Taking Stock

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‘Round The Trade

Now that Tesco has announced it will pull the plug on its failed Fresh & Easy experiment, it should be interesting to see who picks up the pieces. The Fresh & Easy story is really a simple one to recap: haughty, arrogant British retailer thinks it can build a better mousetrap (based on its overall corporate success in the UK) only to find that its flawed research led to an instant disconnect with U.S. consumers in California, Arizona and Nevada. Between Marks & Spencer, Sainsbury and now Tesco, perhaps the Brits would be better served choosing another country for expansion. As for those “pieces” (stores), if Wal-Mart is ever going to do more than “talk the talk” about expanding its small format operation, the opportunity to acquire the entire 200 store Fresh & Easy operation is staring them squarely in the eye. And speaking of the Behemoth, Wal-Mart announced that net income in its third quarter, ended October 31, increased 9 percent to $3.63 billion and comp store revenue at its U.S. store gained 1.5 percent, its fifth consecutive quarter of comp sales gains. Overall sales at its U.S stores rose 3.6 percent to $66.1 billion (total company sales in its third quarter excluding membership fees from Sam’s Club were $113.2 billion). However, Wal-Mart maintained its cautious stance in the fourth quarter and going forward. “Current macroeconomic conditions continue to pressure our customers,” asserted Charles Holley, the mega-retailer’s CFO. “The holiday season is predicted to be very competitive but we are prepared to deliver on the value and low prices our customers expect.”…in what seems like late inning housekeeping moves comes word that Supervalu has frozen salaries. That message came in an internal email sent from executive VP- human resources and communications Dave Pylipow which states in part: there will be no 2013 merit pay increases for salaried team members. Additionally hourly team members in SVU’s corporate, banner, region and distribution center offices will not receive a merit pay increase. This does not impact store hourly or store pharmacy positions, or hourly operational distribution center roles. Promotions and job changes will continue to be recognized with pay changes where appropriate. Subject to any applicable laws, the frequency at which some team members are paid will change in early 2013. Today, all team members are paid on a weekly basis. Next year some salaried team members will transition to a bi-weekly pay schedule and others to a monthly schedule. Also, SVU’s service anniversary awards program as it exists today will be discontinued and as for salaried team members, as well as hourly team members in Supervalu’s corporate, banner, region and distribution center offices, the company’s matching contributions are being suspended. For store hourly and store pharmacy positions, as well as hourly operational distribution center roles, the company’s maximum matching contributions will be reduced from 5 to 3.5 percent. Pylipow added: “We recognize that these changes will have a significant impact on you, and we will continue to evaluate them in light of our business results. Thank you for your understanding and your work for the company in these critical times.” A sad situation for a company that must “divest itself from itself” ASAP…A&P (which in some surreal way finds itself in a slightly better position today than Supervalu) announced it will close three New Jersey Super Fresh stores on January 11 – Marlton, Plainsboro and Westmont – reducing the number of Super Fresh units to 22…other Ahold USA stuff: the company has agreed to build a 162,000 square foot meat processing facility in Lower Allen Township, PA (Cumberland County) that will produce beef and pork products for the chain’s Giant/Carlisle and Giant/Landover divisions. The big global retailer said it will invest at least $63 million in the project and will hire about 850 workers. Ahold has named Vantage Foods to operate the facility when it opens in late 2013. Vantage currently supplies the southern region of Martin’s Food Markets from a facility in Lenoir, NC. “Ahold USA is proud to be part of the economic engine of Central Pennsylvania, brining new jobs to the region and a new business, Vantage Foods, to the state. This meat packaging facility is a significant investment in the future and these incentives will help us ensure its long-term success,” said Mark McGowan, executive VP-supply chain for Ahold USA…I missed the opening on December 4, but did have a chance to visit the new Kroger marketplace store which debuted in Chesterfield County (at the site of the old Cloverleaf Mall). Wow! What a store. The new 123,600 square foot unit offers more than 300,000 items including furniture, jewelry and home fashion and décor. The food presentation, particularly its fresh departments, was magnificent. Kroger, which recently highlighted its aggressive expansion plans in the Tidewater market, will open a 124,000 square foot Marketplace at the old SuperK location on Holland Road in Virginia Beach next year and will cut the ribbon on its second Richmond area (Staple Mills & Hungary Road) Marketplace in 2014 and according to company officials will have a minimum of 10 marketplaces by 2017. While the new Marketplace mega-store definitely gets my vote as store of the month, I have to give my friends at McKay’s first place in a new category: “niche” store of the month. McKay’s totally retrofitted its Hollywood, MD location with a strong perishables and prepared foods look. A beautiful, smallish (17,000 square foot) unit from its wine bar to “food station” presentation. David, Tommy, Betty, Cherry and mom Marilyn should be very proud.