More than 1,400 retailers, suppliers and industry executives converged on chilly but beautiful Marco Island, FL last month to attend FMI’s annual Midwinter Conference and if you liked tech talk, you were right at home.
Clearly, the record attendance indicated that the grocery industry is at an inflection point where the application of new technology, particularly the deployment of Artificial Intelligence (AI), has never been more important.
On a more visceral level, more than a dozen senior retail executives told us that the Strategic Executive Exchange Meetings were the most productive since 2019.
“Simply said,” noted one president of a regional Northeast chain, “the large CPGs have decided to start promoting again. I guess many of them were getting tired of showing quarter-after-quarter declining unit sales, despite profitable bottom lines. With the economy still somewhat uncertain and inflation flattening, they’ve needed to open their wallets for more than a year. Our sessions with many vendors this year have proven they’re willing to restart spending on their brands.”
But back to AI. There were no fewer than five breakout sessions and an additional three “tech exchange” meetings devoted to the subject. While I didn’t attend all these confabs, I did find Mark Rousset and Randall Sargent’s “Generative AI in the Grocery Industry” talk to be very informative. The two Oliver Wyman partners demonstrated real-world applications of generative AI in food distribution, focusing on inventory management and ultimately improving the shopping experience. In fact, the utilization of distribution efficiency is already an impactful biproduct of AI.
On a totally different topic, Martin Otto, retired COO of H-E-B, delivered a dynamic and thought-provoking overview about the state of our health and the healthcare system that supports it. The combination of a healthcare infrastructure that refuses to address the greed of drug companies and insurance firms combined with a worsening public health crisis related to diet and obesity has created a system which is doomed to fail soon. Otto called for an overhaul of a system that is badly broken and stressed the urgency for Americans to change their eating habits and reduce the burden of chronic disease.
Of all the sessions I attended, my favorite was “Navigating the New Economic Model,” hosted by FMI’s Andy Harig and featuring Dr. Leo Feler, chief economist at Numerator and a senior economist and professor at the UCLA Anderson School of Management, and John Ruane, president of The Giant Company. With the retail food industry feeling the headwinds of reduced consumer spending and the reduction of COVID-related SNAP benefits during the past nine months, Feler remained optimistic that eating at home will remain stable and that retail food will bounce back if the economy continues to show signs of improvement. Ruane was more cautious, noting that the large economic hole that has been left by SNAP benefit decreases and the 25 percent food inflation rate that’s impacted grocery spending over the past three years are big hurdles to overcome. Still, the veteran supermarket executive noted that by early April, the hit from SNAP will have cycled through and that he’s learned that more than ever, consumers seek value. As president of one of the largest regional chains in the country, creating opportunities that focus on items that are value-driven has become increasingly important.
“Supply chains are almost normal now, eating from home is good and we’re seeing our major suppliers once again begin to promote their key items. Additionally, we’re seeing more digital engagement from our customers.” Ruane remains concerned about growing credit card ($1.1 trillion) and student loan debt ($1.7 trillion) and the cost of building new stores, which he claims has risen approximately 50 percent over the past four years.
Seven Months In, President Stigers Puts His Imprint On Remaking Wakefern Leadership
Mike Stigers has had enough time to observe the daily grind, meet the member/owners and assess the culture of the largest wholesale grocery co-op in the U.S. So, it wasn’t surprising that the first “outside” day-to-day leader at Wakefern would be making some changes.
However, few would have predicted that his new alignment would include the departure of three key senior executives – Bryant Harris, chief merchant; Steve Henig, chief customer officer; and Bill Mayo, chief administrative office, the latter two with more than 60 years of experience at the Keasbey, NJ-based juggernaut.
However, a review of what’s happened over the past eight years would reveal that Wakefern has been restructuring itself to some degree since when the now departed (in 2022) Chris Lane was promoted to executive VP in 2016. One of his tasks was to find and help develop the next generation of Wakefern leaders, both internally and with the co-op’s member/owner base.
Indeed, Lane did make some hard decisions involving personnel, but the truth be known, between retirements, the need to bring in outside talent and more quickly develop younger middle managers with potential, was a necessity. Unfortunately for Lane, despite his intelligence and leadership ability, sometimes being “The Turk” can be dangerous.
Stigers role is similar. When iconic president Joe Sheridan retired after 48 years with the organization, Mike Stigers, came aboard in June 2023, bringing with him a new leadership perspective to a company whose retailers amassed $19.6 billion in sales last year.
Perhaps the first clue came in August when he brought in John Jantson as interim chief information officer, replacing the popular Cheryl Williams, who was with Wakefern for 22 years. Jantson and Stigers worked together at Supervalu and UNFI for three years.
A week after Harris, Henig and Mayo exited, Wakefern announced that industry veteran Darren Caudill would be joining Wakefern in the newly created position of chief sales officer. Like Jantson, Caudill and Stigers worked together at Supervalu and UNFI for a decade, most recently at its Minnesota-based Cub Foods unit, where Stigers was chief executive and Caudill was senior VP-sales, merchandising and marketing. Prior to his stint at Supervalu/UNFI, Caudill spent more than 30 years with Kroger.
