‘Round The Trade
Ahold reported less than stellar fourth quarter sales (ended December 28), with its U.S. business being hit the hardest. Company-wide, the Amsterdam-based merchant saw net sale decline 1.1 percent to $10.2 billion (at constant exchange rates). In the U.S., its largest segment, the chain’s volume dropped 2.1 percent to $6 billion and ID sales also decreased 2.1 percent. Ahold’s full earnings report will be issued late next month. The big global retailers said that “a contracting food market and the sales effects of Hurricane Sandy” impacted sales. Ahold also consolidated some of its European business. According to an announcement, Ahold Europe as a business division will no longer exist. The company will refocus its current Ahold Europe operations and its leadership on building the Albert Heijn business in the Netherlands and adjacent markets through its various formats and channels. Executive committee member Sander van der Laan will continue to lead Albert Heijn, and report to CEO Dick Boer. The company’s CzechRepublic business will also report directly to Boer. Bol.com (Ahold’s European online offering) will continue to report to executive committee member and chief commercial officer Hanneke Faber and remains an important area of growth for Ahold according to the company. Boer noted: “The food retail industry continues to evolve rapidly and we see significant opportunities for growth to cater for the changes in the way that our customers shop. Today’s decision will bring management closer to running the business. By further strengthening the Albert Heijn brand in both the Netherlands as well as neighboring markets, combined with a growing omni-channel offering via Albert Heijn online, Albert Heijn pick-up points, and Albert Heijn to go, we will be better positioned to meet customer needs and accelerate future growth.” Ahold said it will continue to pursue other important areas of growth within Europe such as further strengthening the market position of Albert in the Czech Republic, the roll-out of Albert Heijn and bol.com in Belgium, and Etos and Gall & Gall in the Netherlands. At the same time, Ahold stated that it is continuing to look for ways to streamline and simplify the organization’s support functions across the company, as part of its Simplicity program. “This will ensure that the company can maintain and strengthen its successful market positions and continually reinvest resources in its customer proposition and organizational capabilities.”…C&S Wholesale Grocers, which supplies most of Ahold’s U.S. stores, has named Mark Verdi as its president, a new position for the large Keene, NH-based wholesaler. Verdi, a native of nearby Springfield, VT, comes to C&S from the accounting and consultant industries and will officially join C&S on March 1. C&S’s current chairman, CEO and patriarch Rick Cohen, will remain in his position but transition to a role driving strategy and innovation at the wholesaler, C&S said. This is potentially a huge change for C&S, the nation’s largest grocery wholesaler and also for Cohen, who helped revolutionize the retail distribution business and has been a hands-on, innovative game changer since taking over from his father, the great Lester Cohen, in the late 1970s. We wish Verdi well – he’s got a huge challenge to fulfill….Acme will shutter two stores within the next month as part of a 26 unit closing by parent firm New Albertsons/Cerberus nationally. Acme units in West Chester, PA and Exton, PA (both were victims of high-volume Wegmans stores in Malvern, PA and Downingtown, PA) will be shuttered by February 20. Other Albertsons news: William Emmons, who was part of CEO Bob Miller’s “posse,” has retired as president of the company’s Jewel unit based in Oak Ridge, IL. Emmons who spent 40 years with Albertsons before retiring in 2011, was lured out of retirement by Miller after (New) Albertson acquired Jewel from Supervalu last March…according to an SEC filing, Fairway has extended its lease at its flagship unit on Broadway and W. 74th Street for another 15 years. In a complicated arrangement, the property that the maze-like supermarket stands on was owned by two parties (one of whom was Howie Glickberg, vice-chairman of development whose family founded Fairway in 1932). The other was an unrelated landlord who could have potentially closed the building for renovations in 2017. A new deal was hammered out that will allow Fairway to continue to operate on Manhattan’s eclectic and tony Upper West Side until 2029…Whole Foods, which had a gangbusters opening at its first Brooklyn store in Gowanus last month, has signed a lease and will build a new store in the Bryant park section of Manhattan (Sixth Avenue between 41st and 43rd Streets). The new Midtown unit will be a two-floor store encompassing 32,000 square feet and will add to Whole Foods’ growing presence in NYC where stores in Harlem, the Upper East Side and Williamsburg (Brooklyn) are also under development…after more than three months of sometimes contentious bargaining, United Food and Commercial Workers (UFCW) Local 1500 and members from Stop & Shop and King Kullen Supermarkets overwhelmingly ratified new collective bargaining agreements with their employers. The new collective bargaining agreement will cover more than 8,000 store associates across the New York metropolitan area for 14 months, dating retroactively on September 29, 