Taking Stock

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Local Notes

Just a few quick thoughts about the Best Market/Lidl deal. It was pretty clear that Best Market had been seeking a buyer for several months (you don’t hire an investment banker and issue a prospectus if you’re just fishing) and Lidl’s consolidated bid was probably the best one offered, but I’m a bit puzzled about Lidl’s promise to keep all employees while changing the fresh food- oriented merchant to a discounter. When compared to Lidl’s store staffing at its other locations, the numbers don’t seem to match up very well. And what about the executive team? Are president Rebecca Philbert, CFO Jeff Yonkers and other corporate team members staying for any length of time? And then there’s Lidl’s ongoing disappointing sales in the U.S. Why should we expect things to change just because of a new geography? To wit: earlier this month (on a Friday), I went to Lidl’s newest store in Richmond (W. Broad Street). Beautiful store with some of the best in-store conditions of any Lidl unit I’ve visited over the past 17 months (I’ve been to about 80 percent of Lidl’s 59 units). The problem remains the same: few customers with baskets only 25-50 percent full. The unconventional product mix and uncomfortable store layout make it less than a pleasurable shopping experience. Pricing aside (which remains strong), will entering a new marketing area already inhabited by established discounters Aldi and Walmart in addition to market leader Stop & Shop (which plans to spend upwards of $100 million early next year to upgrade its 51 stores) and fast-growing ShopRite make Lidl’s chances for success any greater than in other markets? Stay tuned…Ahold Delhaize USA’s Retail Business Services arm (RBS) is seeking “cleaner” private label products from its vendors. That means offering products at its nearly 2,000 supermarkets that don’t contain synthetic colors, high-fructose corn syrup as well as artificial flavors, preservatives and sweeteners by the year 2025. It’s the right thing to do and a move that other retailers are also implement or considering. So, if Ahold Delhaize USA wants to upgrade its private label program., here’s a suggestion to think about: you’ll get better execution from your private label suppliers if you offer them a bit more loyalty. Issuing RFP’s every 6-12 months to save a penny isn’t a long-term formula that’s effective. If you want more consistency and higher productivity from your vendors, take a page from Wegmans’ or H-E-B’s books. Corporately, Ahold Delhaize (AD) is planning to roll out small automated mini-warehouses to cut delivery times and accelerate order picking that AD hopes will expand its online presence and execution. The international retailer is working with e-commerce tech company Takeoff. More ahold Delhaize news: Selma Postma has been named president of the company’s Peapod online grocery delivery service. Postma, who most recently headed e-commerce for sister AD brand Albert Heijn in the Netherlands, will begin her Chicago-based duties on January 1. She replaces Ahold veteran Walt Lentz, head of supply chain and operations, who also had been serving as Peapod’s leader on an interim basis for the past 14 months…lots of retailers reporting quarterly sales and earnings – here are a few of note. Weis Markets posted a comp sales increase of 0.7 percent and its profits soared 219.3 percent to $14.2 million in its third quarter. Sprouts, which is still producing strong sales at its three Mid-Atlantic stores (Ellicott City, MD; Towson, MD; and Philadelphia) enjoyed a 1.5 percent gain in comps and a 19 percent profit increase in its third quarter. In Albertsons’ second quarter, the Boise, ID-based chain posted a 1 percent comp store growth and the retailer said that comparable store revenue would fall in the 1-1.3 percent range for its full fiscal year, below previous expectations. The company said its earnings loss diminished from $355.2 million to $32.4 billion. While Amazon’s two-city supplemental headquarters was “Godzilla’s” biggest news items of the month, the Seattle-based juggernaut also enjoyed another strong quarter. Revenue in Q3 jumped 29 percent to $56.6 billion and profit skyrocketed from $256 million to $2.9 billion. The company added its Prime Now delivery service to include Annapolis. Prime Now is currently available in 63 cities. Additionally, curbside pickup, unveiled in August in Virginia Beach, has now expanded to 14 markets. Despite the strong numbers, very little growth came from its physical stores (Whole Foods). To be honest, after 17 months of ownership, the significant changes at WFM have been underwhelming. Some prices have been lowered and there are more Amazon products being offered. But Whole Foods’ new centralized merchandising plan has reduced the number of regional offerings and the morale at store level has also diminished slightly…in the “bad time to get a raise” category, Rite Aid CEO John Standley stands alone. For a company that failed to get merger agreements with Walgreens and