With the increasing number of finance, HR and strategy executives now calling the shots at many food retailers, it’s sometimes easy to overlook the value that people skills still play in our business. And when you couple human connectivity with real talent, that’s likely to yield a superstar.
One of the keys to the success of Wegmans is its continued focus on the human factor. It certainly doesn’t hurt that chairman Danny Wegman is a once-in-a-generation visionary, but he’d be the first to admit that, without the importance of teamwork, the company’s unique model wouldn’t be nearly as powerful.
Two of those team players, senior VP of store operations Jack DePeters, and VP of media relations Jo Natale, will retire at the end of 2019, after spending much of their lives making Wegmans a better company.
Both share some similar traits – intelligence, humility, selflessness, a tireless work ethic and a willingness to mentor. What also makes them special is that they have been able to flourish in a system that embraces individualism and entrepreneurship – something rare in a company that employs about 50,000 people and amasses more than $9 billion in annual sales.
Jack DePeters began his Wegmans career in 1967, while still in high school, as a part-time customer service associate in the stores. He continued to work for the retailer while in college and then after graduation, joined the Rochester-based retailer on a full-time basis. He’s held virtually every job at the company both in store ops and merchandising including front end manager, store manager, head grocery buyer and director of grocery (dairy and frozen). In 1999, he was promoted to his current post where he oversees all store operations.
That’s a big job, especially considering that Wegmans has opened nearly 50 stores in six states since its Princeton, NJ debut in 1999, the year Jack was promoted. As Yogi Berra once reportedly said: “You can observe a lot by just watching.” If you observed Jack DePeters in action in the stores, you’d learn plenty.
Jo Natale was kind of a late bloomer. After working in the insurance business and then becoming a stay-at-home mom for a few years, she applied for a part-time job as a pharmacy tech at a new Wegmans store (Britton Road in Rochester) not far from where she lived. That was in 1983. She remained a pharmacy tech for two years and then was promoted as a part-time consumer affairs specialist, before joining the company as a full-time employee in 1987. Five years later, she was elevated to manager of media & consumer relations, then to director and in 2016 was named VP of the department.
Jo is also my point person in seeking information about the company. Simply stated, there’s no better communications executive in the industry. She’s fair, open-minded, sometimes tough. One of the characteristics that makes her special is that she has a unique sensitivity about understanding a reporter’s needs to gain information, even if it’s sometimes proprietary. She’s sets the boundaries early and then handles questions candidly and diplomatically, even if the end result is “no comment.” Jo Natale is a pro’s pro.
Replacing both DePeters and Natale respectively are Wegmans veteran Bob Farr and newcomer Deana Percassi. I’ve known Bob Farr since he headed the company’s Virginia operations. He now serves as senior VP of continuous improvement support helping open many new stores in the Old Dominion. He’s very focused and soft spoken (like DePeters) and after 39 years with Wegmans is ready to take the baton from Jack. Percassi joins Wegmans as director of media & public relations strategy. She comes from insight and analytics firm The Harris Poll (also based in Rochester).
Both have big shoes to fill because, in Jack DePeters and Jo Natale, you’re talking about reaching the gold standard.
New Store Openings Help Lidl Gain More Market Traction
After a sluggish debut, Lidl has begun to pick up steam by offering a revamped merchandising plan (featuring more American products), a smaller footprint (20,000-25,000 square feet vs. the original 36,000 square foot model) and an evolving real estate philosophy where it is now willing to lease locations rather than adhering to its initial decision to acquire all real estate and build on those sites. It also chose to build many of its stores in the same trading area as two more established and successful discount retailers – Walmart and Aldi – making Lidl’s entry that much more difficult.
The German discounter, which debuted in the U.S. in June 2017, and planned to have more than 100 stores open in the Mid-Atlantic and Southeast during its first year, has faced setbacks primarily in its ability to generate the level of sales that many predicted.
After being criticized for not being in touch with the American consumer by its own leader, Klaus Gehrig, CEO of the Lidl’s parent company, Schwarz Gruppe, Lidl moved company veteran Johanne Fieber into the U.S. chief executive post and added Roman Heini to the newly created post of chairman of its U.S. business. The collective moves have seemed to help.
Despite the early challenges, Lidl is still prepared to spend earnest capital to grow. Trade analysts believe that the privately-held merchant has spent as much as $2 billion to acquire land, build stores, construct three distribution centers and hire a management team that is based in an impressive headquarters building in Arlington, VA.
It also made a significant investment when it acquired 27 Best Market stores (24 on Long Island) earlier this year and announced plans to convert those stores to the Lidl banner over the next three years. The first of those stores – Babylon and Huntingdon – will open early next year. Also opening early next year as Lidl units will be two stores – Plainview and Center Moriches – that Best Market acquired (but had not yet opened) from A&P in 2016.
The discount retailer is also reportedly interested in acquiring several Shoppers Food stores in the Baltimore-Washington market that current owner UNFI has put on the sales block.