In talking to about a dozen sources including Wakefern associates, member/owners and vendors, most mentioned that Wakefern internally functioned with too many silos, a system that made it harder to create cohesion and maximize communication among team members. “As the entire grocery business has become more complex, it seemed that many people operated in their own lanes. I’ve been calling on Wakefern for more than 30 years and there’s much more of a bureaucracy than there ever was,” said a New Jersey-based vendor.
By essentially combining the sales and marketing jobs, Wakefern will have streamlined its organization process. Still, having one person oversee both roles is a mighty tall task for anyone, let alone someone who has never left the Midwest and is described by several vendors who’ve called on Caudill as having “old school values with a tireless work ethic.”
And perhaps that’s exactly the type of person Mike Stigers was looking for.
‘Round The Trade
Late last month, Walmart announced a 3-for-1 stock split, its first since 1999. The Bentonville, AR-based mega-merchant said all current shareholders will receive two additional shares for each share held. Those new shares will be issued on February 26. That will bring the number of outstanding shares to 8.1 billion. In a statement, CEO Doug McMillon said, “Sam Walton believed it was important to keep our share price in a range where purchasing whole shares, rather than fractions, was accessible to all of our associates. Given our growth and our plans for the future, we felt it was a good time to split the stock and encourage our associates to participate in the years to come.” The move comes less than a week after the “Behemoth” said it would offer its more than 4,700 U.S. store managers annual stock grants beginning in April. The grants, which could be as high as $20,000 worth of Walmart’s stock (trading at approximately $166 per share pre-split, an increase of about 43 percent over the last five years), come on the heels of an annual wage increase for the company’s top store executives from $117,000 annually to $128,000 beginning February 1.
At Target, Mike Fiddelke, who has served the Minneapolis mass merchant for the past four years as CFO, has been named its new COO and will report directly to chief executive Brian Cornell. In his new role, Fiddelke will supervise the chain’s nearly 2,000 stores, its global supply chain network, fulfillment services, network capacity planning, enterprise operations, building and remodeling teams and flight services. He first joined Tar-Jay in 2003.
Cencosud S.A., the Chilean-based grocery chain which controls a majority stake in The Fresh Market, has named Rodrigo Larrain Kaplan as its next CEO, effective March 1. Kaplan has worked in various senior management roles at Cencosud for the past decade. Cencosud has big plans for The Fresh Market, with plans to add 22 new stores to the Greensboro, NC-based specialty merchant’s store base by 2025. It currently operates 160 units in 22 states.
Getir, which last month consummated its purchase of FreshDirect from Ahold Delhaize USA, has named the top two executives to lead its U.S. efforts. The Turkish-based ultra-fast grocery delivery service has named company veteran Hatice Evren as its U.S. Group chief executive and Sloan Eddleston as CEO of FreshDirect. In her new role as U.S. Group CEO, Getir and FreshDirect, Evren will oversee cross-channel development and creating synergies between the two U.S. companies, while leveraging her experience at Getir’s headquarters. Evren was previously the chief of global business functions for Getir and has been with the company since 2019. Eddleston, a former Walmart executive, will focus on improving customer value propositions and passion for forming high-performing teams will enable him to build upon FreshDirect’s strong foundations and pioneering position in digital grocery delivery, driving growth and profitability for the business, the company noted. Eddleston also worked for Wonder, Marc Lore’s startup where he served as chief marketplace, strategy and growth officer.
The Aldi acquisition of Southeastern Grocers (SEG) is one step closer to the finish line as SEG announced it has completed the sale of 28 Fresco y Mas (and four pharmacies) ethnic supermarkets to the Fresco Retail Group, an independent Hispanic retailer based in Coral Gables, FL which operates other ethnic and specialty stores in South Florida. The completion of the larger part of the deal – selling about 400 Winn-Dixie stores to the German discount operator – is expected this summer.
Springfield, MA-based regional chain Big Y announced that will open three supermarkets that were originally slated to become Amazon Fresh units before “Godzilla” elected to pull the plug on building any more new units of its failed business model. Those three stores, located in Brookfield, CT, Westport, CT and Westborough, MA, were almost ready for completion before all construction on future Amazon Fresh stores was halted in February 2023. Big Y also plans to open new stores in Middletown, CT and Uxbridge, MA.
Local Notes
New store of the month is the Giant Food replacement store on Westbard Avenue in Bethesda, MD. The 65,000 square foot unit is located on the third floor (the first two floors are for parking) and is adjacent to one of the company’s historically best stores for more than 50 years. Included in the new store are dedicated areas for Ben’s Chili Bowl and Ledo Pizza as well as a pharmacy, something the old store never had. I can remember walking the original store with Izzy Cohen and Al Dobbin in the late 1970s when that smallish supermarket was doing an amazing (for the time) $800K per week and was always packed. The new store offers all the amenities and services that other recent new Giant units feature plus a demographic that’s off the charts.
