Taking Stock – Jeff Martin’s Greatness: It’s All In The Heart

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Message to Jeff Martin: I want to be your agent when you return to the business.

Actually, I feel more like Jeff’s press secretary after receiving more than 200 emails, phone calls and direct inquiries (at Ahold USA’s vendor meeting on June 13) about his departure from Ahold USA.

Yes on one level, the news that Jeff Martin has resigned as executive VP-merchandising and marketing is stunning. Arguably, he was the heart of the entire AUSA operation and viewed by many as COO Carl Schlicker’s right hand man. After being at the core of rebuilding much of Ahold’sU.S.business model over the past 30 months, Jeff seemed to be at the prime of his career and ready to handle new company challenges. And there will be other opportunities (perhaps even with Ahold) to tackle in Jeff’s future. But not now.

After I received an early morning call on June 8 alerting me of Jeff’s decision, I waited a couple of hours and then called Jeff at home. He was expecting my call. During the course of our conversation he was emotional but resolute with his decision to step down from a role in which many vendors and fellow company associates viewed him as among the best in the industry.

While he admitted he had been thinking of making a change in his life for several months, it took some time to finalize his decision.

Yes, the job itself was a factor (in my opinion, handling both merchandising and marketing for a $25 billion organization that just completed a major restructuring is among the most difficult jobs in the entire food industry). However, separating himself from the only company he’s ever known (Jeff began his career as a produce clerk at a Martin’s store in Hagerstown, MD in 1978), leaving dozens of friends and thousands of associates he has worked with and relinquishing the high-profile and significant compensation that he’s earned after 33 years, wasn’t going to be easy, either.

In the end, Jeff Martin made a decision that many of us often think about, yet rarely act upon. He walked away, knowing there were, for now, more important priorities to deal with.

In the past few years, he met Andrea Astrachan, AholdUSA’s former VP-consumer affairs. They ultimately fell in love and he began to recognize how important she was to him and how deeply he cared for her. He also realized there was more to life than working 15 hour days, answering emails at 11 p.m., traveling too much and sacrificing most of his life to a career that began at age 16.

When I asked Jeff to give me a quote to summarize his situation he said: “My 33 years with Ahold have been truly enjoyable. But as I approach age 50 this year, I have the opportunity to decompress and prioritize some other things in my life. I feel very blessed to be with a great partner in Andrea (Astrachan) and I will now have more time to spend with my daughter. I am not retiring from the business and I hope in the future I can make a positive contribution. However, for the present, I plan on taking care of some things that are important to me and my family.”

That’s Jeff Martin – all heart, always straightforward, always a gentleman.

Of course, like many others, I have mixed feeling about his decision. I would agree with the feeling of many of his associates and vendors: he has been the best of the best at what he has done. Not only from a skill level, but Jeff Martin possesses so many intangibles that made him the great leader and person that he is.

His door was always open when there was a problem or issue to deal with (both personal or business); he was truly a glass-half-full type of person (who remained optimistic even during the toughest of challenges, but didn’t try to sugar-coat things, either); and he was a true professional in the way he conducted himself (his high level of integrity should be noted as should the fact that he treated everyone with dignity and respect).

So, it’s tough to say goodbye to one of the best, even though it will most likely be a temporary farewell. He’s leaving for all the right reasons: family, love and the personal time that’s needed to make those very important things work properly.

For that, Jeff Martin deserves everybody’s respect.

Food Trade News Market Study: ‘Market Correction’ Has Begun; Gainers ShopRite, Giant/Carlisle To Seize More Future Opportunities?

Even a casual observer of the state of the food industry in the Delaware Valley market five years ago knew that Armageddon was coming, and on January 5, 2012 when Genuardi’s (Safeway) announced it was withdrawing from the market, you could put a definitive time stamp on when the “change game” became official.

But that time stamp was only a marker, the erosion of Genuardi’s, Acme and A&P/Pathmark/Super Fresh can actually be traced to the last millennium. The bumpy roads traversed by the former “Big Three” have been well documented. Now comes the hard part: predicting what the $20 billion market will look like over the next 24 months as more seismic change is likely to occur.

