This is not a story about Walmart. Or Amazon. Or Instacart. Or Kroger, Albertsons, Ahold Delhaize or Target, either.
While it’s important that we report on those retailers that create much of the news these days; it’s also important that we cover events concerning small companies, particularly those where news and humanity combine to create the fabric which I believes still remains vital in the grocery industry.
Libbie Market, Richmond, VA. A micro-dot on the retail landscape that for most people has no connectivity or relevance – unless you know the backstory and the people involved. The grocery store serves as a landmark for the upscale West End neighborhood in the city. And the ownership has always treated the store and its many faithful customers with great dignity and respect.
What began as a Lukhard’s store in the late 1960s, then evolved to Joe’s Market in 2001 (when it was owned by Ukrops and named after Jim and Bobby Ukrop’s dad who founded the Ukrop’s Super Markets in 1937), ultimately became Libbie Market (located on Libbie Avenue) in 2010 when former Ukrop’s employees “Buster” Wright and David Taylor acquired the store after the Ukrop family sold most of its stores to Ahold USA (Martin’s) in 2010. Later in 2016, another former Ukrop associate, Sam Dortch, joined the ownership team at Libbie’s.
A few months ago, valued employees Rebecca Daniel and Curtis Sammons were offered equity positions at the company and now will help lead the next generation at a store which remains unique in the way it merchandises its products and how it treats its customers.
Daniel, who joined Libbie Market in 2015 as a cashier, now serves as assistant general manager at the 10,000 square foot market which employs an impressive 115 associates. Sammons, who came aboard in 2013 as a line cook, is now executive chef.
Both will serve as excellent compliments to Wright, who I’ve known since his days as a food broker in the 1970s; to Taylor who I’ve knows since the early 1990s when he served as a Ukrop’s store manager; and to Dortch, who I first met in the 1990s when he worked for food broker Acosta.
In speaking with Taylor, 63, I learned that both he and Wright, 76, aren’t going away anytime soon, but felt it was important to develop and execute a succession plan (a challenge for many independents) as the two principal owners approach retirement ages.
Taylor acknowledged that it is likely that he and Wright will likely be working fewer hours and taking on different challenges to let Dortch (general manager of the store), Daniel and Sammons expand their duties. I tried to pin Taylor down on specific exit timelines but he refused, admitting he and Wright still love what they do but felt the transition plan was important to not only reward Daniel and Sammons for their stellar contributions, but also to ensure that the standards that are now in place remain that way in the future.
There used to be a lot of Libbie Markets in communities across America. But issues dealing with capital, technology and the aforementioned perpetuation have contributed to the decline of small, service-oriented merchants over the past 25 years. Of course, Walmart, Costco, Target and a host of other larger retailers, many in different trade channels, have also adversely impacted independents.
Libbie Market stands out because it still represents the best in class among neighborhood retailing. More than 60 percent of its sales come from its fresh departments –custom butcher shop, unique seafood department, scratch bakery, impressive produce selection and large prepared food selection. Additionally, the store’s wine department offers many varieties not typically found in larger supermarkets. Taylor estimates that the five owners probably know more than half of their customers, adding that the importance of maintaining a store that’s relevant to the neighborhood has been mutually beneficial.
“There’s a trust that goes both ways,” Taylor noted. When Buster and I opened the store we constantly talked about the importance of serving the community. We’ve never lost that focus. And we’ve been rewarded by their faith and trust in us. We now see second and third generations of families returning to shop at Libbie Market. That in itself is very rewarding.”
