Ahold Delhaize USA Team In Place For Jan. 1 Rollout
Combining the leadership of Ahold USA and Delhaize America into one job with (not surprisingly) Kevin Holt named to lead all U.S. operations for Ahold Delhaize (AD), the new domestic team is virtually complete and ready to roll into action on January 1.
Just prior to the Holt promotion was the completion of the big merchant’s “Wave C” job assignments affecting associates in IT, legal, people systems and services, finance, supply chain and communications.
The new structure places priorities on its brands (banners) and on its Retail Business Services (RBS) unit, which was created earlier this year to oversee administrative functions. Those who made the cut in “Wave C” will be part of RBS. At the brand level, “Wave C” focused on human resources, finance, fresh formats and quality assurance.
According to Ahold Delhaize USA, the completion on “Wave C” marks a significant milestone in the transition of its U.S. companies. The big retailer emphasized that the final “wave” of its restructuring “was all about supporting the brands with the right expertise and the right structure.”
In an internal memo, AD stated that in 2017, “we have been focused on staffing and selecting for more than 5,000 total positions through the various staffing waves, an accomplishment that was made possible by contributions of associates in every function.”
Here’s the “Wave C” key personnel lineup (VPs and higher): at Giant Food in Landover, Robin Anderson has been named VP- human resources and labor relations and Anthony Matala is VP-finance.
At Giant/Martin’s, Julie Morales will serve as VP-finance; Manuel Haro is the division’s new VP-strategy and planning; and Jim Saccary is VP-human resources.
At Stop & Shop, the largest AD U.S. brand based in Quincy, MA, Maria Silvestri, SVP, will head up human resources. Reporting to her will be Tara Fallon, VP- talent, diversity/inclusion and organization development, and Bob Spinella, VP-labor relations. Derk-Jan Terhorst, is Stop & Shop’s SVP-finance and Sonja Boelhouwer will serve as that brand’s VP-strategy.
At its Food Lion unit, based in Salisbury, NC, Linda Johnson has been named SVP-human resources. Reporting to her will be Millette Granville, VP- talent, diversity/inclusion and organization development. Jason Wilson will serve as SVP-finance.
At Hannaford, based in Scarborough, ME, Margo Peffer has been appointed VP-human resources and Tom Kelly will serve as VP-finance.
The biggest grouping of professional services executives will work at the retailer’s RBS unit, which will be based in Quincy, but have management operating from other brand locations, too. Roger Wheeler was appointed to president of RBS earlier this year and his key executive team includes: Kathy Russello, EVP-people systems & services; Paul Scorza, EVP and CIO; JJ Freeman, EVP-commercial services & strategy; Chris Lewis, EVP-supply chain; Tim Mahoney SVP-real estate & store development; Nancy Nicoll, VP-not for resale (NFR); and Christy Phillips-Brown, VP-communications.
Reporting to Russello will be: Bob Eicholtz, VP-human resources systems and services; Cathy Edwards, VP-learning talent services; Adrienne Heil, VP-human resources for RBS supply chain services; Janet McGorty, VP-total rewards; and David White, VP-human resources for RBS.
Reporting to Scorza in IT will be: Edward Carreira, VP-COO; Odile Ducatez, VP-architecture, strategy & data; Howard Miller, VP-solutions development (engagement); Subodh Mishra, VP- solutions development (transactional); Katherine Phillips, VP-infrastructure; Joseph Sheldon, VP-service delivery & store technology; and Brian Theise, VP-solutions development (mobile, web & innovation).
Reporting to Lewis in supply chain will be: Lee Nicholson, VP-supply chain strategy; John Patriquin, SVP-supply chain operations; Timothy Rohrbaugh, VP-logistics; and Andre Shaw, SVP-demand. Reporting to Patriquin will be Louis DeLorenzo, SVP-supply chain operations
Reporting to Shaw will be Brian Aubertine, VP-demand planning group.
In real estate, reporting to Mahoney will be: John Hernon, VP-asset management & leasing; Michael MacKnight, VP-store development; Susan Sollenberger, VP-maintenance; and Gary Stutz, VP-real estate.
In finance, Greg Amoroso, CFO, will operate within Ahold Delhaize USA. Reporting to him will be: Kimberly Lechner, SVP-accounting & business services; Mike Miller, VP-RBS financial planning & analysis; David Hilse, VP-portfolio strategy; Arjan de Ruiter, VP-financial planning & analysis. Reporting to Lechner will be Kristina Rota, VP-corporate accounting and reporting.
