An orderly leadership transition and a stunning management team shakeup. That can best describe the recent changes at the nation’s two largest dollar store retailers.
At Dollar General (DG), the largest dollar store merchant in the country with more than 18,000 stores in 47 states, Jeff Owen will become the chief executive. He will succeed the retiring Todd Vasos, who has helmed the Goodlettsville, TN-based discounter since 2015, on November 1. Vasos will then serve in a senior advisory position through April 1, 2023, at which time he will retire from employment with DG. He is then expected to enter into a two-year consulting agreement and continue to serve as a member of the dollar merchant’s board of directors. Vasos first joined DG in 2008 and in his tenure as CEO, the dollar store operator has expanded its store base by approximately 7,000 stores, added nearly 60,000 net-new jobs, increased annual sales revenue by more than 80 percent, and more than doubled its market capitalization to approximately $58 billion.
Current board chairman Michael Calbert said this of Vasos: “On behalf of the board of directors, I want to thank Todd for his many years of service to Dollar General, his outstanding leadership, commitment to our values and dedication to the company, its employees, customers, communities and shareholders. Todd led Dollar General through a period of significant transformation, accelerated growth and innovation. We are a stronger, more resilient, and longer term strategically driven organization than when he took the reins in 2015. Dollar General is a better company today as a result of Todd’s leadership.”
Calbert added: “The board is looking forward to continuing this strong trajectory under the leadership of Jeff Owen, who is a strategic thinker, strong collaborator and proven leader known for his motivational leadership and deep knowledge of Dollar General.”
Jeff Owen has served DG as its COO since 2019, having previously held the roles of executive VP-store operations and senior VP-store ops. He began his career at DG in 1992 as a store manager trainee in a Nashville, TN store. Owen is expected to be elected to serve as a member of the company’s board when he officially takes over as chief executive. During Owen’s nearly 30-year tenure with DG, the retailer has grown from 1,500 stores in 23 states into the largest retailer by store count in the U.S. with more than 18,000 stores and 28 distribution centers.
Then there’s the situation at Dollar Tree Stores (DT). While Mike Witynski (a real good guy) remains CEO of the Chesapeake, VA-based discounter, much of his executive team, according to popular Elvis terminology, has “left the building.” It’s clear that DT’s new board was behind the shakeup (more on that later).
Veteran executives who are no longer at DT include chief legal officer and corporate secretary William Old; chief operating officer Thomas O’Boyle; chief strategy officer David Jacobs and chief information officer Andy Paisley. Searches for successors are underway, and the retailer said it is in advanced discussions with several candidates for certain positions.
Additionally, Kevin Wampler will transition out of his role as chief financial officer upon the appointment of a successor. Wampler will remain with the discounter as an advisor until April 2023 to ensure a smooth transition.
“As we look to the future, I believe these changes within our leadership team will bring new perspectives and experiences that will help accelerate our continued growth and deliver even greater value for our shareholders, customers, employees and suppliers,” stated Witynski.
Rick Dreiling, who was DG’s CEO from 2008-2015 and began his industry career at Safeway in 1969, now serves as executive chairman of DT, said, “Our board is fully aligned with Mike that now is the right time to bring in new leadership to ensure the company remains on a strong trajectory.”
It was Dreiling and more specifically the private equity activist investor which brought him in, Mantle Ridge, that forced the current management changes. Trouble has actually been brewing for several years at DT during which time the value merchant has faced some difficult hurdles. In early 2019, another activist hedge fund, Starboard Value, acquired a 1.7 percent stake in the Virginia-based retailer and proposed that DT sell its underperforming Family Dollar (acquired in 2015) business while also replacing a majority of its board members.
Starboard Value ultimately dropped its DT challenge, but last year Mantle Ridge acquired an even larger stake in the retailer and called for the replacement of all 11 board members. The company pushed back, saying such a move would not be in the best interests of its investors.