‘Round The Trade
Even though the Bureau of Labor Statistics (BLS) has not yet issued its July inflation numbers, you can bet the ranch the price increases will surpass June’s 9.1 percent and 12.2 percent respectively for overall and food price gains – and that’s even with a drop in fuel prices over the past 30 days. And now we’re seeing the early effects of those skyrocketing numbers both in corporate earnings and anecdotally from conversations I’ve had with a dozen retailers over the past month. Both Walmart and Target have felt the effects of doing business in this fast-changing business climate by posting lower earnings despite still strong revenue. Even Publix, the nation’s most profitable publicly-traded food retailer, felt a bit of bottom line sting – profits fell to $628.4 million during its second quarter ended June 25 versus the $1 billion the Lakeland, FL-based merchant earned in Q2 last year. However, comp store revenue remained robust at positive 7.8 percent. One senior VP of a regional chain based in the Mid-Atlantic analyzed changing shopping habits this way: “We first saw some trading down in May that continued into June. However, the past month, we saw significant increases in unit sales of our private label products that we expect to continue. Prices are just too high and the consumer has no confidence that they’ll stabilize anytime soon – I share their lack of confidence.”
And while Walmart’s Q2 2023 numbers won’t be out until later this month, the “Behemoth” made an unusual mid-quarter announcement that it expects earnings per share (EPS) to drop by 8-9 percent and by 11-13 percent for Q2 of this fiscal year (2023) despite projected IDs of 6+ percent for the upcoming second quarter. And just before presstime, The Wall Street Journal reported that Walmart will be cutting about 200 corporate jobs in a major restructuring effort. The story noted that cuts will affect the company’s real estate, merchandising and global technology departments.
One retailer that has not yet felt the consumer pushback (as measured by financial performance) is Albertsons. The Boise, ID-based grocery chain posted an overall sales gain of 9.6 percent and a comp store gain of 6.8 percent (versus a drop of 10 percent a year ago) for the 16-week period ended June 18. Like most retailers, the increases were primarily due to higher grocery and fuel prices. “In the first quarter, our teams continued to deliver strong operating and financial performance across all key metrics, and we continued to gain market share,” said CEO Vivek Sankaran. “As we look forward to the balance of the year, while we are thoughtful about the macro environment and the possible implications on consumer behavior, our teams have consistently demonstrated their ability to adapt to a changing back drop in real time. This puts us in a strong position to continue to execute against our ‘Customers for Life’ strategy, including more deeply engaging our customers both digitally and in-store and delivering against our productivity agenda. We are so proud of the resilience, agility and passion of our teams and their ongoing service to our customers and communities.” Unlike some of its peers, Albertsons is not predicting a slowdown; in fact, it raised its revenue and profit guidance for the remainder of the year. The big merchant also provided a brief update on the “Strategic Alternatives Review” which it first announced six months ago which is designed to seek greater shareholder value. An unnamed third party was hired to evaluate its company-owned real estate, which is now valued at $13.7 billion, up from $11.2 billion three years ago. Some analysts believed that part of the strategic review process might have included a potential exit plan for Albertsons’ five largest shareholders – Cerberus Capital Management, Klaff Realty, Kimco Realty, Jubilee Limited Partnership and Lubert-Adler Partners – which essentially provided operating capital for the company before it went public about two years ago. While that theory has never been substantiated, Albertsons did reveal that those five firms have extended their “lock up” agreements until September 10 (they were originally going to expire on June 30 of this year). Albertsons’ board has not set a timetable for the conclusion of the “Strategic Alternatives Review,” nor has it made any decisions related to any further actions or potential strategic alternatives at this time adding there can be no assurance that the “Review” will result in any transaction or other strategic change or outcome.
Amazon is yet another example of a retailer whose numbers remain good but a deeper look reveals that its growth has also slowed. Overall Q2 sales increased 7 percent to $121.2 billion, but the Seattle-based juggernaut posted a $2.03 billion loss, mostly attributable to its investment in EV car manufacturer Rivian. That compares to a 27 percent gain in the corresponding period last year and marks “Godzilla’s” slowest sales growth rate in more than 20 years. Of particular note was Amazon’s 4.3 percent decrease in its online business. One brighter note was a gain in physical store revenue (Whole Foods, Amazon Fresh and Amazon Go). Sales increased 12 percent in that segment to $4.72 billion for the period ended June 30. Amazon had been predicting a flat second quarter and CEO Andy Jassy did not seem displeased in his Q2 recap: “Despite continued inflationary pressures in fuel, energy and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network. We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds and adding unique benefits such as free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting Sept. 15, and releasing the highly anticipated series ‘The Lord of the Rings: The Rings of Power’ on September 2.” After that statement was released, Amazon announced that it will begin same-day delivery for retailers such as GNC, PacSun, SuperDry and Diesel in a move designed to compete with mainstream delivery organizations FedEx and UPS. The service will be available in 10 U.S. markets and is free for Prime members when they spend more than $25. Amazon noted that it plans to expand the program to other cities with additional retailers in the next few months.
