Taking Stock

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 ‘Round The Trade 

Jonathan Weis has shed the “interim” title and now will become permanent CEO and president of Weis Markets. He retains the vice chairman title. Jonathan has done an excellent job over the past five months in leading the Sunbury, PA regional chain after the abrupt departure of former chief executive Dave Hepfinger. He along with executive VP Kurt Schertle have restored much of the flagging morale at the regional chain and it appears that sales once again are headed in the right direction (Weis’ financial statement is due out in early this month)…a very tough fourth quarter for Wal-Mart as the Bentonville Behemoth’s U.S. numbers took their biggest dive in several years. Comp store revenues for the period ended January 31 fell 0.4 percent, marking the fourth consecutive quarter that same store sales have declined and earnings dipped 21 percent during Wal-Mart’s critical holiday period. Traffic counts also decreased by1.7 percent. Bill Simon, CEO of Wal-Mart’s U.S. stores, said cuts to the federal Supplemental Nutrition Assistance Program (SNAP), adversely impacted the big retailer’s results. An exceptionally ferocious winter with multiple storms also cut into earnings, Simon noted, and detracted from a positive performance during the six-week holiday shopping period. He added the storms weren’t an excuse, but merely an explanation. Simon also affirmed that Wal-Mart’s plan to aggressively open new smaller format units (Neighborhood Market, Express) is on track and in 2014 about 270-300 units will open. “Customers’ needs and expectations are changing,” Simon asserted, “and they want to shop when they want and how they want, and we are transforming our business to meet their expectations.” However, at the end of the day, the Behemoth’s SuperCenters remain the stalwart engine for the company and 115 new combo units are slated to open this year. And while the boys from Bentonville may be going through a rough patch, let me remind you that Wal-Mart finished the past 52 weeks with a staggering $473.1 billion in annual sales, earned $16.1 billion and plans to spend $12.4-$13.4 billion this fiscal year (2015) in cap-ex…kudos to CVS for announcing that it will stop selling cigarettes and other tobacco products at its 7,600 stores by October 1. Beyond even the toxic health risks associated with tobacco, the fact is that retailers whose business is related to health and wellness should not be in the business of selling one of the least healthy products that’s legally available today. Walgreens and Rite Aid are continuing to assess the situation. There doesn’t seem to be more assessing that needs to be done: do the right thing and follow CVS’ lead…just returned from the National Grocers Association (NGA) convention and once again this year the vibe was very good. The annual Las Vegas event continues to offer good speakers and effective workshops while providing independent retailers (and regional chains) with a lot of one-on-one interactivity without losing its “homey” ambience. This year’s show attracted a record number of attendees (3,100) and also broke its record of exhibitors (nearly 400) who displayed their wares at the show. A tip to NGA president Peter Larkin for once again creating an excellent forum for independents. And a special tip of the hat to Wakefern president Joe Sheridan who in his two years as an NGA officer (he is currently outgoing chairman) has done an excellent job of bringing passion, leadership and vision to the trade group. Sheridan also did an excellent job at the show’s opening ceremonies, noting that independent retailers are well poised to handle issues such as competition and digital challenges because of how close they remain to their businesses. He termed the entire e-commerce initiative as a disruption and that bricks-and-mortar retailers will still be relevant, but added that 2014 will be a “grinding” year with more competitive diversity and the reduction of SNAP benefits affecting virtually all markets. Another excellent speech was delivered by John Phillips, senior VP-customer supply chain and global go-to-market for PepsiCo. Phillips, a dynamic personality and terrific speaker, urged independent retailers to embrace the customer experience and make it personal, “because you know more about your customers than the chains.” He then offered up a bevy of new programs and websites designed to gauge and analyze consumer data. As an aging boomer, Phillips provided the most comprehensible connection between digital “theory” and real world application that I’ve ever heard. However, not so dynamic was Bob Woodward, the noted journalist and author, who may be the public’s best link to the last eight U.S. presidents. There’s no question that Woodward is a fount of knowledge and a