It’s been quite an interesting month for Wakefern Food Corp., the largest grocery wholesale food co-op in the nation. In June, the company announced that president and COO Joe Sheridan would be stepping down from his day-to-day leadership post in October 2023 and that executive VP (and potential heir apparent to Sheridan) Chris Lane had resigned.
It was only a few weeks later when Wakefern said that it would be adding a key new member to its roster. Shortly after that, the Keasbey, NJ-based company announced a key executive retirement and a series of promotions. As for the new retailer, Gerrity’s Supermarkets, the largest independent supermarket operator in the Scranton-Wilkes Barre, PA area has agreed to become Wakefern’s 48th member.
“Our family is excited to join the Wakefern cooperative which is committed to helping family-owned businesses like ours gain a competitive edge in a rapidly changing and challenging industry. Wakefern will help us save our customers money and provide an enhanced assortment of products to our customers, including high-quality, on-trend private label foods, and increased buying power of a cooperative,” said Joe Fasula who along with his mother, Joyce “Mom” Fasula, owns the 10-store retailer which operates stores in Lackawanna, Luzerne and Northampton counties in Pennsylvania.
When the conversion process is completed (likely later this year), the Gerrity’s stores will fly Wakefern’s The Fresh Grocer banner. Gerrity’s becomes the first new Wakefern since late 2020 when Madison Foods (the Slawsby family) left Save A Lot to join the co-op. Madison Foods operates four Price Rite stores in the Boston area. Prior to that, in 2020, Nicholas Markets (the Maniaci family) left Allegiance to join the co-op. Its four New Jersey stores all trade as The Fresh Grocer. Gerrity’s was formerly with C&S which continued to supply Gerrity’s after it acquired AWI in 2014. In November 2021, the Scranton-based independent acquired Valley Farm Market, a single store independent based in Bethlehem, PA.
“The Fasulas are a strong addition to our cooperative and another family-owned business that provides an exceptional experience and quality fresh foods for its customers and a great place to work for its associates,” said Joe Colalillo, Wakefern’s chairman and CEO. “Membership in our cooperative allows independent operators like the Fasulas to maintain their entrepreneurial spirit while benefiting from the scale and services Wakefern offers. We look forward to welcoming the Fasula family to Wakefern.”
Gerrity’s is the largest family-owned supermarket business in Northeastern Pennsylvania. Along with its 10 supermarkets, it also owns three Ace Hardware stores. The company was founded in 1895 by William Gerrity as a small meat market in West Scranton and became a supermarket in 1980 under the leadership of Joyce and her late husband Neal Fasula. Gerrity’s currently employs more than 1,300 people.
Retiring from Wakefern will be Brett Wing, who currently serves as senior VP-retail excellence. Prior to that, Wing was president of Wakefern’s corporately owned retail arm – SRS. A 45-year industry veteran, Wing joined Wakefern in 2015.
Those who were promoted include Kevin McDonnell, former senior vice president of Price Rite Marketplace, who has been appointed to Wakefern’s executive staff as president of the banner. He will continue to lead Price Rite Marketplace, which has more than 60 stores in Connecticut, Maryland, Massachusetts, New Jersey, New York, New Hampshire, Pennsylvania and Rhode Island. As president, he will oversee all aspects of the banner, including sales and advertising programs, retail store operations, real estate and facilities management. McDonnell will now report to Joe Sheridan. Ryan Maloney has been elevated to VP-retail services and member initiatives. In this role, Maloney will lead all initiatives supporting the membership and store operations, to include new member integration as well as all facets of merchandising.
Maloney joined Wakefern in 2009 as an intern in the company’s grocery division. Filling Maloney’s former position is Danny Perriello who has been promoted to director of retail operations where he will oversee CGO, retail labor management, and the retail operations shared services program. Prior to joining Wakefern in 2009, Perriello was with the co-op’s second largest member Village Supermarkets for 14 years. Dan Tarnopol has been promoted to VP-site development, real estate and member services. Tarnopol joined Wakefern in March of 2014 as corporate counsel in the legal department. In 2018, he was promoted to director of site development and real estate. Since leading this team, Tarnopol has been instrumental in helping members achieve better lease terms and continues to provide leadership to the site development committee. In his new role, Tarnopol will continue to support the cooperative and service the members in helping to drive growth and business transformation. He will now report to Michael Day who also has been elevated to group VP-strategic planning, business development and member services, overseeing strategic initiatives, retail operations, site development and real estate. Most recently, Day had been leading the efforts to identify new cooperative members as well as supporting the membership through business and financial planning services.