The National Grocers Association (NGA) has released its annual “Independent Grocers Financial Survey” and one of the quick reveals was that indies achieved their second-best profitable results. While last year’s earnings didn’t quite reach record 2020 levels, sales far surpassed 2019 results. The survey noted that center store revenue contributed to 61 percent of total sales as shoppers prioritized food staples and continued to eat more food at home. Independent retailers also faced higher expenses as they dealt with increased labor costs and supply chain challenges. In recapping the state of the independent merchant, NGA president and CEO Greg Ferrara proclaimed that 2021 was a strong year despite the year-on-year declines. Inflation, higher costs of doing business, volume and unit declines, and prolonged marketplace volatility are expected. While 2022 is unlikely to bring the same results as 2020 and 2021, Ferrara said independents are prepared for the challenge. “For many years, independent grocers have proven to be resilient, creative and nimble,” he said. “Strongly rooted in their communities, independents are well positioned to weather the perfect storm of supply chain, inflation and labor challenges.”
It’s official: Trader Joe’s now has a unionized store. In a story that was first reported three months ago, the TJ’s unit in Hadley, MA voted to organize by a 45-31 vote as certified by the National Labor Relations Board (NLRB) earlier this month. The Central MA store will not affiliate with any larger labor organizations and will operate as Trader Joe’s United. The final step in the process is for union reps to meet with TJ’s management to iron out a contract which should occur in the next 6-8 weeks.
A tip of the hat to Dr. John Stanton and his team at the Erivan K. Haub School of Business at Saint Joseph’s University in Philadelphia for creating the university’s new department of food, pharma and healthcare. Stanton, who is the chairman of the department, noted: “The pandemic accelerated many trends in our society, from buying groceries online to tele-medicine. The department of food, pharma and healthcare is being built out to ready students for the ‘new normal’ the organizations that employ them will face by giving them the tools needed to understand the multi-faceted consumer of today and tomorrow,” said Stanton, chairman of the department. The new department offers both undergraduate programs and MBA programs in food marketing and pharmaceutical and healthcare marketing. The program also features graduate degrees in the fields of health administration and health informatics, and graduate certificates in food marketing and health informatics. Our buddy, the dynamic Dr. Joseph Di Angelo, dean of the Haub School of Business, said the new department is drawing on decades of success in the classroom and beyond to ready both students and faculty for a consumer-centric approach to teaching and research.
“Saint Joseph’s University and the Haub School have long had robust connections to the global marketplace, which provides our graduates with a proven advantage. The establishment of this new department with a focus on how and why people shop for food, medicines and healthcare services will strengthen that edge and offer more focused thought leadership,” he said. Just to clarify one point that several readers have asked – the new food, pharma and healthcare department is not part of the Academy of Food Marketing which is also housed at Saint Joe’s and has raised tens of millions of dollars for the university for 60 years.
Local Notes
Another excellent quarter from Weis Markets as the Sunbury, PA-based regional chain continues to pile up impressive sales and earnings. In Q2 which ended June 25, comp store sales increased by a healthy 6 percent excluding fuel (versus a 5.8 percent dip in Q2 of 2021). Profits were equally as strong – $36.3 million this quarter, a $2.8 million increase over last year’s Q2 earnings. “We generated strong results in the second quarter, despite ongoing inflationary pressures throughout our business operations, due to the hard work and commitment of our associates,” said Jonathan Weis, the retailer’s chairman, president and CEO. “We are also mindful of inflation’s impact on our customers and continue to promote the value of our private brands, along with the fuel and retail product savings available through our Weis Rewards program. In May, we made a multimillion-dollar investment to expand our ‘Low, Low Price’ program by lowering prices on hundreds of our best-selling brand-name and Weis quality frozen products.” In late April at its annual shareholder’s meeting, the closely-controlled merchant told stakeholders it would invest $150 million on capital projects this year. Among those projects are store remodels in Gettysburg, PA; Hawley, PA; Mifflinburg, PA and Scott Township, PA. Weis also added a Gas N’ Go fuel center at its store in Muncy, PA.
