Taking Stock

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‘Round The Trade

Supervalu is once again facing pressure from activist shareholder Blackwells Capital LLC to separate its wholesale and retail divisions. The Manhattan-based investment management firm, which owns 4.35 percent of SVU stock, pushed the Eden Prairie, MN wholesaler/retailer in October to sell one-third of its grocery stores, parts of its real estate and bring in new leadership. Blackwells also wants to choose three directors of its own to force these changes in an attempt to gain shareholder support. It criticized most of the existing nine directors as having no direct retail operational experience, adding that the last three board chairmen have had no wholesale or retail food industry experience. The wholesale business, which provides about three-fourths of Supervalu’s revenue and nearly all of its operating profit, should be shopped to potential buyers, such as SpartanNash Co., UNFI or C&S, Blackwells said. Supervalu quickly countered Blackwells’ request noting that a “rapid transformation” is under way. The company also noted that its has added new wholesale customers including The Fresh Market and America’s Food Basket and has acquired wholesale grocers Unified and Associated Grocers in the past 12 months. SVU has also added new leadership in its wholesale and retail divisions. As a shareholder, Blackwells has a right to be disappointed. But clearly, they have no feel for the realities that face a company that’s still climbing out of a black hole created by inept former CEOs Jeff Noddle and “Craig “Clueless” Herkert. Furthermore, the company’s last three chairman were Wayne Sales, Bob Miller and currently Gerald Storch. While it’s true that Sales and Storch do not have food industry backgrounds, to assail current Albertsons chairman and CEO Bob Miller as inexperienced is an insult to him and a clear indication of how big a money grab this forced march is. I’ve said it before: Supervalu chief executive Mark Gross is doing a very good job; give him a bit more time to clean up the problems of SVU’s corporate retail stores. Many if not all of those banners are going to disappear through sale or closures, but the climate is not currently favorable to potentially dispatch about 220 stores, many of which are simply undesirable…its appear that Boxed.com, the online retailer that resembles a digital version of Costco, will be the next e-commerce firm that will be sold. The four-year old Manhattan-based startup has reportedly spurned an acquisition offer from Kroger and, according to multiple reports, is talking with Amazon.com about a deal. Boxed.com’s attractiveness lies in the unique space it has created. It offers businesses and consumers club store type products with free two-day delivery on purchases of more than $49. There is also no membership fee. A one percent cash reward is also offered on the total price of every purchase…Weis Markets has upgraded its “Preferred Shopper” program, making it easier to qualify for discounts and adding a 10 percent discount on Weis private label items every Tuesday for seniors 60 years and older. “Our upgraded rewards program now offers more of our customers reward discounts on some of our best-selling products and is particularly helpful to those in areas with limited gas reward options,” said Ron Bonacci, VP-marketing and advertising for the Sunbury, PA regional chain. “Our rewards program has always been a tremendous success but many of our customers wanted the additional option of saving on the products they regularly purchase. Ultimately, we wanted to give them more flexibility in their reward choices’…a few thoughts about last month’s FMI Midwinter confab in Miami. As always, the event featured the highest level of participation of retail leaders and CPG executives. And while many told me the “strategic executive exchanges” between retailers and vendors were very productive, we also heard some feedback from those same parties about the many presentations and forums that were offered to a broader audience. “Too much data” was the prevailing view of more than a dozen executives I spoke with. “I think big data is important. I think relevant data is vital. But it seemed that the speakers and panels featured so much information it was difficult to absorb,” said the president of a regional chain based in the Northeast. “I understand that we need the data and insight in order to compete more effectively in a changing landscape. I know that we need to better understand Millennials and Gen-Yers who comprise our fastest growing groups of shoppers. But it was just an overload. As important as grasping and utilizing the data, we’re still a business of operators and merchants. Too much future casting, not enough input from retail leaders in the presentations” One retailer noted that of all the forums he attended the two best were the keynote speech by Tim Steiner, founder of British online merchant Ocado, and the closing “State of the Industry” presentation which featured FMI CEO Leslie Sarasin, Ahold Delhaize USA CEO Kevin Holt, Kings/Balducci’s CEO Judy Spires and Coborn’s chief executive Chris Coborn. “It was the one meeting that I felt connected to the food industry as a group,” said another retail executive from a large Southeast chain. “Too bad, it was the last event scheduled on Monday, when many people had already left.” Personally, I think I understand where FMI and Sarasin are going. A few years ago, after the dissolution of its disappointing Expo, the large trade association had lost a huge revenue source and was struggling for relevancy. Sarasin has kept her eye on the ball and done a good job of rebuilding the industry’s largest trade group. However, while I know they provide significant revenue to the association, maybe it’s time that IRI, Nielsen, Accenture and several other well-endowed market research/analytics organizations take a lesser role at the Midwinter event and perhaps FMI should consider bringing back some of the roundtables and panels that feature the real retail drivers and leaders in our industry…not shockingly comes more word about Lidl’s struggles in the U.S. In an interview with the German business publication Manager, Klaus Gehrig, CEO of Lidl’s parent company, Schwarz Gruppe, criticized the discounter’s progress in the U.S. thus far, noting that several things have gone wrong