Some major changes at Save A Lot, the St. Ann, MO-based franchised discount retailer that can’t seem to get out of its own way. In February 2022, the company that began as Moran Foods in St. Louis more than 40 years ago hired Leon Bergmann, the former C&S and Supervalu executive, to become its newest CEO. Leon had the right toolbox to do the job, but the decisions made by former CEO Kenneth McGrath (who amazingly now serves as the top dog at rival Lidl) has really led to downfall of a company that once showed so much promise. In the end, the haste of finalizing a plan for shifting from a combination corporate-store and licensee ownership to a fully franchised operation, paired with the challenging financial constraints from SAL’s board, proved too much to overcome and Bergmann exited on Halloween (of all days).
Here’s how SAL chairman Mike Motz delivered the message to the company’s independent owners:
I want to let you know about an important change in the leadership team. Leon Bergmann has decided to step away from his role as CEO, following a personal decision to relocate back to California and spend more time with family.
On behalf of the Board, I thank Leon for his service and dedication to the Company. We wish him well in his future endeavors.
As we initiate a search for a new CEO, Fred Boehler, current Board Member & Compensation Committee Chair, will serve as our interim CEO. Fred has served as a Save A Lot Board Member since July 2021. He is a seasoned supply chain executive with more than 30 years of experience across multiple retail and wholesale format businesses, spanning both large- and small-scale companies in a wide range of growth phases. Fred has worked in supply chain at Americold Logistics, Supervalu, Borders and Newell Rubbermaid. Prior to joining the Save A Lot Board of Directors, Fred served as the CEO of Americold Logistics, which he took public in January 2018.
I assure you that we do not anticipate a disruption to the business. We will continue to execute against our strategy of positioning Save A Lot as a world-class wholesaler, providing unmatched quality and value to local families and proudly serving our Retail Partners. We have excellent depth across our leadership team and are confident in our plans to win the holidays. In the coming weeks we will begin working to identify the next CEO, which we look forward to updating you on in due course.
Warm Regards,
Michael Motz
Chairman of the Board
I’m certain “warm” is not how the licensees felt after receiving this message from a person the majority of owners have never met. I’m betting most of them have never met Fred Boehler, either – that’s how “engaged” these leaders are. The problems extend far beyond poor relationships with the licensees. In their rush to convert the company to a wholesale and marketing organization SAL recruited a bunch of unqualified retailers to run some of the formerly corporately-owned stores. Even existing SAL operators have struggled when acquiring multiple stores in markets far from their existing store bases.
And then there’s Yellow Banana, one of the new “finds” in SAL’s lottery to discover owners to run some of its previous corporate stores. Yellow Banana acquired 38 former corporate SAL stores in Chicago, Milwaukee, Cleveland, Jacksonville and Dallas, in a so-called effort to serve communities in many food desert locations. They also reportedly received financial incentives from Save A Lot and received municipal financial aid to fund their efforts.
Now we’re hearing they’re in major trouble, with SAL essentially taking over many of the stores’ corporate functions. We’re also hearing that the total number of Save A Lot stores nationally is down to 803– in 2018 the company either owned or licensed more than 1,200 discount units. To say the future doesn’t look bright would be a huge understatement. No chief executive could withstand the type of pressure that Bergmann faced in his 21 months on the job. So what’s Save a Lot’s recovery strategy? I’m not sure they even have a clue!
‘Round The Trade
Another company that can’t seem to get out of its way these days is UNFI. The Providence-based wholesaler (which also operates about 130 Cub and Shoppers stores), which posted horrific numbers in its past two quarters (and projects a loss for next year), has hired Andre Persaud to serve as president and CEO of its aforementioned retail division, He will report directly to UNFI overall chief executive Sandy Douglas. Douglas may be underperforming in the role for which he was hired in July 2021, but he’s not the only problem. The company has lost its soul – as a warehousing and logistics company it is mediocre at best, as an orchestrator of private label programs (and pricing), it is slipping, and as counselor to independent retailers it is failing.