Lidl, which last month opened its first Baltimore City store (Northwood Plaza) will open a Baltimore County store on August 31 in Reisterstown, MD (a former Mars unit).
Giant Food cut the ribbon on its newest store in Silver Spring, MD – a replacement supermarket for its old and smallish unit in Calverton, MD.
We also hear that Amazon Fresh (AF) is close to signing a deal on M Street SE at the site of the old Washington Navy Yard. Parent company “Godzilla” has been very active in the DC area in the last two months, opening new AF units in Manassas and Lorton, VA in June and in Alexandria, VA (Crystal City) last month. The prospective Navy Yard unit is seeking to sell beer and wine. Amazon Fresh also opened its first New Jersey store late last month in Paramus, NJ. That 40,000 square foot unit, a former Fairway Market, had been owned by Amazon for more than a year before it finally opened.
Kudos to our friends at Boyer’s Food Markets which was awarded the top overall honor (Grand Master Marketer) at last month’s UNFI national trade show in Minneapolis. The Orwigsburg, PA-based merchant that operates 19 stores in Central PA, really understands service-focused retailing and, to Dean Walker, Anthony Gigliotti and their team, this is an honor that is much deserved.
Wegmans is getting rid of plastic bags at all seven of its Maryland stores as part of a company-wide effort to phase out single-use plastics by the end of 2022. Paper grocery bags will still be available at 5 cents per bag, with proceeds going to local food pantries.
C-store operator Wawa has agreed to pay $8 million to settle a 2019 data breach that impacted 34 million payment cards that were used in Wawa stores in Maryland, New Jersey, Delaware, Virginia, Florida and Washington, DC. Under the settlement, Wawa is now required to maintain a comprehensive information security program designed to protect consumers’ sensitive personal information; offer resources necessary to fully implement the company’s information security program; provide appropriate security awareness and privacy training to all personnel who have key responsibilities for implementation and oversight of the information security program; employ specific security safeguards with respect to logging and monitoring, access controls, file integrity monitoring, firewalls, encryption, comprehensive risk assessments, penetration testing, intrusion detection, and vendor account management; and follow the protocol of previous state data breach settlements, and undergo a post settlement information security assessment that, in part, will evaluate its implementation of the agreed upon information security program.
Walmart is looking to enter the truck stop business, kind of. The “Behemoth” is working with hospitality firm Getaway to build small general stores at travel outlets nationally. According to Axios, “The General Store by Walmart” will be only 75 square feet in size and will sell locally sourced products and seasonal items including hiking and camping gear. Walmart is calling its newest venture its first “micro-retail shopping experience.”