2013 through December 6, 2014. Throughout the lengthy negotiation process, high cost mandates from the Affordable Care Act were often noted as the most difficult hurdle to overcome. “Both negotiating committees did an excellent job. We were able to come under compliance with Affordable Care Act mandates and still achieve affordable coverage for Full-Timers with no paycheck deductions, and maintain dental, vision and affordable health coverage for Part-Timers,” said UFCW Local 1500 president, Bruce Both, “While many retail companies like Trader Joe’s, Home Depot and Walgreen’s have cut health insurance for their part-time workers and pushed them to inferior plans on exchanges, our contracts secured affordable health plans for all workers,” Both concluded. The agreement secured all employees’ pension plans, increased hours for all part-timers, and provided multiple wage increases over 14 months to all members. Due to the short length of the agreement, the union said it has already started the process of mobilizing members at both Stop & Shop and King Kullen in preparation for negotiations in the coming months. A few days before the UFCW Local 1500 deal was ratified, so was a similar three year agreement between Giant/Landover and Safeway with UFCW Locals 400 and 27 in Baltimore-Washington. However, three weeks after the deal was blessed by retail clerks at both chains and meatcutters at Safeway, a separate meatcutters voted was taken and ratified by approximately 600 meatcutters who work for Giant. That’s because of the future impact of Ahold USA’s new case ready plant which opened late last year in Lower Allen Township, PA. The opening of that facility allows Giant/Landover (and Giant/Carlisle which is non-union) to send pre-packaged case ready meats directly to its stores, which in turns would allow the chain to reduce its number of meatcutters. About 60 of its most tenured meatcutters were offered buyouts (about $40,000) with a second round of buyouts reportedly to be offered next year. It’s anybody’s guess what the ultimate reduction in staff will be, but I’m betting that it will be substantial. I certainly understand the need for efficiencies, however, there are existing customers (me included) who don’t like the gas flushed product, and by further diluting its meat labor force, it’s one more level of potential disconnection from its customers. …MOM’s (My Organic Market), the Rockville, MD organics retailer with 10 locations in the B-W market (and an additional four more units reportedly planned), will open its first store in the Delaware Valley, a 17,000 square foot former Borders store in the Main Line suburb of Bryn Mawr, PA perhaps as early as next month…up north a bit, it’s no wonder that competitors fear Market Basket (Demoulas). The uber high-volume family-owned regional chain announced that it will offer a 4 percent discount on all purchases until December 27 as a strategy to increase sales and gain new customers. And we’re talking about a supermarket merchant which may already have the lowest everyday retails in the country. As one of its New England competitors noted: “Our best hope when dealing with Market Basket on a head-to-head basis is that we hope the family keeps on quarrelling which will further delay new stores from being built.” Apparently, that won’t happen either, as the company’s board of directors announced that it is not seeking to replace its embattled president Arthur T. Demoulas, who has been at odds with his first cousin Arthur S. Demoulas (who controls the board). The Market Basket machine is indeed a powerful entity…in national news, Aldi said it will accelerate new store development in the U.S., with a goal of 650 new stores in the next five years. Plans call for the discounter to open about 130 new stores per year. One reported growth target is the Richmond/Charlottesville area. Additionally, Aldi’s growth plan includes the construction of a Southern California warehouse and headquarters to be located in Moreno Valley, CA, which will serve as a foundation for the German retailer’s entry into SoCal. “We’re ramping up our expansion plans to meet growing demand for Aldi from customers across the country,” said Jason Hart, president of Aldi. “Recently, we successfully entered new markets such as Houston, and expanded our presence in competitive markets like South Florida and New York City. At Aldi, we believe that great quality can be affordable, and we are eager to bring the Aldi difference to new markets like Southern California.” Aldi currently operates 1,300 stores in a geography that ranges from the East Coast to as far west as Kansas. Late last month, the extreme value merchant also said it would soon launch a natural and organic brand called Simply Nature…a couple of thoughts about the recent FMI Midwinter Conference in Scottsdale, AZ: 1) it was the best Midwinter event that I’ve ever attended, with lots of time for business planning and social networking, and 2) for the most part, the business sessions were very strong with a very comprehensive view on how “big data’ is shaping the business and our lives. My favorite speaker was former FBI director Robert Mueller, who provided retailer, wholesalers and suppliers with an update on the state of cyber-security. Mueller’s folksy style belied a very strong message: be concerned and be vigilant. That was my takeaway a few weeks earlier when Target Corp. announced