On November 3, Walmart officially unveiled the remodeling of 117 of its stores (mostly SuperCenters), a two-year project into which the “Behemoth” invested more than $500 million. The rollout is part of an ongoing $9 billion investment to refurbish its physical units that will impact 1,400 U.S. stores. Upgrades include expanded grab-and-go offerings, improved fixtures with LED lighting, new digital touchpoints in its stores to communicate product through QR codes, new store interiors and exteriors, new signage, more shopping carts, and enhanced online grocery pickup and delivery areas. Additionally, Walmart is expanding its pharmacies with private screening rooms for pharmacist consultations and services and upgraded vision centers with eyewear choices, the company noted.
A change at the top of Costco is slated for January 1, when Ron Vachris will become the club store powerhouse’s new CEO, replacing the immensely talented Craig Jelinek , who is retiring after a stellar 11-year run (Jelinek himself replaced another icon when he took the helm from Jim Sinegal in 2012). The succession plan has long been part of the Issaquah, WA club operator’s strategy. Vachris, a 40-year Costco veteran who began his career as a forklift driver, was named president and COO 18 months ago for the company which last year accrued annual sales of $242 billion.
I’ll close this part of my column by addressing a multitude of news about Amazon. First the good news: the company’s recently completed Q3 was a very strong one. Earnings increased from $2.9 billion in the third quarter of last year to $9.9 billion this year. Net sales also boomed, rising 13 percent to $143.1 billion while its growing advertising business increased revenue by 26 percent to $12 billion.
More good news (at least from “Godzilla’s” perspective): it will begin opening new Amazon Fresh (AF) grocery stores again next year, after a “pause” earlier this year. The company said it has already redesigned five of its existing stores and, according to Claire Peters, Amazon Fresh’s worldwide VP, “we will have a good pipeline for next year. What we won’t do is open stores aimlessly,” she told Bloomberg. Aimlessness is not the reason AF failed in its first effort. Its locations were almost always in demographically favorable areas, but its execution sucked. I’m skeptical that reflecting on its problems and developing a new game plan can improve in-store execution. Good retailers that attract new and loyal customers have a mojo that encompasses marketing savvy, dedicated employees who collectively create a strong culture, and a certain human touch that makes them credible and attractive. I’m not sure Amazon Fresh has enough of any of these components to become a game changer. And one more thing: I wonder how many stores in this “pipeline” are already built (or nearly built) and will open because of the reality or threat of landlord litigation?
And then there’s the bad news – in newly unsealed parts of the FTC’s lawsuit against Amazon it was revealed that “Godzilla” reportedly destroyed two years of communications the FTC had requested as part of its antitrust investigation into the company. Specifically, the Federal agency has alleged that Amazon executives knowingly deployed practices that would avoid a perfectly competitive market or changed tactics when it realized Amazon could lose its competitive advantage. The FTC also charged that the world’s largest online seller of goods switched course on an algorithm that raised prices for consumers during periods of “heightened outside scrutiny.” Amazon, as it has done from the outset, has disputed the FTC’s claims. While the Kroger-Albertsons merger remains the top news story in food retailing, this lawsuit is really FTC chairwoman Lina Khan’s “Gunfight at the O.K. Corral.”
Local Notes
Just before presstime, we learned that Ahold Delhaize USA (ADUSA) plans to sell its FreshDirect online perishables delivery business to Getir, an Istanbul, Turkey-based ultrafast grocery delivery service which operates in several key U.S. markets (New York, Chicago, Boston) as well as in the UK, Germany, The Netherlands and in its home country. It was founded in 2015. ADUSA acquired Fresh Direct, founded in 2002, from private equity investors in January 2021. Ahold Delhaize USA said it made the decision to sell the FreshDirect business to focus investments in its omnichannel businesses.