The Department of Justice late last month filed a civil antitrust lawsuit in the U.S. District Court for Maryland against a data consulting firm and its president, as well as three poultry processors, to end a long-running conspiracy to exchange information about wages and benefits for poultry processing plant workers and collaborate with their competitors on compensation decisions in violation of the Sherman Act. The lawsuit also alleges that two of the poultry processors violated the Packers and Stockyards Act by engaging in deceptive practices associated with the “tournament system,” which pits chicken growers against each other to determine their compensation. At the same time, the department filed proposed consent decrees with defendants Webber, Meng, Sahl and Company (WMS) and its president, G. Jonathan Meng, as well as Cargill Inc., Cargill Meat Solutions Corporation, Sanderson Farms Inc. and Wayne Farms LLC. “Through a brazen scheme to exchange wage and benefit information, these poultry processors stifled competition and harmed a generation of plant workers who face demanding and sometimes dangerous conditions to earn a living,” said principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s antitrust division. “Today’s action puts companies and individuals on notice: the antitrust division will use all of its available legal authorities to address anticompetitive conduct that harms consumers, workers, farmers and other American producers.” If approved by the court, the proposed consent decree with data consulting firm WMS would ban it from providing surveys or any other services that facilitate the sharing of competitively sensitive information in any industry. Jonathan Meng, WMS’s president, is also subject to the terms of the consent decree in his individual capacity. The proposed consent decree with defendant poultry processors Cargill, Sanderson Farms and Wayne Farms would prohibit them from sharing competitively sensitive information about poultry processing plant workers’ compensation. It would also impose on the poultry processors a court-appointed compliance monitor who, for the next decade, will ensure their compliance with the terms of the proposed decree; grant the court-appointed monitor broad authority to ensure their compliance with all federal antitrust laws as they relate to their poultry processing facilities, workers at their poultry processing plants, chicken growers, integrated poultry feed, hatcheries, transportation of poultry and poultry products, and the sale of poultry and submit regular reports on the processors’ antitrust compliance; permit the antitrust division to inspect the processors’ facilities and interview their employees to ensure compliance with the consent decree; and require the companies to commit to pay $84.8 million, collectively, in restitution for poultry processing plant workers who were harmed by the information exchange conspiracy. These terms would expire 10 years after the consent decree is approved by the court. Additionally, the proposed consent decree with Sanderson Farms and Wayne Farms would resolve alleged violations of the Packers and Stockyards Act, which prohibits, among other things, deceptive practices in poultry markets. As alleged in the complaint, poultry processors use a “tournament system” to adjust a chicken grower’s “base payment” based on how well the grower performs relative to other growers. The poultry processors, however, control nearly all the key inputs, including the chicks delivered to the growers and their poultry feed, that often determine a grower’s success. In allocating this financial risk to their chicken growers, Sanderson Farms and Wayne Farms failed to provide information that would have allowed their growers to evaluate and manage their financial risk. The proposed consent decree would prevent Sanderson Farms and Wayne Farms from penalizing chicken growers by reducing their base payments as a result of relative performance, while still allowing for incentive, bonus and other types of payments to growers; require expanded information disclosures in grower contracts, consistent with proposed transparency rules set out by the USDA; and prohibit retaliation against growers who raise antitrust concerns with the court-appointed compliance monitor or the government.The DOJ said that this lawsuit is part of a broader investigation into anticompetitive labor market abuses in the poultry processing industry. Why does it seem that the poultry and beef processors are the ones that seem to have their hands in the cookie jar more often than any other food-related industry?
Unfortunately, we have a few deaths to report this month. Moving on to the first chapter of after-life is actor Paul Sorvino, who played more than “heavies” in his 52-year career which featured 172 movie and television roles. Sorvino first made his mark on Broadway in the hit play “That Championship Season” (1972) for which he received a Tony Award nomination. He gradually shifted to film where among his best roles included Reverend Willie Williams in “Oh, God!” (1978) and in Henry Kissinger, complete with a German accent, in Oliver Stone’s “Nixon” (1995). But his most popular (and I believe best) role was as mobster Paul Cicero in Martin Scorsese’s iconic film “Goodfellas” (1990) which included the classic scene when Cicero and his fellow inmates were preparing a gourmet Italian dinner. While preparing the food, Cicero reminds Vinnie (played by Martin Scorsese’s father