And then there were the other strategic and operational challenges that affected DT. In September 2021, the company announced it would test higher base price points of $1.25 and $1.50 at some of its legacy stores. That change followed nearly three decades of the retailer sticking to its $1 price point storewide. At the same time, the company announced it would be expanding its “Dollar Tree Plus!” in-store department offering items priced at $3 to $5 in categories such as crafts, home décor and cleaning products.
Two months later, in November, the retailer officially expanded the $1.25 and $1.50 price points at all of its 16,000 store nationwide. At that time, the company said the higher prices would allow it to increase its offerings and provide families with more of their essentials.
Operationally, there were issues, too. In early February of this year, DT was forced to temporarily shutter 400 stores after discovering a rodent infestation at one of its Family Dollar distribution centers after a Food & Drug Administration (FDA) inspection uncovered unsanitary conditions, including the infestation, at the warehouse in West Memphis, AR. That DC permanently closed last month.
Additionally, Family Dollar issued a voluntary recall of some products that the FDA said might be unsafe for consumers to use due to potential contamination.
In March 2022, DT settled with Mantle Ridge and announced the makeup of its expanded and reconstituted board. The retailer conceded to a number of Mantle Ridge’s demands, including Dreiling’s appointment to lead the board (Dreiling also serves on the board of directors for Lowe’s) and the inclusion of Mantle Ridge founder and CEO Paul Hilal as vice chairman. The board was not completely overhauled, however – five current directors stayed on, including Michael Witynski as well as Thomas Dickson, Jeffrey Naylor, Winnie Park and Stephanie Stahl. Also, five new independent directors were added to the board: Ned Kelly, Cheryl Grisé, Daniel Heinrich, Mary Laschinger and Bertram Scott.
Moreover, former DT CEO and board executive chairman Bob Sasser (who led the retailer during its halcyon days) as well as Arnold Barron, Gregory Bridgeford, Lemuel Lewis, Carrie Wheeler and Thomas Whiddon retired. With these changes, the company’s board now consists of 12 directors overall.
And a month before this recent management realignment was announced, Dreiling and the board were already putting their imprint on the company by naming two more former DG executives to assume to leadership roles at DT. John Flanigan was named chief supply chain officer and Larry Gatta was tapped to be chief merchandising officer.
Since the settlement was announced, the company’s stock price has risen from $146.80 per share on March 8 to $171.21 at closing on July 19. Mantle Ridge controls just under 10 percent of DT, including derivatives. By comparison DG’s stock price was $245.35 on that same date. Over the last five years DT’s stock price has gained about 69 percent which trails its chief rival’s 189 percent increase.
Amazon’s Jassy Building His Team As Herrington, Felton Are Promoted
Amazon has made an important change involving its physical stores. Doug Herrington late last month was named CEO of the company’s Worldwide Stores business, a unit that was once known as Worldwide Consumer. The 17-year veteran of the company previously served as senior VP-North American Consumer business, a post he held since late 2015.
“I’m excited to share that Doug Herrington will become the new CEO of our Worldwide Amazon Stores business”, said Amazon’s chief executive Andy Jassy in a message to his associates.
“He joined the company in 2005 to build out our consumables business, launched Amazon Fresh in 2007, and in 2015, took on leading all of our North American Consumer business. Doug and I have worked together on S-team (senior executives) since 2011,” Jassy said. “He is a builder of great teams and brings substantial retail, grocery, demand generation, product development, and Amazon experience to bear. He’s also a terrific inventor for customers, thinks big, has thoughtful vision around how category management and ops can work well together, is a unifier, is highly curious, and an avid learner. I think Doug will do great things for customers and employees alike, and I look forward to working with him in this leadership role.”
In a related move, Jassy also announced that John Felton will lead all of Amazon’s operations. An 18-year veteran of the Seattle-based juggernaut, Felton spent most of his career in retail and operations finance management roles. In 2018, he moved to Worldwide Operations to become the VP-global customer fulfillment and a year later he took over the newly formed Global Delivery Services group, encompassing global import/export, Amazon Logistics, and the merchant’s last mile delivery services.
“John has strong end-to-end knowledge of our fulfillment network, operates with an important mix of strategic thinking and a command of the details that matter most in our network, is right a lot, and is a strong team builder who is dedicated to making Amazon a great place to work for our employees,” Jassy explained.