While we bid adieu to Genuardi’s (in my mind, I still think of the regional chain as a great family-owned retailer), next up on the merry-go-round are the futures of the Tea Company and Acme, given their declining states in a market they once owned.

A&P’s destiny seems more controllable with new chairman Ron Burkle no longer saddled with significant debt and having negotiated new more efficient labor deals post-bankruptcy. Burkle and A&P are no longer under any great pressure to make a quick move with some of their underperforming properties. So, while the timeline for A&P to do “something” isn’t as urgent, we all must remember that Mr. Burkle is first a venture capitalist. That said, there’s a lot more value in A&P’s real estate than there would in sinking hundreds of millions of dollars into its stores to get them in game shape in the hope that the whipping the company has taken from ShopRite over the past 20 years would begin to abate. And given the Tea Company’s continually declining sales in theDelawareValley, a major cap-ex investment into store improvement would seem wasteful.

Look for the sell-off/store closings to begin later this year.

As for Acme, the situation is more dire. While it’s clear that at A&P Burkle has a plan, and after the bankruptcy exit and subsequent private control, doesn’t have to rush into any hasty decisions, the situation Acme is quite different and the retailer is almost in a checkmated position.

It was only three years ago that Acme was still the market leader in the 15 county area before being supplanted by ShopRite in 2010. If the trend line continues for another two years, both Giant/Carlisle and Wawa will climb ahead of the Malvern, PA unit of Supervalu. As terrible as the leadership has been at SVU for the past six years, the time is at hand for theEden Prairie,MNbased company to consider selling stores at discount prices and closing others that don’t have appreciable market value. The idea that bungling CEO Craig Herkert was reportedly looking for a billion dollars for Acme (and its Shaw’s unit, too) was laughable a few years ago; now it looks unfortunately like the company is nearly at fire sale status. What’s sad about this is that Herkert keeps pimping his “America’s Neighborhood Grocer” and “hyperlocal”

mantras while sales and market share are still free falling, there’s no appreciable cap-ex money for Acme, and morale within the company continues to erode.

The great sadness for me is the morale of the associates at Acme. I’ve been fortunate to meet hundreds of talented and loyal Acme employees over the years and their mental state is currently (pick one or more) angry, depressed, apathetic and/or concerned about their futures. They receive little information about their status from the hermetically sealed corporate enclave onFlying Cloud DriveinEden Prairie. Their CEO is either too insensitive or too afraid to address his own local troops directly. And in the past two months, the company named another new Acme president, Keith Wyche, who has little grocery industry experience and now has to absorb all the complexities and challenges of his declining company in one of the most competitive markets in the country.

This could be race between A&P and Acme as to who puts their “sell-off/store closure” plan into action first.

Of course, when these market corrections occur, there will be somebody to pick up the broken pieces. So, from my catbird seat, here’s my take on the other key players in the market.

ShopRite – The mighty men of Wakefern will always be in any discussion about store acquisitions and might be in the best position (despite limitations) to be a big buyer. Other than having the capital resources and depth of current members (and new members who are lined up) to make a significant play in the Delaware Valley market, ShopRite is fully unionized, potentially giving them “first dibs” on future purchasing opportunities. However, with thePhiladelphia (andNorthern New Jersey) market already heavily concentrated with ShopRite stores, getting FTC clearance will pose a challenge in certain areas. As for performance over the past 12 months, it was another A+ effort. The ShopRite store owners/members have truly become a wrecking crew. Wegmans, Wal-Mart, Wawa – bring them all on, because ShopRite continues to eat everyone’s lunch with their brand of great merchandising, talented and tenacious member/owners and a fearlessness that is truly special.

Giant/Carlisle – Once it reopens the 15 stores it agreed to acquire from Genuardi’s, cuts the ribbon on two if its own stores now under construction in E. Brandywine, PA and Havertown, PA and continues to grow its ID sales at its current rate, Giant/Carlisle could jump into the number two slot in the DelVal market as early as next year. It was kind of like a “Tale of Two Cities (markets)” for the unit of AholdUSA. In its coreCentral PA area, Giant/Carlisle struggled to match its big gains of the past few years (a much improved Weis and Wal-Mart were key impediments), but in the Greater Philadelphia area, the chain zoomed. During the past year, Giant/Carlisle opened its firstPhiladelphia unit (Grant Street) and, much like ShopRite, posted healthy sales because of its strong merchandising and modern store base while receiving some help from the problems that Acme and A&P face. With more cash than virtually any retailer on the planet, Giant/Carlisle (Ahold) is well-positioned to make a run at any stores that might become available, but being non-union, will undoubtedly meet with resistance from several UFCW locals. Of course, if A&P closes stores north ofTrenton, the union issue won’t be factor because of Stop & Shop’s organized status.