curator of recent American history. But as a speaker, he’s mediocre at best. His delivery is painfully slow and staggered and it appeared he didn’t do much preparation for his speech, instead relying on references from his books along with a few anecdotal tales from his political crypt. Also at the NGA show, two Mid-Atlantic retailers – K-VA-T (FoodCity) and B. Green & Co. – were awarded “best in show” honors for marketing and merchandising respectively. Abingdon, VA-based FoodCity’s marketing campaign, “Salute,” was selected for an original 60-second commercial honoring members of the armed forces and was aired on Fourth of July, Labor Day and Veterans Day. Baltimore based B. Green was chosen for its “Food Depot and Eat Right, Live Well” effort which encouraged low income consumers to select healthier items when they shop. Also receiving a prestigious national honor was Klein’s ShopRite of Maryland, which was named by FMI as one of six winners of its 2013 Community Outreach awards. The family owned independent, based in Forest Hill, MD (HarfordCounty), was chosen in the “Neighborhood Health Improvement” category for developing a partnership with BaltimoreCity and other non-profit groups to voluntarily surrender guns. Those who complied received a $100 ShopRite gift card. Good work by all three retailers… I recently visited the newest Mrs. Green’s unit (part of the Natural Markets Food Group (NMFG and no affiliation with B. Green) run by former Giant/Landover president Robin Michel, which opened in the Fair Lakes section of Fairfax, VA last month (the first Mrs. Green’s in the Baltimore-Washington. market). While the natural/organics store was all right, there was nothing special about it, except that it wasn’t very busy (my colleague who was with me at the time called the store “a poor man’s Whole Foods” – which, incidentally has a high-volume beautiful store less than a mile away also in the Fair Lakes section of Fairfax, which store was booming when I visited). Additionally, there’s a Wegmans doing about $1.7 million per week located less than three miles from the Mrs. Green’s unit. And there’s been no official movement concerning the now closed six Fresh & Green’s locations (former Super Fresh units that are also part of the NMFG organization) which have been on the block since late last year. Since the stores were left in pretty crappy condition, it’s not surprising that interest seems spotty at best. The Fresh & Green stores in Washington, DC and in Arnold, MD seem to be the best candidates to be moved. Back to Mrs. Green’s home base in WestchesterCounty in New York, UFCW Local 1500 picketed the Mrs. Green’s Natural Markets store in Mt.Kisco last month in protest of the dismissal of nine employees the Westbury, NY local said had attempted to organize the store’s employees. That unionization attempt failed. As for the bigger picture at Mrs. Green’s, I still don’t get it. The natural/organics foods retailer, which is owned by Canadian hedge fund Catalyst Capital Group, has major expansion plans that extend to points even further than Northern Virginia. Thus far after visiting several Mrs. Green’s stores in New York and Connecticut, I’m not locking in on Robin’s vision. The newer prototypes (including Wilton, CT; Hartsdale, NY; Chicago; and Calgary, Alberta) are much like Fairfax – reasonably merchandised but with a limited selection and high retails. And I don’t know what the volume projections for the newer Mrs. Green’s stores are, but my gut tells me they can’t be happy with current sales. Robin seems undaunted though, with plans for more new stores in: Manhattan’s WestVillage; Dobbs, Ferry, NY; West Windsor, NJ; New Canaan, CT; and another Canadian unit in Burlington, Ontario…some news from a bit farther south. Publix has developed a dedicated website – www.charlotte.publix.com – for its newest operating division in Charlotte, NC. The new site lists departments, services and recipes offered by the powerful Lakeland, FL merchant and includes a list of current stores that are open in the greater Charlotte area – Indian Land, SC, Fort Mill, SC and the BallantyneTownCenter area of the Tar Heel state’s largest city. The Ballantyne store, which opened on February 26, will be a true test for Publix as it competes with market leader Harris Teeter in one of Charlotte’s toniest areas. In fact, with the powerful Kroger engine behind Harris Teeter, look for a battle royale over the next few years between two of America’s best run supermarket chains…the FTC has officially approved the Bi-Lo/Winn-Dixie acquisition of former Delhaize stores that operated under the Sweetbay, Reids and Harvey’s banners. The order is still subject to a 30 day comment period and includes Bi-Lo’s consent that it divest 13 stores that were deemed to overlap with existing Bi-Lo and Winn-Dixie units. Those 13 