Albertsons and said it could lose as much as $485 million this year, Standley received a compensation package of $9.32 million this year, an increase from $8.07 million last year. Obviously, shareholders are incensed and rightfully so, since the drug chain’s shares have plummeted more than 70 percent this year and were trading at $1.12 on November 7… from the monthly death desk come these tragic passings: one of the great minds of the past 50 years has died. Paul Allen, co-founder of Microsoft and one of the most generous philanthropists of his generation, passed away last month. Allen and his partner, Bill Gates, met each other when they were teenagers attending the same private school in Seattle. Allen and Gates both dropped out of college to pursue their dream of creating a personal computer company in 1975. Within five years, they had become fabulously wealthy and household names in American business and culture. By the early 1980s Allen stepped away from his daily duties at the Seattle firm to pursue other interests. Much like Gates, Allen’s generosity was prodigious. He donated more than $2 billion towards non-profit groups involved in science, technology, education and the environment. Paul Allen also owned the Seattle Seahawks and Portland Trail Blazers. He was only 65…James Karen, 94, has also left us. Karen, born Jacob Karnofsky in Wilkes-Barre, PA, was a classic “that guy” character actor having appeared in about 200 films and TV shows. However, you might remember the serious looking man in glasses as “Mr. Pathmark” from his 28-year career as spokesman for the now defunct grocery chain. “I go to New York every two weeks and run off twenty 30-second commercials at a time. This is the best job an actor can have,” Karen said in 1984. “It pays very well and it is steady.”…one of my favorite Americana artists, Tony Joe White, he of the gritty voice and swampy guitar playing, has passed away. White is best known for his 1969 classic hit “Polk Salad Annie.” The Louisiana native was still performing and recording albums up until his death at age 75. Singer Brook Benton had a hit with White’s “Rainy Night in Georgia” and Elvis Presley and Ray Charles also recorded White’s songs. White was a true Americana original…another great picker has also passed away. Roy Clark, an underrated guitar player and singer whose image suffered from being co-host of TV’s long-running country variety show “Hee Haw” (along with the late, great Buck Owens), died earlier this month at the age of 85. Clark was born in rural Meherrin, VA and received his first guitar at the age of 14. By the mid-1950s, he was playing regularly in clubs around Washington, DC. He signed his first recording contract in 1962 and appeared on dozens of TV shows prior to a 24-year run on “Hee Haw” that began in 1969. As an instrumentalist, he was a virtuoso, playing guitar, banjo, fiddle, mandolin and harmonica. He was inducted into the Country Music Hall of Fame in 2009…Wally Triplett, 92, one of the first African American players drafted by an NFL team, passed away earlier this month, too. Triplett, born in La Mott, PA near Philadelphia, was a three-sport athlete at Cheltenham High before entering Penn State. Triplett and his teammate, Dennie Hoggard, became the first African Americans to play in the Cotton Bowl in 1948. The following year he was drafted as a running back by the Detroit Lions. All told, he played three seasons in the NFL with the Lions and the Chicago Cardinals…and one of the true icons of the past 50 years has also died. Stan Lee, the legendary writer, editor and publisher of Marvel Comics who created such characters as Spider-Man, X-Men, Thor, Iron Man, Black Panther and The Fantastic Four has passed away at 95. He was born Stanley Martin Liber in the Washington Heights section of New York of his immigrant parents who had little money. After graduating from high school, Lee got a job as a “gopher” for $8 a week in 1939 at Marvel predecessor Timely Comics and the rest truly was history…and with the Thanksgiving holiday now over, I hope we all raised our forks to Dorcas Reilly. Yes, that Dorcas Reilly – the creator of the green bean casserole, who died last month at 92 in Haddonfield, NJ. Reilly worked for Campbell Soup for nearly 40 years and created the Turkey Day staple in 1955 when she was kitchen supervisor for the soup maker. Her contributions alone should have made you consider having an extra helping of one of the greatest culinary recipes ever concocted. And it’s OK to be in temporary denial about the calories, sodium, and cholesterol…in closing, I offer a few thoughts on the new food industry buzzword of the month: ecosystem. I’ve always thought an ecosystem was a biological community of interacting organisms and their physical environment. Apparently, I was mistaken. The term is now being used to describe any network or interconnected system. I’m confused, so I’ll defer to the rarely wrong Urban Dictionary example of how to properly use the word: “After going 36 holes on a hot day, an ecosystem had developed in my shorts.”