Wal-Mart – It was not only a better year for the Behemoth corporately, its number in theDelawareValley were also improved. During the past 12 months, the world’s largest merchant converted its South Philadelphia store to a SuperCenter and opened a new combo market inSpringfield,PA. Wal-Mart’s refocused effort on price seems to be paying off as witnessed by solid ID sales increases at its 53 stores in theDelawareValley. Wal-Mart has about six more SuperCenters planned for the region (both net new and expansions) and if it can ever get its act together with its “small format” concept (which could make Wal-Mart a potential player in an Acme or A&P sell-off), then the mega-retailer could pose an even bigger threat. As I’ve told many retailers over the years, “Just because you can better compete with Wal-Mart, don’t forget about them.” Even though Wal-Mart may be sloppy in some area (service levels, customer service, perceived cleanliness), when you achieve the extremely high per store volumes that the retailer can produce, Wal-Mart will always be a major competitive threat.

Wegmans – With only seven stores measured in this year’s market study (an eighth unit inKing of Prussia,PA opened last month after our measuring period ended), it’s hard to conceive that the uber-retailer fromRochester,NY could be such a competitive factor. But when you remove $1.5-$2 million a week from a given market, the competition finds that the hole in their donut becomes much larger. Wegmans has an unbeatable model that wins both on the top line and with a consumer image that’s best in class. Perhaps the only thing that can slow Wegmans’ growth is its own ability to maintain such high standards as it continues to expand geographically. Will that “stretching” point ever become a significant factor, given the intensiveness of Wegmans training and attention to detail? One potentially scary fact for the competition: if Wegmans can ever master its new smaller stores format (it will open a 70,000 square foot new store in tony Chestnut Hill, MA), then it becomes a company that can offer up a Nolan Ryan 100 mile per hour fastball along with a Steve Carlton knee-buckling slider.

Wawa – The Wawa story remains a remarkable one. Like Wegmans and Whole Foods, the area’s third ranked retailer has achieved the rare “perceived excellence” rating from its customers and continues to produce the highest per store averages (not counting fuel) of any convenience store operator in the country. With superlative CEO Howard Stoeckel retiring at the end of the year (he’ll remain on Wawa’s board), it will be interesting to see how Chris Gheysens, whose background is in finance, puts his mark on this iconicDelawareValley retailer. Gheysens will have a lot on his plate with the company’sCentral Florida expansion on tap. I’m not expecting much to change, because in Wawa’s case, why try to tinker with something that’s working so well?

Weis Markets – Not a significant player yet in the Delaware Valley, but with the recent acquisition of three Genuardi’s stores and the leadership ability of chief executive Dave Hepfinger and his team, Weis might become a significant factor soon. With no corporate debt, Weis is also well-positioned to enter any future A&P or Acme sell-off/store closure scenario. Four years ago, despite having a handful of stores on the fringes of the DelVal market, I never thought of Weis as a prime-time player in the market. However, with the aforementioned upgraded leadership team, an impressive new 63,000 square foot prototype and deep pockets available for future acquisition opportunities, don’t be surprised to see Weis dive into theDelawareValley fray more aggressively.

 Food World Market Study – Market Gridlock: Nowhere To Run, Nowhere To Hide

In the early stages of assembling our market study issue, I noticed that a slight thinning of the herd might have somewhat eased the gridlock that has suffocated the Baltimore-Washington market for the past decade.

After all, during the past 12 months, market leader Giant/Landover closed five stores, second ranked Safeway operated six fewer stores than last year and Food Lion closed nine units as part of a corporate restructuring that saw 25 stores shuttered and the elimination of its Bloom banner. And A&P (Super Fresh) virtually disappeared altogether.