“This was a difficult decision, especially given FreshDirect’s rich history in the New York City area,” said JJ Fleeman, CEO, Ahold Delhaize USA. “However, our strength as a grocery retailer in the U.S. is the true omnichannel experience – a combination of online and in-store – where we have leading brands and market share, strong store density and online presence, and a deep heritage of customer loyalty and relationships. With this decision, we will increase our focus on omnichannel – our biggest growth opportunity. We are proud of the positive impact FreshDirect has had in the online grocery space, raising the bar in offering the best in-season selection of locally sourced goods,” added Fleeman. “In the coming weeks, we are committed to supporting a smooth transition for FreshDirect’s valued employees, customers, partners and communities, who have been loyal to the brand over the past 20 years, so that FreshDirect will be well positioned to continue as an integral part of New York’s food culture under Getir’s ownership.”
Headquartered in the Bronx and serving the greater New York tri-state area, FreshDirect currently employs approximately 3,200 associates. It’s curious to me that a company that considers digital to be such an important component of its omnichannel experience has closed two large fulfillment centers in the past five months (Jersey City, NJ and Hanover, MD) and now is selling an asset that, less than three years ago, was considered a building block in the retailer’s growth strategy. Just sayin.’
In more positive ADUSA news, one of the best speeches I’ve heard over the past 25 years came from John Ruane, president of The Giant Company (TGC), earlier this month at a trade dinner hosted by the Mid-Atlantic Food Trade Organization (MAFTO) at the Valley Forge (PA) Sheraton. Ruane, who began his working in the biz at age 14 at Hy Shulman’s Foodtown store in Caldwell, NJ, reflected on both his career and that 100th anniversary of the Carlisle, PA merchant. Speaking to a packed house of more than 200 suppliers, brokers, distributors and TGC associates, Ruane delivered a talk that was inspirational, instructive and heartwarming and was delivered in John’s typical self-deprecating style. Much of his speech was devoted to TGC’s ongoing 100th anniversary and how important the human element remains. His remarks also underscored the power of partnership with the supplier community and expressed gratitude to the room. He touted the retailer’s core values of having the best products at the fairest prices coupled with a strong dedication to community relationships which were developed by founder David Javitch in 1923. “Those values remain the same today,” he noted, especially emphasizing the importance of the company’s commitment to reducing food insecurity, improving children’s health and overall priority of “giving back.” He stressed the importance of entrepreneurial leadership both from himself and the company’s associates.
Ruane, who first joined Ahold USA (Stop & Shop) in 2011, acknowledged that the business is more challenging and sophisticated today, but affirmed that “it’s our job to figure it out and make it work.” In closing, he offered his “top tips,” gleaned from a career that’s spanned nearly 50 years. Among the highlights: “Great leaders provide clarity of purpose.” The room also reflected on his advice to choose wisely when Ruane stated, “In a world of limits, every choice you make precludes another.” Good stuff delivered with good vibes!
Recent new store openings to note include Foxtrot’s hybrid convenience store in Logan Circle (1341 14th Street NW) in Washington, DC. It is the Chicago-based startup’s sixth unit in the District.
Also debuting this month was another Grocery Outlet (GO) on Ritchie Highway in Glen Burnie, MD. After a four-year lull in its once-vaunted Mid-Atlantic expansion, activity by the Emeryville, CA franchisor has really picked up over the past year. It recently opened stores in Catonsville, MD and Edgewood, MD and before year’s end will cut the ribbon on new discount stores in Eldersburg, MD, Owings Mill, MD and Rio Grande, NJ. Additional new units are slated for Milford Mill and Overlea, both in Baltimore County.
I attended the NGA executive conference held late last month in Washington, DC and heard some of the industry’s best minds discuss the state of the independent grocer as well as the future of marketing, technology, consumer demand, talent, center store, fresh, AI, HBC/GM, front end, traceability, deli/dairy bakery, emerging brands, relationships, food and payments, grocery distribution, and retail leadership. NGA CEO Greg Ferrara continues to do an excellent job in keeping independent retailers informed on key industry issues and legislative initiatives.
I was especially happy to see Mike Stigers and Bob Richardson recognized for their many years of achievement and service to the industry. Stigers, now president of Wakefern, was presented with NGA’s Thomas F. Wenning Pinnacle PAC Award, given to NGA members who help advance the role and presence of independent grocers and NGA in government and political affairs. The award was established in 2014 to honor Tom Wenning, retired NGA executive vice president and general counsel, for his years of service to the association and the independent grocery industry. Richardson, who has been Clorox’s director of trade and industry relations for many years, was bestowed with the NGA Industry Service Award, which is given to an individual or company whose years of service in the food industry have contributed to better working relations and understanding between retailers, wholesalers and manufacturers. Mike and Bob are two of the best in our business!