including poor site selection, locations that are too large and too expensive to operate and lack of insight into Americans’ product preferences. While Herr Gehrig has pinpointed Lidl’s problems, the bigger task will be correcting them, and I’ve seen little evidence of improvement. Opening smaller stores is part of the answer, but Lidl’s problems in the U.S are deeper and more complex. On February 15, the discount merchant will open its 49th store in Fredericksburg, VA (its second unit in that city) and is almost certain to fall well short of the 100 units that were scheduled to open by this June…Whole Foods opened its seventh and newest “365” store in Brooklyn, NY late last month and reports of the demise of the smaller, more discount-oriented organics/natural format seem premature since WFM announced that it will open at least 16 more “365” units in the near future. Two of those units are in the Northeast – Fairfax, VA and Weehawken, NJ – and scheduled to open later this year…Jim Sinegal, the iconic executive who provided the foundation for the dynamic growth of Costco, is leaving the club store merchant’s board after 35 years. Sinegal told shareholders at Costco’s recent annual meeting in Bellevue, WA, “It’s time. I’ve served for a very long period of time and I think the company is in very good hands.” Sinegal’s protege, Craig Jelinek, has served as chief executive since Sinegal left that post in 2012. And at that annual meeting, Jelinek told its holders that Costco business is very healthy with traffic growing 5.9 percent in its recently completed first quarter, its biggest jump in at least a decade. And even when membership fees were raised in the last year, Costco’s renewal rate remained at an impressive 87 percent. I wonder how puzzled Walmart executives continue to be as they witness the ongoing deceleration of the Sam’s Club business. And speaking of the Behemoth, it has named current executive VP and COO of its U.S. stores Judith McKenna to president and CEO of Walmart International, the company’s second-largest operating segment. She will be succeeding David Cheesewright, who has been in that role since 2014 and is retiring…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 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. Instacart, which has been on quite an impressive run over the past six months, announced that it acquired Canadian digital solutions provider Unata for a reported $65 million. Unata’s strength is developing and tracking digital circulars and coupons. There certainly seems to be a place for that in Instacart’s fast growing delivery services model…good news for our buddy Bill Shaner, former CEO of Save-A-Lot and for a short time the top dog at Haggen. The charismatic executive has formed an investor group, PetGuard Holdings LLC, which recently acquired PetGuard, a Jacksonville, FL-based manufacturer of premium, natural pet food products and supplies. Shaner, who will serve as managing partner and chief executive of PetGuard Holdings, acquired the company from Sharon and Steve Sherman who founded it in 1979. Good luck to a good man…sadly, there are a few deaths to report this month. From our industry, we lost George Mezardash, 81, who operated Baltimore-area independent supermarkets and convenience stores (George’s SuperThrift and Little George’s, primarily in Carroll and Frederick counties). George was a very good operator who was exceptionally community-oriented, excelling in customer service. And he was a nice guy, to boot. Another nice guy from our biz, Dave Schisler, has also passed away. I first met Dave when he worked for B. Green & Co. where he remained for 15 years, ultimately becoming head buyer for the Baltimore-based wholesaler. In 1980, he opened his own brokerage company, Chesapeake Sales, based on the Eastern Shore. Dave was a shrewd businessman who was gifted with street smarts and he’ll be missed by the many people he touched. Roy Marks has left us, too, at the age of 87. For anyone who met Roy and got to know him, his presence and charisma were undeniable. Roy was hysterically funny, highly intelligent with a photographic memory (although he never bragged about it) and a person who took the time to mentor those younger than himself who wanted to learn and succeed (me included). I first met Roy when I arrived in town in 1978; he was working for Food-A-Rama and to see him interact with the F-A-R’s three owners – Ben Schuster, Paul Diamond and Dave Diamond – was kind of like watching a Mel Brooks movie. There was some substance, some melodrama and a lot of laughs. A few years later, Roy joined Shoppers Food Warehouse, where he led the merchandising team and helped shape the retailer’s discount strategy. My condolences to his wife Alice, his son, Steven and daughter Stephanie. Roy leaves an unforgettable legacy…speaking of Mel Brooks, Oscar-nominated and Emmy-winning composer John Morris has died. Morris and Brooks hooked up for almost all of the comedian/director’s films, including co-writing the title song for “Blazing Saddles” and composing the haunting violin score in “Young Frankenstein.” Both of those great movies were released in 1974. Morris, 91, also penned the original arrangement for “Springtime for Hitler,” from “The Producers” (1967), Brooks’ debut film…and finally, Oscar Gamble has passed on. The journeyman power hitting outfielder who played for seven major league teams over a 17-year career, died late last month. Gamble was a solid left-handed hitting outfielder who hit 200 homeruns in his career but was best-known for having the largest, most outrageous Afro hairstyle in the history of the game. When he was first traded to the New York Yankees in 1976 (his first of two stints with the Bronx Bombers), Gamble had to abide by team rules requiring no facial hair or excessive hairstyles. As Yankees owner George Steinbrenner recalled, the news came as a disappointment to Gamble who had an endorsement deal with Afro Sheen. “Pete Sheehy (the Yankees’ veteran clubhouse man) told him he would get no uniform until he got a haircut,” the late Yankees owners said in 1991. “I said, ‘Oscar, I’ve got a barber.’ They brought this guy in and they butchered him. Absolutely butchered him. I was sick to my stomach. I told Oscar, ‘It looks good,’ but I thought to myself, it was absolutely the worst. There were blotches in his scalp.” Gamble was 68 when he died in Birmingham, AL.