Linn Evans will serve as chief legal officer of Ahold Delhaize USA and Kim Lyda, SVP-legal services will report to Evans. Reporting to Lyda will be: Libby Christman, VP-risk management & safety; Gail Goolkasian, VP-employment labor and benefit laws; Larry Kohl, VP-quality assurance; Dawn Perry, VP-business and regulatory law; Dyana Tull, VP-litigation; Caroline Woodward, VP-real estate law; and Teross Young, VP-government affairs.
The Ahold Delhaize integration is one of the largest reorganizations in the food industry over the past decade. With all U.S. businesses now consolidated, the international retailer is hoping that an efficient infrastructure coupled with a decentralized branding approach will not only lead to greater internal productivity, but also to increased sales at store level.
I have no doubt this new streamlined lineup will bring more internal synergy, but I still have my doubts that, without more staffing and improved training at store level, significant same store sales gains can be achieved.
Now that it’s almost game time for the new team, we’ll be keeping score.
Supervalu Quietly Regaining Momentum By Focusing On Creative Wholesale Growth
The dark days of past regimes (rudderless Jeff Noddle, clueless Craig Herkert and greedy Wayne Sales) are now clearly in Supervalu’s rear view mirror and the true talent of Mark Gross, who became the wholesaler/retailer’s CEO nearly two years ago, is beginning to reveal itself.
Earlier this month at Barclays’ “Eat, Sleep & Play” financial conference in Manhattan, Gross illustrated to the financial community just how far the Eden Prairie, MN firm has come in the past 22 months.
Sales are increasing, earnings are improving, Supervalu is in an acquisition mode and Gross has made several key executive changes that have improved culture and operating efficiency.
At the Barclays’ conference, the New England native focused on key components of SVU strategy which (not surprisingly) focuses on expanding its core wholesale grocery business.
Beginning with creating a “selling culture” mindset, Gross has prioritized serving new customers (America’s Food Basket and The Fresh Market have been added this year), retaining existing customers and selling them more product.
The latter piece involves capturing additional business in produce, meat, private brands, administrative services and specialty and ethnic items.
The acquisition of Commerce, CA-based Unified Grocers earlier this year has already produced benefits beyond the $3.8 billion in annual revenue it adds to Supervalu’s top line. Because many of Unified’s members operate ethnic stores, the deal gave center store top heavy SVU an opportunity to inject the California wholesaler’s ethnic/specialty mindset into existing Supervalu areas, particularly with Unified’s Market Centre, a dedicated ethic specialty, natural/organic depot expanding to the Midwest (with the acquisition of the former Central Grocers’ one million square foot distribution center which is only seven years old). We’ve also heard that Supervalu is close to adding another Market Centre in the Mid-Atlantic in Carlisle, PA.
Having dedicated distribution centers for those formerly niche, but now mainstream, departments will allow SVU to not only attract new independent retailers, but might also attract other non-Supervalu customers to shift a portion of their business into Supervalu’s domain.
We will probably see both the Joliet, IL and Carlisle facilities open in 2018. By this time next year, Supervalu will also shift its core Mid-Atlantic business from its existing facility in Denver, PA (which is owned and soon to be operated by outgoing transition services agreements – TSA – partner Albertsons) to another depot in Harrisburg, PA which is currently being refurbished.
Also adding to its wholesale portfolio was the recent addition of Associated Grocers of Florida, which will add about $650 million in annual revenue and more ethnic marketing expertise and a geographical reach that extends to the Caribbean as well as Central and South Americas.
Yes, there are still major challenges that Gross and Supervalu face. Stock price is still lagging at about $20 per share despite a 1-8 reverse stock split earlier this year designed to spur activity. The company’s nearly 220 corporately-owned stores (Shoppers, Farm Fresh, Cub, Shop ‘n Save, Hornbacher’s) remain a constant thorn – at least Supervalu was able to dump the seemingly even more troubled Save-A-Lot discount unit a year ago. And the lost adjusted EBITA from the wind down of its TSA primarily with Albertsons will total $120 million over the next three fiscal years.
Even with those roadblocks, the body of work under Gross’ leadership has been impressive when you consider how many intangible hurdles the 54-year chief executive had to resolve before he could even tackle sales and future growth initiatives.
Many goals such as adding talent, improving morale and creating a mindset of aggressive expansion throughout the organization have been achieved and just in the past 12 months more than $5 billion in wholesale sales will have been added.
There are more opportunities – and still major challenges – that lie ahead. I’m betting on Gross to continue to move the needle forward in 2018.