Let it be stated that suffocating continues as most retailers in the B-W market and throughout the entire Mid-Atlantic region once again realized on a relative basis that only growing slightly or in some cases, surviving, wasn’t such as bad thing.

Folks, it continues to be tough out there and, despite some closures, there are still too many stores in the market with diverse operating styles. Given that diversity and significantly changed consumer buying habits, it look like gridlock is here for at least the next few years.

That said, here’s my take on the players in the B-W market for the past year and looking ahead, too.

Giant/Landover – There’s a new sheriff in town (note to old-timers: he doesn’t reside on Sheriff Road anymore) and he is Anthony Hucker, who assumed the top spot in Landover last October. Hucker’s extremely intelligent, has a strong pedigree (Wal-Mart, Aldi) and is a great listener. After several years of aggressive store improvements and culture change (the old Stop & Shop taint is gone), this past year was one of settling in. Over a three year period, the stores are improved and Hucker’s right hand men – Jim Nazzaro in merchandising and Shane Sampson in store operations – are first rate, but Giant has been somewhat victimized by the after-effects of Ahold USA’s huge corporate consolidation which was completed last year. We were promised more local merchandising and decision making. To date, there’s been little progress to report on those fronts and the stores themselves seem very vanilla. I’m certain Hucker, his boss Carl Schlicker (COO of AUSA) and Jeff Martin (EVP-merchandising AUSA) are all aware of this, but from an execution analysis, the pace needs to be accelerated. Having known Schlicker and Martin for many years and gotten to know Hucker a bit in the past few months, my bet is that within 12 months Giant will have made significant strides with these “local” initiatives.

Safeway – Did somebody say “vanilla?” Actually, Safeway has shown it can produce a lot of “flavor” when it wants to (its on-site replacements in Georgetown, Olney, MD and Bethesda, MD, etc,. are elite stores by any measure), but as it has been over the past few years, there isn’t enough balance between those high-flying replacements and the typical Safeway unit that comprises most of its local fleet. Its marketing/advertising program is solid, but I don’t think Safeway gets enough credit for running a strong ad and promoting its “specials” aggressively. Perhaps that’s because it got into the price repositioning game a bit late or perhaps it’s because many of its stores look like it’s still 2005. As I’ve said many times, Safeway is on solid ground with great store locations and knowledgeable local leadership. As an observer in the box seats, I wish Eastern division president Steve Neibergall and VP-merchandising Rick Stein would be allowed more improvisational opportunities. They certainly have the talent and it would be interesting to see what Safeway’s eastern division could accomplish if the leadership team at headquarters in Pleasanton, CA would loosen its corporate grip.

Shoppers – If you’re looking for positive, the losses at Shoppers over the past 12 month were mitigated to some degree, but on an overall basis the prognosis is still not good. It took the loss of its price image several years ago coupled with years of ineptness from parent company Supervalu to put Shoppers in its current state, but it’s hard for me to see the once mighty regional chain regaining its glory days of a decade ago anytime soon. Yes, the negative IDs continued, but not as profoundly as in the past three years. So, how can Shoppers regain its mojo? Finding a new president whose talent and independence can make a difference would be a good start. However, given the personnel cutbacks at the company in recent years, a dried up new store program and (most importantly) a chief executive at Supervalu (Craig Herkert) who is totally delusional about how his retail banners are performing (or will perform once the new analytical tools and hyperlocal marketing program kick in), I’m not going to the $50 window at Pimlico and making any bets. Then again, if Supervalu would just replace Herkert, the odds that Shoppers might improve would increase substantially.

Food Lion – As far as Baltimore-Washington goes, Food Lion (Bottom Dollar) is almost yesterday’s news. Sure, it still has 93 stores in the market, but other than a handful on the outskirts of the market, the retailer continues to head toward becoming middle of the street “roadkill.” Over the past six months, it has closed stores, converted some Bloom stores back to the Food Lion banner while purging the Bloom banner altogether (parent company Delhaize America stated the Bloom name has been “retired”). Remember Bloom? Only six years ago, this new upscale model was supposed to provide a differentiated alternative for a more upscale demographic (like the DC-Northern Virginia market). Within a year, the Bloom stores reduced customer service dramatically until the concept finally fizzled. Now Food Lion is attempting to reposition itself again with a fresh look, lower prices and a new private label program – “My Essentials.” It almost begs the question, “What took them so long?” The company’s revitalized look and new marketing programs may be successful in some markets, but Baltimore-Washington won’t be one of them.