In addition to the Best Market purchase, Lidl earlier this year announced that it will open 21 new stores (not including the planned conversions of those Long Island units) with a heavy focus on Pennsylvania, New Jersey and Maryland, three states where Lidl had only operated a handful of stores.
During the past three months, some of those planned new stores have opened including units in Trooper, PA; Royersford, PA; York, PA; Lacey, NJ; College Park, MD; and Hagerstown, MD. It will also open an additional New Jersey store in Bergenfield; an additional Pennsylvania unit in Philadelphia (East Butler St.); and five more stores in Maryland – Catonsville, Lanham, Nottingham, Waldorf and District Heights which opens on October 9.
With the inclusion of the Best Market stores, Lidl U.S. now operates 107 stores.
‘Round The Trade
UNFI posted its Q4 and fiscal 2019 sales and earnings earlier this month, and to be blunt, they weren’t very good. For the period ended August 3, the Providence-based distributor amassed sales of $6.4 billion and earnings per share of 44 cents, both figures missing analysts’ estimates. Sales loss for the year was $285 million. While admitting 2019 was a “humbling” year, CEO Steve (“Senor Spinmeister”) Spinner was bullish about the company’s going-forward plan, noting that the UNFI’s full-service grocery distribution model is one that will prove more effective in the near future. Here’s the problem: Wall Street ain’t buying it and neither are some of the company’s independent retailers who “inherited” UNFI after it acquired Supervalu 12 months ago. Wells Fargo analyst Ed Kelly was one of several UNFI followers who assessed the Q4 performance and noted, “Overall, we believe the update was a clear incremental negative, as it raises many questions around the strategic and financial outlook of the company.” I do give interim CFO John Howard credit for being more open with the analysts when he stated, “Fiscal 2019, which serves as the base for the subsequent years, was well below the expectations we set earlier, “So we don’t believe we have a path to achieve the net sales or adjusted EBITDA dollar ranges for fiscal 2022 provided in January at our Analyst Day.” Oh, about that Analyst (Investor) Day conference in January, according to several Wall Streeters in attendance, Spinner, COO Sean Griffin and president Chris Testa were practically gloating as they predicted annual sales growth of 3.6 percent and EBITDA growth of 7 percent. The real numbers don’t lie. After the earnings release, “The Street” and shareholders punished UNFI, dropping the stock more than 25 percent the next day (as we went to press, UNFI shares were trading at $7.47). Spinner also addressed the lingering Shoppers’ situation, as 44 stores and thousands of associates have been stuck in “limbo land” for more than a year. Spinner said the company was working on several deals involving multiple stores and hopes to have an announcement in early 2020. He also acknowledged that the unfunded pension liability (more than $135 million, a number he didn’t mention specifically) has made the process more complicated. Why “Senor Spinmeister” remains chief executive is a head scratcher. The tangible and measurable metrics are poor and the intangibles of how he and the company are perceived by some of his own people and by his own independent customers is equally as bad…According to The Wall Street Journal, Amazon is stealthily moving forward to roll out its new retail grocery format. Sources have told the newspaper that Amazon has secured more than a dozen leases in the Los Angeles area. Other markets being targeted are Chicago, Philadelphia and possibly Washington, DC. Store size is expected to between 20,000-40,000 square feet and with a substantial space expected to be devoted to prepared foods. Currently, Amazon operates 504 Whole Foods units and 16 Amazon Go c-stores. While it won’t divulge specifics about its new grocery format, the Seattle-based juggernaut has previously stated that it will expand its bricks and mortar presence as a way to reach more consumers…the Grocery Manufacturers of America (GMA), the insulated trade association comprised of many of the country’s largest food manufacturers, is changing its name in January 2020 to Consumer Brands of America (CBA) in an effort to establish a new presence that better reflects “today’s era of transparency and consumer-first thinking.” We wish them well, knowing that GMA’s relevancy passed about the time I was resetting my clock to prepare for Y2K… just before presstime, Bloomberg is reporting that Acosta is close to completing a deal that would reduce its large debt service and cede control to creditors including Neuberger Berman Group LLC and Eaton Vance Corp. f the deal is completed, the Jacksonville-based brokerage firm would file for a pre-packaged Chapter 11 bankruptcy. Rival brokerage firm Crossmark recently restructured its organization, too (no bankruptcy) and Eaton Vance was also one of its new investors. The Carlyle Group reportedly paid approximately $4.8 billion in 2014 to acquire what was then the largest food brokerage firm in the county.