units (including four Winn-Dixie and one Bi-Lo store), will all be shuttered between March and July of this year…very interesting piece in the February 25 edition of The Wall Street Journal noting that Target is “punishing” Procter & Gamble for the role the large CPG packer has played in assisting Amazon’s exponential growth in recent years. The story states that P&G has literally set up shop inside Amazon’s many distribution centers (with many more to come) to help create greater efficiencies for the online merchant and Procter. The story adds, “P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label and ship the items directly to the people who ordered them. The under-the-tent arrangement is one Amazon’s competitors don’t currently enjoy, and it offers a rare glimpse at how the company is trying to stay ahead of rivals, including discount chains, club stores and grocers.” Target, which isn’t having a particularly enjoyable last few months, has allegedly reduced the number of end-caps, moved P&G products to less optimal shelf positions and taken away “category captain” in several key categories. Whether it’s a fair retaliatory practice or not, the ago old adage of never pissing off a customer applies here…sadly, there are too many obits to report this month. From our business, I’m sorry to report the death of industry leader Bob Hermanns, who most recently was director of the Food Industry Management program at the University of Southern California. Hermanns, 70, died in early February, which was shocking to me because I spent some time with Bob at the FMI Midwinter Convention in Scottsdale in late January. A truly kind and gentle soul with such a positive outlook on life, Bob also served as an executive for such organizations as Lucky, Jewel, American Stores, Associated Grocers and Weis Markets (where I first met him). The food industry has lost one of its truly good guys. Also passing on were two great actors – Philip Seymour Hoffman and Maximilian Schell. Hoffman, who, simply stated, was one of our generation’s most gifted performers, tragically died of a heroin overdose (what a waste) at the age of 46. An Oscar winner for “Capote” (2005) and multiple nominee, Hoffman simply had the “touch.” Whatever medium he acted in – television, stage or movies – his presence and raw ability improved every production he was part of. While “Capote” was certainly his signature role, he was also well known for his appearances in “Boogie Nights” (1997), “Almost Famous” (2000), and “Doubt” (2008). However, I’d refer you to the 2003 film, “Owning Mahowny,” in which Hoffman played a down on his luck bank manager Dan Mahowny, a sad sack with a gambling addiction and access to millions of dollars. A melancholic and haunting story with a riveting performance by Hoffman that is worth more than the price of a Netflix rental. Also passing on recently was Austrian actor Schell, 81, who won an Oscar in 1961 for his role as Hans Rolfe, the impassioned but ultimately unsuccessful defense attorney for four Nazi judges on trial for sentencing innocent victims to death in the great Stanley Kramer film “Judgment at Nuremberg.” Schell also was nominated for two other Academy Awards and was described by Austrian Cabinet minister Josef Ostermayer as one the “greatest actors in the German-speaking world.” He grew up in Switzerland after his parents fled Austria when it was annexed by Germany in 1938. His last film, “Les Brigands” will be released later this year. Last month, we also learned of the death of Sid Caesar, the iconic comic who practically invented variety television in its early years. With “Your Show of Shows” (1950-1954) and its successor, “Caesar’s Hour” (1954-1957), Sid Caesar not only owned half of America every Saturday night with his vast array of “schtick,” his weekly shows also gave opportunities to some of America’s funniest men and women who would later have great writing and comedy careers of their own. Those included Imogene Coca, Carl Reiner, Neil Simon, Mel Brooks, Woody Allen, Larry Gelbart (“M*A*S*H”) and Mel Tolkin (“All in the Family”). Caesar, who shed the spotlight for many years in the 60s and 70s due to struggles with alcohol and pill addiction, emerged a healthy and still funny man in the 1980s with roles hosting “Saturday Night Live” and appearing in the Mel Brooks movie, “The History of the World Part 1” (there was never going to be “Part 2”). Caesar was 91 when he passed. Another comedy legend has also died – Harold Ramis, 69, who produced, directed and wrote some of the greatest comedies of my generation – “Animal House” (1978), “Caddyshack” (1980), “Stripes” (1981), “National Lampoon’s Vacation” (1983), “Ghostbusters” (1984), “Back To School” (1986), and “Groundhog Day” (1993). Ramis, a Chicago native, began his career with the legendary Second City comedy troupe in 1969. For the Ramis movies listed above, here’s a famous line from each of those films. Can you match the line with the movie and the character or actor who delivered it? (send me an email at jmetzger@best-met.com). 