We have two obits to report this month both from the world of sports, to report over the past month. Former baseball slugger Frank Howard, 87, has passed away. The “Capital Punisher” was one of the most power hitters of his era (he played from 1958 to 1973). At 6’7” and 270 pounds (think Aaron Judge in a time when all baseball players were smaller). His genial approach to his job made him a beloved teammate and a player admired and respected by his rivals. While he played for four teams during his 16-year career, Howard was best known from his seven-year stint with the Washington Senators (now the Texas Rangers) where he belted 237 of his 382 career home runs. In 1969 alone, Howard hit 48 homers, drove in 111 runs, walked 102 times and hit for a .296 average.
I’d run into Howard, who lived in Aldie, VA (Loudoun County) at several events in the ‘80s and 90s and found him to be very approachable and down-to-earth. But my one indelible Frank Howard memory goes back to October 1963 when my dad took me to my first World Series game at Yankee Stadium. The Dodgers met the Bronx Bombers in the Fall Classic and I was there for game one, sitting with my father about 30 rows behind home plate to see two Hall of Fame greats, with Sandy Koufax facing Whitey Ford. In the top of the second inning, Howard hit a screaming line drive that…well I’ll let former Yankees shortstop Tony Kubek explain what happened: “Howard hit a line drive just over my head. I jumped for it and missed it by maybe a foot or two. There was a speaker in left-center field, 457 feet away. The ball kept rising and hit the speaker and bounced back like a bullet. I don’t think it went higher than 10-12 feet.” Kubek’s description is exactly how I remembered it, too. To this day, I’ve never seen a ball hit harder.
Bob Knight, the legendary college basketball coach, known as much for his tempestuousness as his coaching genius, has also left us at age 83. Before Knight achieved coaching greatness first at Army, then Indiana and finally at Texas Tech, the 6’4” Ohio native was first a basketball player and played for Ohio State’s 1960 NCAA championship team. Knight served more as role player to the team’s three stars – Jerry Lucas, John Havlicek and Larry Siegfried, all of whom would go on to have stellar NBA careers. After becoming the youngest head coach in Division 1 history, at Army, where he led scrappy, undermanned teams to a 102-50 record during his six-year tenure at West Point (Mike Krzyzewski, the legendary former Duke coach played for Knight). In 1971, he was named head coach at Indiana University, where he sought to turn around a moribund program in a basketball-mad state. It didn’t take long for the change to happen. In his 29-year career coaching in Bloomington, Knight’s coaching record was 662-239 and included three NCAA championships, including in 1976, when his team went 32-0, the last time a national champion posted a perfect record. But as the years went on, Knight’s bitterness toward many things – the media, the school’s administration and referees – grew, reaching a boiling point in 1985, when after he was assessed a technical foul for berating the officials, he hurled a chair onto the court that ended up hitting a row of spectators. Knight’s irate attitude continued over the years, but in 1997 it reached the boiling point again in a video that showed him choking one of his players in practice. The video didn’t surface until two years later and led to his firing. He emerged as a head coach again in 2001 leading another perennially bad basketball program, Texas Tech, to a level of success they previously hadn’t achieved in many years. Bob Knight was a complicated, brilliant man who let his emotions control his behavior for many years, ultimately to his detriment. There’s a lesson to be learned here. If you want to go deeper into the mid of Knight, read one of the best sports books ever written, John Feinstein’s “A Season on the Brink,” which included this bit of prose: “His good qualities are so good. His bad qualities are so bad. If I had a dollar for every time someone told me a story about encountering Knight and finding him gracious and charming and funny, I would never have to work another day in my life. If I also had a dollar for every time I’ve been told a story about Knight being a bully or being rude and obnoxious, I’d be Bill Gates.”