‘Round The Trade
Target has planted itself firmly in the grocery delivery business with the announcement that it has agreed to acquire Shipt.com, the Birmingham, AL-based online same-day delivery platform, for $550 million in cash. The purchase significantly accelerates Target’s digital fulfillment efforts, bringing same-day delivery services to guests at approximately half of Target’s stores by early 2018. The mass merchant said that service will be offered from most Target stores, and in all major markets, before the 2018 holiday season. “We laid out an ambitious strategic agenda in early 2017, which included a focus on giving our guests a number of convenient ways to shop with Target, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock program. With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” said John Mulligan, executive VP and COO for Target. Some of our readers have already questioned Target’s logic behind this deal, stating that the Minneapolis-based retailer should first figure out how to improve its entire grocery presentation before jumping into the same-day delivery business. I would disagree, however, noting that with competitor Walmart already advancing its delivery platform over the past 18 months, Target needed to jump into the fray if it ever expects to remain a significant national player in food, electronics and apparel. And some of our readers are right: Target has a long way to go to improve its grocery image; in fact, the company has a long way to go to recapture its once mighty mojo…more troubling Lidl news. After reporting last month that many of the German discounter’s future Mid-Atlantic store projects have either been canceled or delayed, now comes word from nj.com that a Lidl unit planned for Mantua Township in South Jersey has been delayed, even though the company received approvals from the town to begin construction. According to Mantua’s economic development coordinator, “budgetary constraints” have put the project on hold. While there are still about a dozen of the 47 stores that Lidl has opened since its June debut that are performing well, most of the stores fall into a predictable pattern: very strong openings to be followed by large drop-offs no more than a month later. For every store winner such as Manassas, VA where our estimates are in the $275-300K weekly range, there are three other stores like Culpeper, VA where volume is estimated at $130K per week. Clearly, Lidl is not a place where you can complete your full weekly shopping list and, based on our review of store conditions after several visits to many units, the decline in perishables is particularly noticeable. And as has been stated here previously, the disproportionate amount of space given to general merchandise and apparel is frankly puzzling. Peddling biker shorts for $20 (during the summer months) begs two very basic questions: 1) how big is the total biker shorts market? and 2) how good is the quality of the biker shorts being peddled? (The latter inquiry was made by my own booty.) As I’ve also said before, beyond what I believe is a gigantic initial merchandising misread by the Europeans running the show at U.S. corporate headquarters in Arlington, VA, what’s equally as worrisome is their inability to change course. Certainly, that can happen when you don’t have enough seasoned American retail decision makers at the point of attack to call an audible. And while Lidl’s pricing and packaging remains an undeniable strength as do its bakery and wine/beer departments (which it can’t offer with its upcoming new stores in Maryland, Delaware, Pennsylvania and New Jersey), the “whole” seems to fall far short of the sum of its parts. Don’t expect Lidl to disappear, even though it’s clearly in “rethink” mode. And just before presstime, we learned that Lidl is considering a smaller footprint – 10-15,000 square feet (vs. the current 36,000 square foot model) – and will look to lease other potential new sites. However, with the original decision to acquire all of its own real estate for the first round of about 100 stores (which seem very doubtful to open by next June as the company had hoped) and overall infrastructure costs totaling at least hundreds of millions of dollars (including building four distribution centers, a state-of-the art headquarters, corporate and store staffing), Lidl likely won’t resemble Tesco’s short-lived and clueless Fresh & Easy West Coast entry in 2007. Parent company Schwarz Gruppe has much more money at its disposal than Tesco did and is also privately-owned. Sadly, Lidl’s disappointing opening salvo did not come without great preparation and optimism, but once the opening whistle blows, it’s a totally different game (or as the great philosopher Mike Tyson once said, “Everybody has a plan until they get punched in the mouth”). There’s still time for Lidl to recover but it needs to demonstrate to its customers, especially as the new kid on the block in an already vastly overstored marketplace, that its offerings are relevant. The clock is ticking…… and now, a few points about Godzilla, er, rather, amazon.com. According to Forrester research, the Seattle-based juggernaut captured an incredible 54.9 percent of “Black Friday” online sales. Three days later, multiple sources reported that “Cyber Monday” overall revenue reached record levels with CNBC stating that online sales on November 27 increased by 17 percent. And while we haven’t yet seen too many obvious in-store changes at Whole Foods (WFM) made by Amazon (price reductions on a small, but noticeable number of items and selling other Amazon brands – Echo, Fire, Kindle, etc.), that might change soon. Late last month, WFM released its “most anticipated food trends for 2018.” Some of those include: the creative uses of tacos; the further growth of super powders; new technology to aid puffed and popped snack sales; Middle East cuisine becoming become mainstream; the further elevation of sparkling beverages; and even greater transparency in product labeling to name a few. I kind of wish I was 28 again so I could instinctively go back to the future – then I think I’d hate that idea. And one more story that doesn’t directly involve Amazon, but was clearly influenced by Godzilla’s wide wingspan – CVS’ potential acquisition of Aetna. The $69 billion proposed deal will radically change both the drug and insurance industries and not only speaks to the political realities involving healthcare, but also to a realistic threat that Amazon could bring by entering the U.S. pharmacy business as has been rumored. For CVS, the ability to utilize its nearly 2,000 U.S. stores as distribution hubs for in-stores healthcare, lower co-pays and cheaper pharmaceuticals, makes a lot of sense. And Aetna, which had its $37 billion acquisition bid to acquire another large health provider, Humana, blocked by the FTC (this deal will also undergo major scrutiny) believes it can provide people with a better way of accessing medical care. Trade observers feel that since this proposed deal does not involve only insurance firms and would create a more vertically integrated structure, it might have a better chance of being approved. This will be one of the most important stories of 2018 that will affect almost every American.