It’s clear that Wakefern is currently going through one of the biggest and most important periods of internal changes in its 76-year history as several executives who helped build one of America’s best companies are now coming to the end of what have been outstanding 30 or 40 year career paths. Successfully replacing those valued associates is perhaps the biggest challenge that the company faces.
And none will be bigger than finding a successor to the internal glue behind many of Wakefern’s achievements – Joe Sheridan.
‘Round The Trade
Walmart will be charging some of its vendors a new fee to transport products to its distribution centers and stores as the “Behemoth” seeks to counter increasing expenses, particularly in fuel and transportation costs. That’s according to the Wall Street Journal which cites a memo the company sent to its suppliers on July 1. The new surcharge, called a “collect pickup charge” will begin on August 1 and include those companies that deploy Walmart to transport their products. The “collect pickup charge” is calculated as a percentage of the cost of goods received by Walmart, the memo stated. The fuel surcharge is based on the cost of fuel to transport the goods. The Journal story also noted that some suppliers criticized have Walmart for not sharing the expected charges more precisely and not giving them more time to account for the added cost. “I have an unknown expense and nothing I can do about it,” said one supplier who received the email. “This is, for all intents and purposes, a retroactive charge, since many suppliers already have product order agreements in place with Walmart for the coming year.” The story also noted that a spokeswoman for Walmart said the fees would help it adapt to the current economic environment while keeping prices low for consumers. Walmart plans to let individual suppliers know more about specific charges soon, she said. In April, Amazon added a 5 percent fuel and inflation surcharge to all items shipped using its fulfillment service. Vendors can avoid paying the new surcharge by switching from Walmart’s collect shipping service to prepaid shipping, a method that the supplier arranges and pays for shipping into Walmart’s supply chain, the retailer said on its internal website for suppliers.
At Amazon, as usual, there’s more news to report. “Godzilla” is expanding its wings by acquiring a 15 percent stake in struggling restaurant delivery service Grubhub. The deal is actually with Grubhub’s parent firm – Just Eat Takeaway, a Netherlands-based company – and a breakdown of the transaction reveals that a subsidiary of Amazon will receive warrants for 2 percent of Grubhub’s fully diluted common equity. Amazon will also receive warrants (exercisable at a formula-based price) for up to an additional 13 percent of Grubhub’s fully diluted common equity (this is similar to the deal that Amazon made with grocery wholesaler Spartan Nash in 2020). As part of the deal, Amazon Prime members in the United States will be able to sign up for a free, one-year Grubhub+ membership and get unlimited delivery fees from Grubhub for that year at no charge. In addition to waiving delivery charges on eligible orders, Grubhub+ members get access to member-only perks and rewards.
Scott Moses, one of the industry’s most brilliant minds and currently managing director and head of the grocery, pharmacy and restaurants investment banking practice at Solomon Partners, recently released an analysis of last month’s FTC’s Merger Guideline Listening Forum which focused on the impact of M&A activity in the retail sector. Moses was particularly critical of the federal agency’s antiquated definition of traditional grocers and how that narrow definition doesn’t cast an accurate view of how markets have been radically altered over the past 30 years (when the FTC last defined marketing areas and their makeup). Over that period of time, non-traditional retailers – mass merchants, club stores, dollar stores – have garnered the biggest share growth in grocery sales yet still are considered a separate category by the regressive group of five commissioners who comprise the FTC board. Moses’ comments were buoyed by Mark Gross (another 30-pound brain), the former Supervalu CEO who is now co-chairman of Northeast Grocery Inc. (Price Chopper and Tops). Gross provided the commissioners with three salient suggestions: redefine the definition of the current grocery market to include all non-traditional grocers; gain a better understanding of the economic dominance of the non-traditional operators as it relates to the power they assets; and become more accommodating towards regional grocers merger activities so they can better compete with the “grocery giants.” Another speaker, Stephanie Martz, chief administrative officer and general counsel of the National Retail Federation, also urged the commissioners to re-evaluate the calculus in determining the competitive markets for potential mergers. She added that the FTC should also incorporate e-commerce competitors when analyzing individual markets. You would think that the evidence and logic deployed by some of the industry’s top minds would influence the government’s leading commerce agency to avoid such strange decisions as Kroger’s 2014 acquisition of Harris Teeter (no stores were divested) or the 2015 deal between Albertsons-Safeway and Haggen (where 146 stores were ordered to be closed or sold with specific banners and locations listed), but then you’re probably I hope I’m wrong.