There’s news from Giant Food’s sister ADUSA brand, The Giant Company (TGC). Parag Shah, VP-omnichannel merchandising/center store, left the Carlisle, PA-based regional chain last month in a surprise announcement. Shah, who spent nearly 22 years at Wakefern before joining TGC in early 2022 said on his LinkedIn page on January 12, “Today signifies the conclusion of my enriching two-year tenure at The Giant Company. This period has been marked by remarkable accomplishments, acquiring new business insights, elevating customer value, and fostering priceless relationships…as I bid farewell to The Giant Company, I am embarking on a period of reflection and rejuvenation. I remain steadfast in my commitment to enhance the omni-channel experience for our customers, and I am eager to unveil the upcoming phases of my professional journey.” At presstime, no interim replacement has been named to fill that important retail position.
A tip of the hat to two of the best people in our business. Frank Curci, CEO of Northeast Grocery Inc. (NGI – whose stores trade as Tops Markets and Price Chopper/Market 32), will be retiring on February 26 to be replaced by his right-hand man John Persons, the highly skilled grocery executive who is currently NGI’s chief operating officer. Curci has been associated with Tops for nearly 30 years, first under the ownership of Ahold USA, and later as CEO when Morgan Stanley Private Equity acquired the regional chain from Ahold in 2007. Six years later, Curci led an investment group to acquire the Buffalo-area merchant from Morgan Stanley. In 2021, Curci was a key force in combining Tops and Price Chopper/Market 32 to form NGI. A financial executive by training, Curci remains one of the sharpest minds in the industry, and someone who also happens to be one of the real good guys in the biz. As for John Persons, who began his career as a cashier at Tops, he’s worked at virtually every job in food retail – operations, sales, merchandising, marketing, real estate, IT and strategy.
“I’m delighted that John has been chosen to succeed me. He has been instrumental in our merger success to date, providing the necessary leadership over these past few years to position NGI for success. While John’s strategic mindset is poised to lead our multifaceted business day to day, he also possesses great vision for our path forward,” said Curci. Well said!
UNFI will utilize a Symbotic-powered AI-powered robotic automation system (a company owned by C&S chairman Rick Cohen) in its new 1.3 billion square foot Manchester, PA, distribution center, which is expected to open this summer. The Symbotic system will be the second such addition for UNFI and is part of UNFI’s previously stated goal of further enhancing the effectiveness and efficiency of its distribution center network. The first AI automation system is currently being deployed at UNFI’s Centralia, WA DC which should go “live” in the next few months. Among the benefits UNFI expects to see with the system are the ability to increase capacity within its facilities and lower overall costs to fulfill orders. The beleaguered wholesaler, which has posted horrible financials during its last three operating quarters, is banking on technology to help turn its fortunes around.
We have a few obituaries to report this month, including Dominic “Tom” Genuardi Sr., one of five Genuardi brothers who helped shaped the legacy of one of the best regional supermarket chains in the country before it was sold to Safeway in 2000. Being around Tom was such a pleasure – he never liked talking about himself and always treated other people as if they were far more important than he was. Always handy with a joke or a hilarious story, Tom Sr. was truly one of the men whose industry instincts and incredible people skills impacted many people who today are industry cornerstones in the Delaware Valley. Tom Genuardi Sr. was 100 when he peacefully passed away late last month.
Also leaving us was Melanie, the husky-voiced pop/folk singer of the late 60s/early 70s who wrote and recorded such hits as “Lay Down (Candles in the Rain);” and “Brand New Key.” Born Melanie Safka in Astoria, Queens, her family moved to Long Branch, NJ when as a teenager she began performing at coffee houses and clubs in New York City. Within months, she signed a record deal with Columbia. Melanie was also one of two women (Joan Baez was the other) to perform solo during Woodstock in 1970. Melanie was 76 when she died.
And finally, one of the most underrated film directors of the past 60 years has also passed away. Norman Jewison, 97, who directed three Academy Award nominated films – “In the Heat of the Night” (1967) – which won the Oscar for best picture, “Fiddler on the Roof” (1971) and Moonstruck” (1987). Born in Toronto, Jewison learned his craft by working in television for the Canadian Broadcasting Company and the British Broadcasting Company. His first American film was “40 Pounds of Trouble” (1962), a forgettable comedy starring Tony Curtis. However, as Jewison found better scripts, he honed his directorial skills to direct such underrated films as “The Cincinnati Kid” (1965), The Russians Are Coming, the Russians Are Coming” (1966) and the original “Thomas Crown Affair” (1978). One of his best efforts can be seen in 1984’s “A Soldier’s Story,” an adaptation of Charles Fuller’s Pulitzer Prize-winning play about a murder investigation on an Army base in World War II-era Louisiana. Great stuff by an unsung master.