Jim Donald: We Hardly Knew Ye
OK, now that you’ve read the headline on page 1 you should realize that we’re exaggerating more than a little bit here. That Jim Donald will be stepping down as CEO of Albertsons on April 25, seven months after he accepted the position and 13 months after he rejoined the large Boise, ID-based retailer after 27 years, shouldn’t be surprising.
After all, the catalyst for Donald to come back to Albertsons in March 2018 was Bob Miller, then chief executive of the supermarket chain and one of the greatest leaders in the supermarket business of the past 50 years. In the nearly 30 years that I’ve known Jim, he has often mentioned that he’s learned more from Miller (now chairman emeritus) about the grocery business than anybody else. He considers him a mentor.
So, as Albertsons began the process of attempting to complete a merger with Rite Aid, Miller called on his old protégé to help run Albertsons while Miller and then Rite Aid chief executive John Standley (another protégé) would work on digesting the bigger enchilada. Donald made it clear from the outset that rejoining Albertsons wasn’t going to be a long-term gig, but like all of his previous jobs, Jim would tackle this challenge with the same passion and tireless work ethic that have been hallmarks of his entire career (starting with Publix in his native Tampa in the mid-1970s).
However, as it often does, life has a way of altering the best laid plans. When the Albertsons/Rite Aid plan failed to even make it to a shareholder vote, Albertsons’ principal owner, PE firm Cerberus Capital Management, felt that it now had to revamp Albertsons’ leadership in an effort to take it public or find another merger partner. In September, Donald, 65, agreed to take on the role of CEO, a role where he’s had plenty of experience from his tours of duty at Pathmark, Starbucks, Haggen and Extended Stay Hotels. He was also well versed in the often complex relationship that CEOs have with their private equity owners.
Still, elevated status didn’t mean that Donald’s long-term focus had changed. When I had dinner with Jim last summer (pre-Rite Aid collapse) he made it clear that his role was transitory and that he would be moving on once all the collective parts were in sync. He added that he would attack his new job with the same dedication and zest as he did with his other jobs. When he was elevated to CEO the view would change, but Donald’s attitude wouldn’t. He was determined to retool a solid company with aging stores and significant debt (more than $10 billion). He was also confident that his strong people skills would only enhance an already solid culture. However, he made it clear that it was important to find his successor, one who was younger and perhaps would have a differentiated background.
Vivek Sankaran, former PepsiCo COO, fits that description on paper. He’s 10 years younger than Donald and has also worked for a large, pressure-filled organization similar in size to Albertsons (approximately 270,000 employees). He became available after losing the battle to become Pepsi’s chief executive last fall when Ramon Laguarta was named to replace Indra Nooyi.
Those who know Sankaran describe him as extremely intelligent with strong negotiating skills and the ability to work well with both his associates and with the trade (he served as PepsiCo’s chief commercial officer for the past four years).
But one silo Sankaran has not yet entered is food retailing. And despite his many years of dealing with the nation’s top retailers, Sankaran has never sat on that side of the desk. It won’t be an easy conversion – retail, particularly food retail, is as “real time” as it gets. It’s visceral, seemingly endless, with successes fleeting because it’s so fluid. Dealing with Albertsons’ internal issues might seem somewhat parallel to what Sankaran was used to at Pepsi; however the on the field issues are much different. The company operates 2,300 supermarkets under nearly 20 different banners. Within each market are hundreds of individual trading areas with different competitors – some established, some emerging – operating with diverse retail styles. There will be unions to deal with and more than 20 distribution centers and 20 manufacturing plants to oversee. And beyond that, it goes back to instinct. Will Sankaran be able to reinvent himself as a merchant/operator? And will he be able to take a company, which has unsuccessfully tried twice, into the public arena?
Donald is betting strongly that Sankaran is the right man for the job. And he’s well aware that “learning retail” is Sankaran’s most important priority. As such, he will be spending a lot of time with his successor to accelerate that curve.
And Donald himself isn’t going to Tahiti anytime soon, either. He’ll be staying on as co-chairman (along with Cerberus executive Len Laufer), adding that he’ll be nearly as busy as he’s been since he got to Boise 13 months ago (the irony is that with Donald’s constant travel schedule visiting Albertsons’ 14 divisions, he didn’t spend the majority of his time at company’s headquarters).
While this indeed might be Jim Donald’s last full-time pit stop, don’t expect him to retire anytime soon. There will be board directorship opportunities to consider (if he desires) and I’m certain he’ll continue his very successful sidebar career as a speaker. It’s something he loves to do, is very good at and as Jim has joked, “the margins are much better than running a supermarket.”
And certainly there must be a few hundred people in America who haven’t yet heard his fish story.