A few months ago, I wrote about the influx of the so-called “ultrafast” grocery delivery services. There was a commonality to all these companies – startup firms that were all financed by some impressive private equity investment which offered deliveries to your door in as little as 15 minutes. My first thoughts were that these promises were impractical in the long-term and reckless as well and that many parts of the core business model were unsustainable. You didn’t need to be a visionary to predict (much like the early days of the home meal kit startups) that this room was quickly getting overcrowded. And since the need for grocery home delivery in general has waned since shopping behavior has returned to more normal levels, the ultrafast channel is also diminishing or at least downsizing. Last month, Jokr, which had a ridiculous market cap of $1.2 billion late last year, announced it was exiting its U.S. business (Boston and New York) and would focus on its Latin American platform. Buyk, a Russian entry which has raised $46 million in startup funding, pulled the plug in March citing the Ukrainian invasion as a key reason for seeking bankruptcy protection. That same month, Fridge No More also folded, reportedly unable to raising additional seed money. And then there are those ultrafast merchants that are still breathing – at least for now. Getir, whose valuation was at one point $7.5 billion, announced it would lay off 14 percent of its workforce, and Gorillas, a German firm that entered the U.S. in 2021 with $330 million in startup funding, said that it would be riffing 300 associates. There’s a space for perhaps two or three ultrafast service organizations to survive (and potentially prosper on a long-term basis), but as in almost every case, market demand dictates outcomes. And this is another case of overanxious entrepreneurs and their corporate investors believing that it’s California in 1848 and Sutter’s Mill will reward them with gold.
Local Notes
Grocery Outlet opened its first Maryland store in Hagerstown last month. Gerald and Evelyn Eldred are the owners of the new discount unit which is located in part of a former Kmart location. In addition to other discounters Walmart, Aldi and Lidl operating in Maryland’s fifth largest city, expect competition to come from a strong Save A Lot unit, owned by David Green and Melvin Shapiro, located about 2.5 miles from the Eldreds’ Massey Boulevard location.
Speaking of Lidl, the German discounter will open its first Baltimore City store on July 13 on Havenwood Road in the Northwoods Commons shopping center. The 30,000 square foot unit will be Lidl’s 20th store to open in Maryland. Also opening earlier this month was the new Amazon Fresh (AF) unit in Crystal City (Arlington), VA. The 16,000 square foot store is the third AF unit to open in Northern Virginia in the past month (Manassas opened on June 9 and Lorton opened on June 23).
A couple of future new stores to report. Sprouts will open its sixth Maryland store, a 23,200 square foot perishables-oriented unit, in Burtonsville, likely late next year. The new Burtonsville Crossing site has been virtually abandoned since 2010 when former anchor Giant Food relocated its supermarket across the street to a new shopping center. And several sources have told us that Trader Joe’s is close to signing a lease in the Old Keene Mill shopping center in Springfield, VA to replace an existing 10,600 square
foot store that the niche merchant currently operates in Springfield Plaza. In a complex series of moves, speculation has it that TJ’s would take over the Old Keene Mill site that currently houses a 24,000 square foot Whole Foods Market. WFM would relocate to the site of a former 40,600 square foot Giant Food supermarket in Springfield Plaza which Giant closed last year so that it could open a 50,000 square foot replacement unit at the former Kmart location in the same Springfield Plaza center. Now I’m confused!
In the continuing saga of ethical issues with the nation’s pork, beef and chicken processors, Smithfield Foods has agreed to pay foodservice establishments $42 million to settle a lawsuit accusing the Hong Kong-owned firm of price fixing. Earlier, the company, whose U.S. headquarters are in Smithfield, VA, agreed to pay $83 million to a different group of end users, and rival JBS has already paid out $12.75 billion to pork buyers and $52.5 million to settle another beef price fixing suit. As usual, neither Smithfield nor JBS admitted any wrongdoing for their actions. Last year, Pilgrim’s Pride, one of the country’s largest chicken processors, was fined $107 million after pleading guilty to another price-fixing lawsuit. Yet unsettled is price fixing litigation against Hormel and Tyson Foods.