Harris Teeter – A very solid year from a very good retailer. Although they share some similarities to fellow North Carolina based Food Lion (their headquarters are about 50 miles apart, both chains operate in the Southeast and Mid-Atlantic and both are publicly-traded), there are miles of differences between the two organizations. Food Lion never paid much attention to customer service, didn’t seem very interested in upgrading its “fresh” departments and milked its price reputation until it became obvious to everybody that Food Lion hadn’t been a “price” player for almost a decade. Food Lion’s “one size fits all” program should have disappeared long ago, but really wasn’t addressed until last year. At Harris Teeter, the devil is in the details and president Fred Morganthall understands the value of those details – be it customer service, customizing plan-o-grams toward regional preferences or putting the time and financial resources towards associate training (not a popular line item on Wall Street). The attention to detail has paid off and, while Harris Teeter is still struggling with some “green” stores outside the Beltway, its entry into the B-W market has been largely successful. With at least six more new stores on the drawing board, Harris Teeter has proven it can compete with almost everyone in the B-W market as long as not too many more Wegmans open nearby.

Wal-Mart – While the Behemoth began to turn things around last year from a corporate ID sales perspective, its stores in the B-W market have actually performed better than the company’s national average. Again, it’s all relative because “flat” sales at a million dollar a week SuperCenter still means somebody else is feeling the pain. The boys from Bentonville have found the right man in Bill Simon to head its U.S. operations. Simon’s a no-nonsense, top line driven executive who has brought back the fierce price-driven mindset that the company utilized to its advantage for many years. Not that price ever strayed too far, but the previous huge emphasis on SKU reduction and private label growth has been tempered by a more singular effort to move product. In the B-W market, Wal-Mart is expanding consistently with 3-5 new Supercenters a year (either new stores or expansions), and if its much ballyhooed “small format” program ever gains some momentum, then competing retailers will not only have to worry about a Stephen Strasburg-like 100 mile per hour fastball, but also a Hoyt Wilhelm-like knuckleball. On the downside, the service levels at its SuperCenters have never been worse, and the Behemoth is costing itself millions with its worsening out-of-stock performance.

Wegmans – For those retailers who have to compete with the Rochester, NY uber-merchant in Howard County, MD and Anne Arundel County, MD there will be some pain felt during the next four months. With new store openings slated for Columbia (June 17) and Gambrills (October 28), much of that hurt will be felt by the market’s two largest operators, Giant/Landover and Safeway, because both new Wegmans units have the potential to consistently do $2 million per week. Volumes like those can crater any local marketing area and with the widest reach of any retailer in the entire Mid-Atlantic, Wegmans will dish out some collateral damage. When the Gambrills unit opens in October, Wegmans will have opened four new Maryland stores in 17 months (totaling a combined 550,000 square feet of space), with other B-W units planned for Germantown, MD, Owings Mills, MD and Alexandria, VA.  And now that the uber-merchant announced it will build a downsized 70,000 square foot store in Chestnut Hill, MA, that smaller model opens up a world of possibilities for the family-owned company. Some trade observers have pointed out that Wegmans’ world-class customer-service and product in-stock (service) levels have declined slightly over the past year, but I’m not seeing anything that’s potentially damaging. Wegmans is by far the toughest retailer in the Mid-Atlantic to defend against because of the uniqueness of their model and their high level of execution on every front. One long-term question concerning Wegmans’ future: will the company’s tremendous growth initiative (both in new stores and geographical expansion) ultimately dilute its ability to perform at the same high levels as it continues to add new stores and develop the necessary management talent?

Another Stellar AholdUSA Vendor Meeting In Hershey

I know there was some criticism of last year’s AholdUSAvendor meeting, primarily in terms of the length of the event. And perhaps that criticism was justified. My perspective has always been a bit different – when a key retail customer is willing to share so much data with their vendor partners and delivers it in the professional, thoughtful manner that Ahold always does, length should be secondary to the quality of information that’s provided.