a data breach in which at least 40 million customers who made credit and debit card purchases from November 27 to December 15 may have been affected (since then similar breaches have occurred at Neiman Marcus and two other unnamed merchants). The overall learning from this should be that all retailers, no matter how protected and secure their networks, are vulnerable. In a recent article that appeared in American Banker magazine, here’s how industry experts viewed the situation. “While (trade association) The Payment Card Industry’s (PCI) data security council provides merchants and issuers as much information as possible to keep data safe, it is somewhat in vain because it is just too easy to perpetrate fraud against the magnetic-stripe product,” said Mark Horwedel, CEO of the Merchant Advisory Group. “Merchants, acquirers and hardware providers continue to be frustrated by this, and it is never going to end because there is no sunset rule on magnetic-stripe.” Magnetic-stripe data is a frequent target of fraudsters. Stolen data from a magnetic-stripe card can be written to any other type of card, even a hotel room key, and used to make swiped card payments. If the fraudster has a stolen PIN, the cloned cards will enable ATM withdrawals as well. “As long as mag-stripes are still on cards and POS devices, no matter how much we spend on PCI, you can’t protect the public from this kind of breach,” Horwedel added. Such a notion is frightening, considering 24 of the nation’s gross domestic product comes from card payments, said Gray Taylor, executive director of the National Association of Convenience Stores (NACS). The U.S. payments system needs to “totally rethink” its approach to data security, Taylor noted. “We have to stop thinking we can make pristine computing environments and need to start thinking of how we can process secure transactions in the dirtiest environment,” Taylor asserted. “Until we take that total rethink, even under EMV (Europay, Mastercard, Visa – the global standard for inter-operation of chip-driven “smart” cards), I don’t think we will ever be away from these types of hacks.”… several obituaries to report this month, all outside of the food business. Jerry Coleman, former All-Star second baseman for the New York Yankees and a hero of both World War II and the Korean War (the only major leaguer to have actively served in both wars), has died. Coleman was part of four World Series championship teams (he was the MVP of the 1950 series against the Phillies) and for the past 40 years served as an announcer for the San Diego Padres (his hometown). He also did color analysis on TV and radio for the Yankees (he was famous for his malapropism including, “I see Rich Folkers throwing up in the bullpen,” and “Dave Winfield goes back to the wall; he hits his head against the wall and it rolls off! It’s rolling all the way back to second base. This is a terrible thing for the Padres.” Coleman was more proud of his military career as a Marine Corps pilot in which he flew 120 missions and was awarded two distinguished Flying Crosses, 13 Air Medals and three Navy citations. A great American, Jerry Coleman was 89. From the world of music two icons from the world of country and country pop have died. Ray Price, 87, passed away last month at his home in Mount Pleasant, TX. For those unfamiliar with Price, suffice it to say he had one of the greatest country music voices ever. During a career that spanned 65 years, Price had seven number one hits and had more than 100 songs appear on the Billboard Magazine country charts (“including Willie Nelson’s “Crazy Arms” and Kris Kristofferson’s “Help Me Make It Through The Night”). He was elected to the Country Music hall of Fame in 1996. Phil Everly also ascended to harmony heaven. The youngest of the two Everly Brothers, Phil, 74, and his brother Don revolutionized rock and roll music in the late 1950s with their unique sound which blended beautiful melodies with incredible high harmonies. While hit songs such as “Wake Up Little Suzie” and “Bye Bye Love” defined their careers, the Everlys’ catalogue included many dark, haunting songs with beautiful lyrics that also captured their signature harmonious sound. The Everlys were also one of the charter members of the Rock and Roll Hall of Fame in 1986. Bob Dylan perhaps summed it up best when he said: “We owe these guys everything. They started it all.” And just before presstime, we learned of the deaths of two supporting actors from classic 1960s-1970s TV sitcoms. Entering the gates of Nickelodeon-land, is Dave Madden, 82, who played Reuben Kincaid, the on-screen manager of the Partridge Family (1970-1974) band. Madden’s career spanned 35 years and also included major roles in “Laugh In” and “Alice.” Also passing through those gates was veteran character actor Russell Johnson, 89. Johnson’s career began in 1950 and he appeared in more than 160 TV shows and movies. However, by far his most famous role was as “The Professor” in “Gilligan’s Island (1964-1967).” With Johnson’s passing and the earlier deaths of other cast members Bob Denver (Gilligan); Alan Hale Jr. (The Skipper); Jim Backus (Thurston Howell III); and Natalie Schafer (Lovey), that leaves only Dawn Wells (Mary Anne) and Tina Louise (Ginger) as the only surviving cast members from the corny but iconic series. And as many an aging male baby boomer might still ask: Ginger or Mary Anne?