Another interesting story recently in the Wall Street Journal about incoming Whole Foods chief executive Jason Buechel. Buechel, who has been with WFM since 2013 and will succeed co-founder John Mackey in September, acknowledged that inflation is clearly changing the way consumers are shopping. The 44-year old executive noted that as prices increase, WFM is working with suppliers and deciding how much to pass on and how much to absorb, adding that the retailer is considering adjusting the number of items it sells and keeping prices competitive with the rest of the food retail market. Upcoming plans also call for the organics and natural foods retailer to re-emphasize its messages on sustainability and food quality. As with other grocers, Buechel acknowledged that staffing has been one of WFM’s toughest challenges but that store labor issues are improving. As for hourly wage rates, the former Accenture executive said that the company is viewing that factor on a market-by-market basis. And when asked about replacing Mackey, who founded the company in Austin, TX in 1980, Buechel responded by stating, “They are impossible shoes to step into. John is a legend.”
We have a few obits to report this month including Tony Siragusa, former nose tackle for the Baltimore Ravens. While Siragusa was an excellent, if underrated, defensive player for the Ravens for five years (he was a leader on the 2000 Super Bowl team, which allowed a record low 165 points in that season), “Goose” was equally well-known for his wise-cracking career as a TV analyst. His exuberant personality could be witnessed in the first season (2001) of the long-running HBO documentary series “Hard Knocks.” During the show, Siragusa could be seen wearing shirts with the words “Big Daddy” across his chest and making jokes about how he would torture rookie players. After his football career ended in 2001, Siragusa worked for Fox’s NFL coverage as a sideline personality. While “Goose” served as both the instigator and target of many team jokes and pranks, he was also seen as a real team leader by his fellow players. “This is a tough one,” said Hall of Famer Ray Lewis, who is considered the greatest Ravens player of all time. “I love ‘Goose’ like a brother. From the first day we met, I knew that life would be different. I knew he was someone who would change my life forever. He was a one-of-a-kind person who made you feel important and special. You can never replace a man like that.” And even when asked about his own mortality by Howard Stern, Siragusa, who lost his father at the age of 21, said: “If I die tomorrow, I told my wife just put a smile on my face and put a little Sinatra on.” Siragusa was only 55 when he passed.
Another larger-than-life personality has also left us. Sonny Barger, founder of the notorious Hells Angels motorcycle gang, has died at the age of 83. While much of Barger’s life was fraught with criminal activity, (he was arrested more than a dozen times and served two lengthy prison sentences), it might be easier to understand Ralph Barger Jr.’s sometimes abhorrent behavior if you knew about his upbringing. When he was four months old, his mother Kathryn ran away with a Trailways bus driver, leaving Sonny in the care of a babysitter. His father then moved Sonny and his sister to Oakland, CA, where he worked as a stevedore. At night after work, Sonny’s father would often take him to several of the city’s waterfront taverns. One of those buckets of blood, Jungle Jim’s, is where young Ralph first learned to swear – from the bar’s parrot. Barger changed his behavior shortly after being released from his second incarceration in 1992. He encouraged children to stop using drugs and to stay away from cigarettes (as the result of a cancer diagnosis he had his larynx removed in 1982). He also authored six books including two novels and an autobiography. Barger appeared in several TV shows including “Sons Of Anarchy,” a very interesting series about – what else? – a biker gang. Asked if he regretted some of his life choices, Barger said: “One of the things that has always amazed me about reporters during my whole life is that 99 percent of them will say, ‘Gee, after talking to you, I find that you’re halfway intelligent. You could have been anything you wanted to be!’ They don’t realize, I am what I want to be.”
Just before presstime we also learned of the death of James Caan, 82, who is best remembered for his Oscar-nominated role as Sonny Corleone, the hot headed son of Marlon Brando’s Mafia don in the iconic “The Godfather” (1973). Although Caan’s character in the first “Godfather” flick may have been overshadowed by his two brothers, strait-laced Michael (Al Pacino) and weak Fredo (John Cazale), his performance was first-rate and his departure was one of the most memorable moments in the entire “Godfather” trilogy. My favorite Caan performance was in the TV movie “Brian’s Song” (1971), which portrayed the friendship between dying Chicago Bears football player Brian Piccolo and Gale Sayers (Billy Dee Williams). Even today, you can’t watch this film without a box of Kleenex. Other notable Caan movies include “Thief” (1981), “Misery” (1990) and “Elf” (2003). At the time of his death, Caan was scheduled to appear in three films. All told, in a career that spanned 61 years, Caan appeared in 137 film and TV roles. I always admired Caan’s hard-ass, petulant persona – I’ll miss his presence on the screen.