Felton will report to Herrington as will Russ Grandinetti (international stores), Christine Beauchamp (North America stores), Tony Hoggett (physical stores), Dave Treadwell (e-commerce foundation), Neil Lindsay (pharmacy/AmazonCare/healthcare), Dharmesh Mehta (selling partner services), Peter Larsen (Buy with Prime) and Pat Bajari (chief economist).
“This is a very strong and experienced leadership team. I remain very optimistic about our Stores business and believe we’re still in the early days of what’s possible. It’s worth remembering that Amazon currently only represents about 1 percent of the worldwide retail market segment share, and 85 percent of that worldwide market segment share still resides in physical stores. If you believe that equation will change over time, which I do, there’s a lot of potential for us as we continue to be laser-focused on providing the best customer experience (broadest selection, low prices, fast and convenient delivery) while working on our cost structure to have the right long-term business,” Jassy noted.
These changes, in part, were prompted by the June 3 announcement that Amazon Worldwide Consumer CEO Dave Clark was resigning on July 1. A week later, Clark said he would become chief executive of supply chain software company Flexport, effective September 1.
‘Round The Trade
Inflation remains the nation’s biggest story and the numbers for June provided no relief. Overall, according to the Bureau of Labor Statistics, prices increased 9.1 percent year-over-year and food-at-home inflation reached a 40-year high, spiking to 12.2 percent. The June grocery total marked the sixth consecutive month that prices have risen 1 percent or more, and with fuel prices declining slightly, expect food-at-home costs to become the leading inflation category when this month’s number are released in mid-August. Some particular items that broker the 12.2 percent barrier include butter/margarine: +26.3 percent; chicken: +18.6 percent; milk: +16.4 percent: and rice/pasta: +14.2 percent.
On the digital scorecard, according to research firm Brick Meets Click, e-commerce grocery revenue increased 6 percent to $7.2 billion last month compared to June 2021. As has been the trend recently, “pickup” remained the largest digital-driven segment, contributing about 46 percent of all e-commerce sales. Ship-to-home remained the segment in greatest decline, dropping 14 percent last month. “Inflation and COVID are creating cross-currents in the market as higher prices motivate customers to look for ways to avoid paying more than necessary, and ongoing concerns about contracting the virus motivate shoppers to use line online grocery as a way to stay healthy. This is especially true as new variants of the virus triggered surges in infection and rising illness rates during May and June,” said David Bishop, partner and co-founder of the Barrington, IL-based company…
Estimated numbers are in and according to analytics firm Digital Commerce 360, Amazon’s two-day “Prime” event held on July 12 and 13 garnered sales of $12.09 billion. That’s an 8.1 percent gain over last year’s numbers when “Prime Days” was held in June. “Godzilla’s” annual merchandising bonanza saw more than 300 million items purchased worldwide (more than 100,000 per minute) and the Seattle-based juggernaut said its Prime members saved more than $1.7 billion. Additional benefits of this year’s event for Prime members included a year-long 20 percent discount on select items at its 35 Amazon Fresh stores. Other retailers which held online savings events earlier this month included Target (“Deal Days”), Best Buy, JC Penney, Macy’s and Kohl’s.
The Fresh Market (TFM) plans to withdraw its IPO filing with the Securities and Exchange Commission. The Greensboro, NC upscale merchant, which has been owned by PE firm Apollo Global Management since 2016, initially began its quest to become publicly-traded again in March 21, is set to be acquired by Chilean-based merchant Cencosud (which has agreed to buy a 67 percent stake for $676 million and has the option to ultimately acquire 100 percent of the company) later this year. While the upcoming sale is the obvious reason why the IPO effort was withdrawn, analysts have also speculated that TFM would have had a difficult time completing the process given the current economic climate which has seen a significant decrease in IPO activity.