Charles) to not “put too many onions in the sauce” as Bobby Darin sings “Beyond the Sea” in the background. Sorvino was also well-known for starring in the first 31 episodes of the original “Law & Order” series in 1990. There’s no doubt that Paul Sorvino was a powerful and charismatic actor. But I’ve got a little different take on his persona. In about 2010, I got to work personally with the man when he was launching his own line of pasta sauces (he was one of about half dozen Italian-American celebrities who previously had created their own pasta and pasta sauce products). Through Sorvino’s food broker we created a budget to run several trade ads in both Food World and Food Trade News. There was one catch: Paul needed creative control of the ad design and copy. At the time, he was filming a movie in Italy, so we sent him about half a dozen spec ads based on what he told me he wanted us to design. Via fax, we sent him ads we’d created only to have every one of them be rejected. I finally called Paul in Italy and asked him how we could better handle this. He said that it would be best if we waited for his return to the U.S. and we could meet personally to hammer this out. A few weeks later, he invited us to his “farm” in Gilbert, PA (in the Poconos) to meet in person and work out the details. I brought along Terri Maloney, our editor, and Matt Danielson, a graphic designer we work with on pre-print layout and design. More than three hours later we arrived at a place that only a blind person would call a farm – it was an animal rescue domicile where Sorvino’s daughter Amanda lived and the backyard was clearly a place where you wouldn’t want to walk around in ripple-soled shoes. As we entered the house, we weren’t even offered a cup of coffee or glass of water – Sorvino was much more interested in telling us about his great culinary acumen…his terrific operatic voice…his talent as a sculptor…and his advertising skills – he claimed to have worked in a big New York ad agency and could have been CEO if he didn’t continue with his acting career. I knew it was going to be a long day when Sorvino asked Matt Danielson how many fonts he had loaded onto his MacAir laptop. “About 11,000,” the graphic artist replied. “Well, that ought to be enough,” Sorvino countered. Four hours later, we finally banged out about six ads. All with Sorvino lending his “expertise” to the final product. Needless to say, within a couple of years Paul Sorvino pasta sauce products went the same way as most other celebrities who traveled down the same road (Paul Newman being the notable exception). As an actor, Paul Sorvino was a standout, but now that’s he’s passed, do you think his last wish was to die in his own arms?
From the legion of sports, we report the passing of two men who could truly be considered GOATs (Greatest Of All Time) in their respective fields. Vin Scully, arguably the greatest baseball announcer ever, passed away earlier this month at the age of 94. He was hired fresh out of Fordham University in 1950 to assist another redhead (“Red” Barber) in the Brooklyn Dodgers radio booth. And for the next 66 years, Scully remained with the Dodgers, moving with the team when they relocated to Los Angeles in 1958 to not only become the voice of the franchise but in many ways the face of the team as well. Scully’s sparse broadcasting style and his uncanny ability to insert nuggets of baseball or team history into his storytelling made him vastly different from almost all of his peers. For many years, he worked solo – with no color analyst – and for several years the Dodgers simulcasted his broadcasts for both radio and TV. Among his great calls, one stands out to me – the breaking of Babe Ruth’s all-time home run record (at the time) by Hank Aaron in 1974. “To the fence. It is gone.” Scully then paused for what seemed like five minutes, letting the cheers from the crowd capture the moment, before returning to say: “What a marvelous moment for baseball. What a marvelous moment for baseball and the State of Georgia. What a marvelous moment for the country and the world. A Black man is getting a standing ovation in the Deep South for breaking a record of an all-time baseball idol.”
And then there’s Bill Russell, who certainly wasn’t the most skilled basketball player of all-time but arguably was the greatest team leader in sports history. In his 14-year career as a Boston Celtic, Russell’s teams won 11 NBA championships, the last two as player-coach. Prior to that he played for the University of San Francisco, which during Russell’s tenure won 55 consecutive games en route to two NCAA titles. And while Russell favored team play over individual statistics, he was the greatest shot blocker of his day and during his career averaged an amazing 22.5 rebound per game. But Bill Russell was more than just a great basketball player. He was an inspiring leader who spent much of his career and post-basketball time fighting for social justice, particularly in the area of racial issues, which he personally felt the sting of growing up in Monroe, LA and during his days in Boston which he termed a “flea market of racism.” He took part in the 1963 March on Washington, went to Mississippi to open a basketball camp in Jackson after civil rights activist Medgar Evans was murdered and was one of the first athletes to support Muhammad Ali when he refused armed forces induction during the Vietnam War. Bill Russell, a man who often seemed larger than life, was 88 when he left us.