This year’s session entitled “Reshaping Retail At Ahold,” should not bring criticism from any quarters. The annual event attended by nearly 1,700 vendors was cut to a half-day confab. The individual speeches were shorter and zippier, but still provided enough meat for any supplier, distributor and broker to feel satiated.

With the sudden departure of Jeff Martin just a week earlier, the Ahold executive team had to do some scrambling to rearrange the agenda, but everything turned out flawlessly in the four hour time frame.

COO Carl Schlicker led off the meeting with a global overview of the entire Ahold organization (3,008 stores; 215,000 employees; $42 billion in annual sales). He provided the audience with a global financial report card for fiscal 2011 (5.5 percent sales growth; 4.8 percent underlying retail operating margin; and net income of $1.4 billion, a 19 percent increase over the previous year).

Schlicker apprised the vendors of Ahold’s strategic thinking, noting the organization’s strengths (“prime locations, excellent operations, innovative assortment and multiple formats”) and its balance (“passionate and focused associates, simplified structure and financial credibility”). The veteran industry executive also noted the differentiation between creating growth (formats for densely populated areas, tailoring, mass personalization, innovative assortment, small formats and online sales) and enabling growth (flexible, highly skilled personnel, retailing in a responsible way, efficient process and scale, value chain collaborations and sustainable products). One of the recurring themes of the entire program was that of increasing customer loyalty. Within that objective, Schlicker stated that Ahold must continue such initiatives as Peapod, “Project 100” (an initiative to make better use of existing store space) and “best in fresh.” He also addressed Ahold’s desire to expand its geographical reach (the company has $3.2 billion to spend on potential acquisitions and cap-ex improvements) noting such recent deals as Ukrop’s, 15 Genuardi’s stores, three Fresh & Green’s units and three King Kullen stores on Staten Island. He later added that Ahold is looking for further acquisition opportunities to the south and west of its Northeast base.

Schlicker then focused on the big retailer’s U.S. performance (four divisions – all number one in local market share except Stop & Shop NY, which is ranked third behind ShopRite and A&P; 759 units and leadership of all web driven grocers with its Peapod unit).He recapped last year’s accomplishments: surpassed $25 billion in sales; increased market share in all divisions; grew total households; realized cost savings; exceeded budget for second year; completed transition and single host initiatives; and continued to have a positive impact in its communities.

However, moving forward, Schlicker noted that the current impact of economic and business trends are already presenting new and difficult challenges. He cited the slow economic recovery; low consumer confidence; high gas prices; the decline of the supermarket channel; overall cost pressures; and a political environment, both at the national and state level that he termed was in a “stalemate.”

He noted that consumers now have more shopping choices than ever and acknowledged that Ahold USA can’t be all things to every shopper. However, he said that the right combination of quality coupled with price and convenience is a formula that will work for the retailer. Schlicker added that other components such as Ahold’s investment in technology will pay dividends for the company, both as new ways of reaching the consumer as well as understanding changing shopping habits.

As he neared the end of his talk, Schlicker introduced his management team, stating that he was proud of every one of them. In closing, the veteran of nearly 40 years in the industry declared that the winning formula for Ahold continues to be “Price + Quality + People + Value.”

Next up was a triumvirate of senior VPs – Eric Keptner (marketing and consumer insights); Jeff Dichele (non-perishable merchandising); and Steve Mayer (fresh merchandising). In a very interesting interactive dialogue, the three “amigos” focused on customer loyalty. Keptner noted that three key loyalty benchmarks – primary households, market share and recommend to a friend – all continued to grow in the past year. He added that AUSA’s goal is to retain its primary customers and migrate secondary customers to primary ones while profitably growing the total customer base. He urged the vendors to collaborate on actionable insights (CCR- Customer Centric Retailing), continue to support Ahold’s brand building priorities (‘Bonus Buys,” “Real Deals,” fresh brands, own brands, health and wellness, “local” programs and community engagement) and become engaged in customer specific marketing, loyalty programs and digital customer communication.

Dichele, in his typical dry, wry and self-deprecating manner, reviewed a scorecard which indicated that those vendors who partner with AUSA’s CCR initiatives are seeing better results. Dichele also noted the growth of CCR vendor partnerships in 2011.