Local Notes
Campbell Soup has agreed to acquire snack food company Snyder’s-Lance, owner of Cape Cod potato chips and Snyder’s pretzels and Emerald Nuts, for $4.87 billion ($50 per share, all cash). That represents a 27 percent premium from the Charlotte, NC manufacturer’s trading price on December 13, five days before the sale. This deal would be would be Campbell’s largest yet and could provide both a financial and emotional boost for the struggling Camden, NJ-based manufacturer, which despite several acquisitions outside its core center store business, still finds offsetting the declining sales of its staple soup business a tough path to navigate. It’s the same challenge that many large CPG companies – Kellogg’s, General Mills, ConAgra to name a few – face in trying to broaden their portfolios beyond their sluggish primary brands. The explosion of private label has also impacted many large CPG packers. Under the leadership of talented and tenacious CEO Denise Morrison, Campbell’s has attempted to venture outside the box by acquiring emerging brands such as Bolthouse Farms and most recently Pacific. This is a risky maneuver with Campbell’s financing the deal through $6.2 billion of debt, but Morrison explained the rationale behind the purchase, noting it “…will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster growing snacking category.” Interesting to note in the tentative deal is that the Warehime family collectively controls 13.2 percent of Snyder-Lance’s common stock (after the 2010 deal when Snyder’s of Hanover and Lance were merged), giving the family of the late, great Mike Warehime a huge windfall…while it’s not deal related, Nestle, the world’s largest food company with a diverse and international portfolio, joins Campbell’s in announcing that it will be leaving the powerful Grocery Manufacturers Association (GMA) before year’s end. The primary reason: differing views on how to respond to changing consumer tastes, especially nutritional issues. Accurate or not, the GMA has long been perceived by some as a complacent, road-blocking group more interested in protecting its flank rather than engaging into proactive change. Wake up, the world is changing…while the transfer of most of its 1,932 drug stores from Rite Aid to Walgreens until next spring, the Camp Hill, PA-based chain has shifted 97 drug stores in the past six weeks to Walgreens as part of its initial pilot test. Also included in the $4.38 billion all cash deal are three distribution centers…Albertsons, which also has been racing to play catch up in the fast-paced and evolving world of e-commerce, announced that it has signed a deal with Instacart which will provide same-day deliveries to more than 1,800 Albertsons’ stores (including Safeway units) beginning mid-2018. Earlier this year, the Boise, ID-based supermarket chain acquired meal-kit provider Plated, which this month unveiled its first national TV campaign…Whole Foods will open its first “365” market location in our region on January 31 in the Forte Greene section of Brooklyn. The 40,000 square foot unit will be WFM’s seventh overall “365” store. Two weeks earlier, Whole Foods will cut the ribbon on its ninth Delaware Valley unit, a 50,000 square footer in demographically-favorable Exton, PA. And while we’re on the subject of Amazon’s newest offspring, I’d like to give a shout out to Christine Minardi, former WFM Northeast regional president, on her recent promotion to executive VP-operations where she will oversee four regions while also co-leading the integration with Amazon…one more update about the Ahold Delhaize integration (which could affect suppliers and brokers more than any other trade issue next year): according to an announcement from Tonya Herring, Giant/Landover’s new senior VP-merchandising: “First and foremost, Giant will make the assortment and buying decisions for all products that it carries independent of The Stop & Shop Supermarket Company or any other brand of Ahold USA or Delhaize America. Giant will, however, be supported by the Stop & Shop merchandising team, which will issue purchase orders for products on behalf of Giant (excluding beer, wine, ethnic and specialty products, which will be purchased by Giant directly) and provide promotional, display and other related support to Giant. We anticipate that 80 percent of the items, offerings and programs will be consistent between Stop & Shop and Giant. For Giant business, including presentations, proposals and related activities, we are asking that suppliers include both Stop & Shop and Giant merchandising teams together for that work. Giant leadership is working to make this process as convenient as possible for its vendor partners, including by having Giant category teams join via video or personally