Local Notes
Lauer’s Supermarket & Bakery is selling its two stores in Riviera Beach, MD and Pasadena, MD (both in Anne Arundel County). The independent retailer was founded in 1974 by the late Ed and Helen Lauer and has been run for many years their daughters Bernadette (“Bernie”) Snoops and Babette (“Babbie”) Poyer. In a posting on its Facebook page, the two sisters said: “To own and operate two supermarkets in the same community was a dream come true for the Lauer family. After 45 years, we have made the very difficult decision to end the Lauer’s tradition in Pasadena. It has been an incredible journey for the Lauer family to serve and be part of the Pasadena community. The success of Lauer’s would never have been possible without all of the employees. It has been a privilege to experience the dedication of a number of individuals that have been part of our family since 1974. We have had the pleasure to see families grow as generation after generation have walked through our doors as Lauer’s employees. Thank you to each and every person that has committed their time to the Lauer’s Supermarket mission. We have thoroughly enjoyed witnessing the growth of the Pasadena Community since 1974. It has been such a fulfilling experience to be part of such a wonderful community, schools, churches, businesses, community and youth organizations. Thank you for your continued support of your local family supermarkets. We will sincerely miss all the wonderful friends and customers that have been part of our lives for the past 45 years. It is hard to imagine our daily lives without you.” Nice words from two wonderful people. We wish them well in their future endeavors. As for the two stores, Geresbeck’s Food Markets has acquired the Riviera Beach location (their third store) and B. Green has taken over the Pasadena store and will operate the unit as a Green Valley marketplace, the company’s fourth store utilizing that banner…Sprouts Farmers Market opened its fourth B-W store earlier this month in Herndon, VA at the site of a former Kmart location. The 30,000 square foot is the first Virginia unit for the fast-growing Phoenix-based perishables-focused operator… and on October 30 Whole Foods will be opening a new flagship store in
Tysons Corner, VA which the company says will serve as its new prototype. The 70,000 square foot store will feature an in-store food hall, a bar and a game room…Chris Kenny, CEO of the six ShopRite stores in Delaware, and entrepreneur/philanthropist Ben duPont have formed “A Better Delaware,” a non-partisan grassroots organization that will advocate for pro-growth, pro-job policies and greater transparency and accountability in state government. In its mission statement, the new organization notes Delaware’s declining status as a state that’s business friendly. It wants to help provide taxpayers with a voice in changing the direction of “our state to make it more business friendly.”…the Baltimore City Council has delayed taking action on a proposal to ban retailers from using plastic bags saying it needed more time to hold further public discussions. The plastic bag ban bill was first proposed in June and called for the ban and an additional 5-cent fee for paper and compostable bags. Retailers aren’t necessarily opposed to the ban, but want some type of offset compensation to cover the extra costs of alternatives. Legislation to ban plastic bags has been thwarted eight times since 2006.…Lee Delaney has been promoted to president of BJ’s Wholesale Club. The former industry consultant (Bain & Co., Deloitte), joined the Westborough, MA-based club operator in 2016 as EVP-chief growth officer and two years later was named chief commercial officer. He will continue to report to BJ’s chairman and president Christopher Baldwin. The company, which was previously owned by PE firms Leonard Green and CVC Capital Partners, went public in June 2018. Its launch price was $23.65; as of September 20, BJ’s stock is trading at $26.25 per share…tiny Christiansburg, VA will be the site of Walgreens’ pilot initiative to deliver items to local resident via drones. The big drug chain is teaming up with aviation tech firm Wing to begin the drone service in which more than 100 Walgreens items will be available through the Wing app. The town of about 20,000 residents was chosen because it is close to Virginia Tech in Blacksburg where Wing has been conducting drone research over the past three years. “With this pilot, Walgreens will be in a unique position to capitalize on the convenience of drone delivery if and when it should expand, with approximately 78 percent of the U.S. population living within five miles of a Walgreens stores,” said Vish Sankaran, the drug chain’s chief innovation officer…there are a couple of obits to report this month: leaving us too was Sid Haig. Never heard of Sid? Here’s all you need to know: he was one of the scariest guys to ever act in films. With nearly 150 movie and TV credits, Haig often played thugs, carnies and other menacing characters. A hulking figure with a full beard and shaved head, Haig created a screen presence that literally was frightening. While those features were exploited in many of his roles, they were exemplified in an early film, “Spider Baby” (1968) when his character cooked a cat. Thirty-five years later, his role as Captain Spaulding (ripped from a famous Groucho Marx character), a psychotic murderous clown in “House of 1000 Corpses” (2003), was truly epic. Haig acted in some mainstream (or quasi-mainstream) movies as well – “Foxy Brown” (1974) and Quentin Tarantino’s “Jackie Brown” (1997) – come to mind. Of course, off-screen his friends described him as a teddy bear – a soft-hearted and very generous man who loved music…speaking of music, Robert Hunter, the great songwriter who was responsible for co-writing (along with Jerry Garcia) many of the Grateful dead’s greatest songs, has passed away at age 78. Both he and Garcia, the iconic lead guitar player for the dead, hailed from the Bay Area and met in the early 1960s in a local production of the musical “Damn Yankees” (hard to imagine Jerry as a musical comedy star). It wasn’t until nearly a decade later that they collaborated on some of the greatest rock songs of the era – “Dark Star,” “China Cat Sunflower” and later “Ripple” and “Uncle John’s Band.” After Garcia died in 1995, Hunter continued to write excellent songs with fellow Dead members Bob Weir and Mickey Hart, along with rock legends Elvis Costello and Bob Zimmerman, er Dylan. He was underappreciated but a real talent. I’ll miss Robert Hunter’s great contributions to music.