had little money. After graduating from high school, Lee got a job as a “gopher” for $8 a week in 1939 at Marvel predecessor Timely Comics and the rest truly was history…and with the Thanksgiving holiday now over, I hope we all raised our forks to Dorcas Reilly. Yes, that Dorcas Reilly – the creator of the green bean casserole, who died last month at 92 in Haddonfield, NJ. Reilly worked for Campbell Soup for nearly 40 years and created the Turkey Day staple in 1955 when she was kitchen supervisor for the soup maker. Her contributions alone should have made you consider having an extra helping of one of the greatest culinary recipes ever concocted. And it’s OK to be in temporary denial about the calories, sodium, and cholesterol…in closing, I offer a few thoughts on the new food industry buzzword of the month: ecosystem. I’ve always thought an ecosystem was a biological community of interacting organisms and their physical environment. Apparently, I was mistaken. The term is now being used to describe any network or interconnected system. I’m confused, so I’ll defer to the rarely wrong Urban Dictionary example of how to properly use the word: “After going 36 holes on a hot day, an ecosystem had developed in my shorts.”