attend meetings in Quincy whenever possible so your company will only have to make one presentation to the brands. This excludes local programs, as applicable, where it will be important for you to meet separately with the Stop & Shop and Giant category teams.” And remember a few months back when parent company Ahold USA was the target of criticism concerning its “trade equalization” money grab? “Trade equalization” was part of the continuing overriding issue of drilling deeper into vendor funding, sometimes for no justifiable reasons. A lot of dialogue lately has been devoted to the practices of two of the country’s largest retailers – Walmart and Kroger – who, according to more than a dozen vendors we talked with, claim both big merchants are getting tougher with their vendors, especially around the issue of on-time shipments. Kroger is fining suppliers $500 for every order that is more than two days late to any of its 42 distribution centers and Walmart began fining manufacturers 3 percent in August for deliveries that aren’t exactly on time. Logically, all parties want better efficiency when it comes to selling product and it’s true that vendors who use third parties for drayage lose some control (not to mention there’s a nationwide truck driver shortage), but in this case, let’s examine supply chain issues created by retailers. How many trucks have waited in one of Kroger’s depots unable to unload product because warehouse docks are overloaded? Walmart needs to look no further than its own stores to see how much inventory is sitting in its backrooms, unable to be stocked because of lack of labor on the selling floor. This is one issue where collaboration rather than confrontation would serve both parties better…a tip of the hat to two men – Wendell Hahn and Ray Taglialatela – with among the best work ethics this industry has ever seen. Both executives with Four Seasons Produce, the large produce distributor based in Ephrata, PA, will retire at the end of the year. I’ve known both men for many years and beyond their unparalleled knowledge of the produce industry they are also two of the nicest people in the biz. Wendell and Ray-Tag are incredibly hard working, selfless and loyal to their employer and both display that very rare trait of making you feel better about yourself after you’ve engaged with them. I wish both gentlemen only the best in their future endeavors. I’ll miss their wisdom and kindness…a few obits to report this month. Macon Brock Jr, the founder of Dollar Tree stores and its former CEO from 1993-2003, passed away earlier this month. Brock, along with his father-in-law and brother-in-law, began opening dollar stores as a side venture to their toy store business in Norfolk, VA in 1986. The discount concept began to rapidly accelerate by the end of that decade and Brock and his family rapidly began opening more stores. In 1995, the company went public. Today, Dollar Tree operates more than 14,000 stores in the U.S. and Canada with annual sales of nearly $21 billion. Brock, 75, remained chairman of the Chesapeake, VA-based merchant until this past September…from the land of entertainment, actress and singer Della Reese has died. Born D
elloreese Early in Detroit, she began her career as a gospel singer and as a teenager performed with Mahalia Jackson. She later moved on to jazz singing where she released six albums. Reese began acting in the late 1960s and had more than 50 TV and movie credits including her most famous role as “supervising angel” Tess on the hit TV show “Touched By An Angel” (1994-2003). Reese was 86…I’m also sad to report the passing of country singer and songwriter Mel Tillis, 85, who overcame a stutter and recorded more than 60 albums (including three dozen top 10 singles). Tillis, who was inducted in to the country Music Hall of Fame in 2007, also wrote some classic country and pop songs – “Detroit City;” “Mental Revenge;” “I Ain’t Never;” “Ruby (Don’t Take Your Love To Town)” – that he made famous as did other popular artists including Linda Ronstadt, Kenny Rogers and Waylon Jennings. More than 50 years ago, Tillis told the Nashville Tennessean: “It so happened that I found out what I was good for. I’m lucky; a lot of people go through life and never find out.”…Golll-ly, Gomer Pyle is dead, too. Jim Nabors, who parlayed a supporting role as a goofy deputy sheriff on the “Andy Griffith Show” in the early 1960s into a hit series of his own that ran from 1964-1969, passed away late last month at the age of 87. Despite his clumsy antics and over the top southern drawl, Nabors was nothing like the famous character that he portrayed. He displayed an impressive operatic baritone singing voice that belied his TV persona and also appeared in 25 other TV shows and films. Shazam!