1) “Oh, this is your wife, huh? A lovely lady. Hey baby, you must’ve been something before electricity.” 2) “I got laid off when they closed that asbestos factory, and wouldn’t you know it, the Army cuts my disability pension because they said that the plate in my head wasn’t big enough.” 3) “Fat, drunk and stupid is no way to go through life, son.” 4) “C’mon, it’s Czechoslovakia. We zip in, we pick ‘em up, we zip right out again. We’re not going to Moscow. It’s Czechoslovakia. It’s like going into Wisconsin.” 5) “I liked the university. They gave us money and facilities and we didn’t have to produce anything! You’ve never been out of college! You don’t know what it’s like out there! I’ve worked in the private sector. They expect results.” 6) “The football team at my high school, they were tough. After they sacked the quarterback, they went after his family.” 7) “This is pitiful – 1,000 people freezing their butts off to worship a rat.” And, it’s been a tough period for former baseball stars who excelled at their craft despite managing to occasionally mangle the English language. In January, we reported on the death of San Diego Padres announcer Jerry Coleman and last month the unforgettable Ralph Kiner passed away. Kiner, 91, was an excellent power hitting outfielder who played primarily for awful Pittsburgh Pirate teams in the late 1940s and early 1950s. He led the National League in home runs for a record seven consecutive years (1946-1952) and was inducted into the Baseball Hall of Fame in 1975. But what I remember most about Ralph was his post-game show “Kiner’s Korner” and his on-the-air malapropisms. “Kiner’s Korner” was the Mets’ postgame TV show which featured the Hall of Famer interviewing the star of the game from a cheesy television booth with even cheesier music. There are many hilarious tales to be told from the show, but one that I remember clearly was in 1985 when Len Dykstra had just been called up from the minor leagues and had a great game. Dykstra’s mom, an attractive looking woman, also attended the game, so Kiner invited her to be on the postgame show, too. It was obvious that Kiner was taken aback by Mrs. Dykstra when he closed the show by saying: “Congratulations on having a great game, Lenny and for having a hot mom, too.” Among the bloopers that Ralph uttered on the air were: “All of his saves have come in relief appearances;” “On Father’s Day, we again wish you all happy birthday;” “The Hall of Fame ceremonies are on the thirty-first and thirty-second of July:” and the classic, “Hello, everybody. Welcome to Kiner’s Korner. This is….uh. I’m…uh.” Kiner could also bungle a few ballplayers’ names. Hall of Fame catcher Gary Carter was Gary Cooper; speedy outfielder Vince Coleman became Gary Coleman and catcher Dann Bilardello somehow exited Kiner’s mouth as Dann Bordello. Ralph, I’ll always remember you – I still smile fondly recalling some great memories of my youth. And finally it is with great sadness that I report the death of John Griffin, 82, founder and former owner of The Griffin Report, the first great regional food trade newspaper serving our industry, which John launched in 1966. John Griffin hired me and taught me (along with my now retired partner, Dick Bestany) the foundational skills of both the food and journalism businesses. John was a tough boss – demanding, temperamental, opinionated and passionate. His mercurial personality was only outpaced by his sheer brilliance as a writer. When I was a young (and somewhat brash) 22 year old, John allowed me the freedom to develop my own style; he also knew when I needed a lecture. Always prepared with a scalpel-sharp memory, John worked and played hard. The happy times were always a lot sweeter because when John Griffin was in a good mood, life was rarely more fun. But, even in humor there was always a point to be made, such as when I was the rookie on The Griffin Report team and one of my jobs in those days was to deliver the “flats” (the pasted-up pages of the newspaper) to our printer who was about 30 miles from our Boston office in Lowell, MA. As I took the large box, filled with approximately $50,000 worth of ads, John said to me: “You’ve got to get the flats up to the printer in an hour to meet our deadline. Do you understand?” I nodded affirmatively. He repeated, “Are you sure you understand?” I nodded again. He then said, “What I really mean is that if you have a car accident on the way, find somebody on the road to take the flats to our printer in Lowell. You can worry about yourself later.” To this day, I don’t know if he was kidding. I’ll miss you, John. May you rest in peace.