Local Notes
On July 15, Top Markets quietly reopened its Jefferson Street store in Buffalo, where two months earlier a racist mass murderer killed 10 people and injured three others. While not everyone was in agreement that the store should re-open (or re-open so soon), I know the Tops leadership team thought long and hard about what was the right thing to do and ultimately decided that offering an underserved community the opportunity to continue to have an affordable, fresh and healthy grocery shopping experience was the right choice. “We think being able to reopen to the community respectfully and honorably, to be able to do that in two months versus two-and-a-half to three years, we think is the right decision,” said John Persons, president of the Buffalo-based regional chain. Persons and his leadership team as well as Frank Curci, CEO of parent firm Northeast Grocery Inc., have been instrumental in creating a Survivors Fund with $500,000 in seed money for the victims while also organizing other efforts to provide counseling to those who were impacted. The store has also been renovated with brighter lighting, new flooring, an expanded produce department and a memorial wall featuring a poem by poet laureate and Buffalo native Jillian Hanesworth. The store reopening and the contributions by Tops obviously can never erase the tragedy that the May 14 mass shooting had on East Buffalo. But let’s give Tops Markets its due – it has done everything in its power to help the community move forward and it’s done so with sensitivity and a humble altruism.
Interesting story in The Press Of Atlantic City which notes that a planned 44,000 square foot ShopRite store slated for AC may be delayed or scrapped altogether because of a $500,000 incentive that Village ShopRite is allegedly requesting to cover potential losses. The city’s Casino Reinvestment Development Authority (CRDA) last year approved $18.5 million to build a supermarket on Baltic Avenue with a leaseback plan where Village would pay $1 a year in rent. Then, earlier this month Atlantic County prosecutor William Reynolds said that new store building costs would add another $8 million to the tab. The store was originally slated to open late this year, but as one source noted, “We’re in lawyer-land now.”
Here’s more Amazon news (brick & mortar version): Whole Foods will cut the ribbon on its 48,000 square foot Woodcliff Lake, NJ unit on July 27 and Amazon has opened its second Starbucks Pickup with Amazon Go in Manhattan at 8th Avenue & 40th Street. Amazon Fresh also debuted its first New York store earlier this month, a 47,000 square foot unit in Oceanside which only a few years ago operated as a Waldbaum’s.
We have another couple of obits to report, including Larry Storch, the screwball comedian whose career spanned seven decades, passed away earlier this month at the age of 99. Born in Manhattan, Storch began his acting career after serving in the Navy during World War II and already had more than 100 film and TV credits under his belt when he was cast to play Corporal Randolph Agarn in the dark situation comedy “F Troop” (1965-1967). Storch was one of several misfits under the supervision of Sergeant Morgan O’Rourke (Forrest Tucker) who manned Fort Courage to prevent the local Hekawi Indians (originally the Fugawis before censors caught wind) from wreaking (comedic) havoc on the Army soldiers. While much of the show’s dialogue would not pass muster in today’s “woke” world, I have to admit that “F Troop” was one of many favorites shows as a teenager.
If there ever was an actor who perfectly fit the role he portrayed, Gennaro Anthony Sirico would be that guy. As Paul “Paulie Walnuts” Gualtieri in “The Sopranos” (1999-2007), the Brooklyn-born actor served as one of mob boss Tony Soprano’s right-hand men in the iconic HBO series. Sirico passed away earlier this month at the age of 79. The acting was so good because Sirico’s real life very much mirrored that of Paulie’s – a tough guy who served prison time and never lost touch with people in his old neighborhood (Bensonhurst). In almost all of his 82 acting credits, Sirico played tough guys, thugs or Mafioso-types, but his role in “The Sopranos” was especially memorable because of his loyalty, intensity, profanity and humor that were matched with great writing. There were many great Paulie Walnuts moments and lines during the series’ eight-year run, but my favorite came from a scene in which Christopher Moltisanto (Michael Imperioli) and Paulie are with a group of people when he spots Vito Spatafore (Joe Gannascoli) and Bobby “Bacala” Baccalieri (Steve Schirripa), two extremely hefty mob associates, talking to each other. In his typical cojones-busting style, Paulie says, “These guys are like an ad for a weight-loss center – before and way before.”
