Taking Stock

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New Ownership Aside, Acme Must Earn Back Respect From Vendors If It Wants Improved Partnerships

March 21 will mark the dawn of a new era for Acme Markets. That’s when the beleaguered retailer is scheduled to become part of New Albertsons Inc., the non-Supervalu portion of Cerberus’ expanding retail empire.

And this is truly a good thing, a very good thing. The fact that Acme will no longer be part of the ineptitude that’s existed for the past six years in Eden Prairie, MN and that paralyzed the once-mighty Malvern, PA retailer is a victory in itself. Add to that the fact that the new Albertsons team will be headed by Bob Miller, a great merchant with a stellar industry track record, which will hopefully mean that the revitalized company will get back to the blocking and tackling of selling groceries at reasonable prices with improved merchandising from a more local perspective.

Now for the sobering news.

The sales numbers are still poor, morale in the stores is apathetic at best and the company needs huge amounts of capital infusion to make it competitive again. That’s not usually the atmosphere in which private equity companies like to operate.

Earlier this month, I received a memo (via several sources) from Dennis Clark, Acme’s VP-merchandising, that addressed to the company’s ‘vendor partners.’ “We are excited about the future of Acme and our partnership with you…,” the letter begins. The purpose of the memo was to invite suppliers and brokers to a series of meetings that the retailer will host on March 25.

I’m sure Clark, a knowledgeable industry veteran who stuck it out through the bleak Supervalu days, is as hopeful as anyone that the company can indeed reverse its fortunes.

It’s just unfortunate that none of the 10 vendors I spoke to feel there’s much to be hopeful about.

“Although I’m certain this was never Acme’s intent, they abandoned us,” said one regional food broker, who admitted he lost a good chunk of his business when Supervalu implemented its ill-fated SuperFusion centralized procurement and merchandising program five years ago. “Why should we be so quick to re-embrace them?”

One direct rep for a large CPG company, who plans on attending the meeting on March 25, noted, “The game has changed considerably since Acme last had local control. We’d like nothing better than to engage with local Acme programs where they have some control of price points, marketing and advertising. But for years, we’ve gotten little return on our investment with them, so Acme is going to have to prove to us that their deals with us are more balanced and capable of moving cases. The onus is on them, not on the vendor.”

And one DSD vendor, who told us that he probably wasn’t as affected as local brokers (who lost commission dollars) or regional manufacturers (who got lost in the shuffle in Eden Prairie), explained, “I have no doubt about their sincerity in trying to resurrect Acme. The folks in Malvern were also held in Purgatory during the (Jeff) Noddle and (Craig) Herkert regimes. But in 2013, it’s about performance. Nobody is going to reward Acme just because they are better positioned theoretically. They are going to have to sell more stuff and be more reasonable about their margin expectations. And beyond that, there’s a strong belief that this new Acme team is just place holding until the banner can be sold or broken up.”

I, too, am hopeful that better days are ahead at Acme. I’ve written many columns over the past five years decrying the incompetence that prevailed in Eden Prairie while also empathizing with the many associates who soldiered on bravely in Malvern, even as they saw many of their friends get riffed and demoted. And, along the way, the retailer was losing control of its business which for many years was the dominant retailer in the Delaware Valley.

The vendors and brokers certainly would like some resemblance of the old Acme to return. That’s a win for everybody. But the patient has been seriously scarred and damaged. A new transfusion brings optimism, but also reality.

Will Cerberus/New Albertsons put earnest money on the table for desperately needed improvements? Is this Acme “repositioning” really just enhanced “housekeeping” and a prelude to a future sale? And, given how much Acme has frittered away over the past five years, who is the company going to take business away from in one of the most competitive areas in the country?

Dennis Clark better wear his best selling shoes.