One of the retailer’s most important priorities over the past two years has been an aggressive expansion of its digital platform. That will continue this year and in 2013. By the end of 2012, AholdUSAwill have made its mobile shopping list application available to customers in all divisions; it will strengthen its email marketing program; and it will integrate loyalty discounts with more load to card offers. Moreover, the chain’s “Scan It” mobile application will be usable in all “Scan It” stores. The retailer will also offer more grocery pick-up options and broaden its social coupon sharing in-store.

Also reviewed was AUSA’s gas rewards program, which grew from a participation rate of 25 percent last year to 33 percent in 2012.

The new kid on the block, Raymond McCall, senior VP-pharmacy and HBC, who joined the company 11 months ago, revealed some of Ahold’s health and wellness strategies including the expansion of its in-store clinics. Currently there are four such clinics operating under the company’s Giant/Carlisle banner. McCall hopes to expand the program to the other three divisions. He also spoke of the importance of healthy living and getting involved with AUSA’s “healthy ideas” plan which involves promoting foods that meet FDA standards for “healthy.”Vendors can partner with the chain through its “Healthy Ideas” magazine and “Kids Healthy Ideas” magazine and Ahold’s 2013 Health and Wellness Calendar. McCall noted that Ahold has a global goal that 25 percent of all products met the “healthy” criteria by 2015.

Mayer returned to the stage, this time as a solo performer. He reviewed dollar share progress for 2011 among all the five fresh departments (bakery, deli, meat, produce and seafood) and noted that only deli and seafood were down (produce was a big gainer). Mayer even threw in a little “schtick” when he unveiled his “freshness walks” checklist (“think like a customer; walk all departments in fresh to ensure that guest expectations are met”). He urged all department managers, store managers, division teams and support center associates to do the “freshness walk.”

I’ve always felt that the sales development job in the merchandising arena was among the toughest, and Ahold veteran Jodie Daubert is not only well qualified to supervise sales (she’s done so many different jobs in her 25 years with the organization), she brings a real creative flair and passion to the job. Among the new programs that Ahold will be rolling out this year are: a new club store initiative; a “push” program designed to create new sales through special purchases, season buys and cross-merchandising opportunities; meal ideas – which will incorporate time saving idea, cooking skills, budget, size of family, planning/organization and health consciousness to help both Ahold and its customers make easier and better choices with their meal planning; and an improved in-store demo program that Daubert promised would be informative, interactive and fun while utilizing more advanced technology. She also noted the importance of increasing AUSA’s unit sales.

Entering the stage as though he had been shot from a cannon, executive VP-operations Bhavdeep Singh gave a rousing and passionate performance about AUSA’s stores. Without slides or notes, the former A&P executive talked about the need to rethink everything. “We are a good retailer now,” Singh explained, “but we have to get better.” Singh noted the importance of increasing the engagement level with the associates – “our existence depends on the excellence of our people,” adding that “within our stores lies the future of the company, from store managers to division presidents.” He offered that, while Ahold often makes its vendors accountable, the process should work both ways. “Whether it’s an improper display, a problem with in-stock conditions or an employee who can’t explain something about your product, please let us know,” Singh said.

The meeting’s last speaker was Tracy Pawelski, Ahold’s VP-community relations and external relations. Because of its special place as a provider of food, Pawelski noted that grocery retailers have a fundamental and basic responsibility that’s different from other industries, to help the communities they serve. She thanked the suppliers for all their charitable and philanthropic efforts, noting that vendors have contributed $8.7 million this year and Ahold has doled out $51.3 million in product and cash to fight hunger, improve children’s lives and build healthy communities. Another excellent speech filled with emotion and passion.

Carl Schlicker then returned to the stage as he and his merchandising and marketing team presented AholdUSA’s 2011“Vendor of the Year” awards. And the winners were…Marketing Partner of the Year – Dave Schemer/General Mills; DSD Vendor of the Year (VOY) – Brendan Brazel and Mike Cassara/Coca-Cola Refreshments; Diversity VOY – Mariagrazia LaFauci/Be Satori; Non-Perishable VOY – John Hamm/Jeff Mullinix/Acosta; and Fresh VOY – Joe Musacchia/Hormel Foods. Kudos to all.

A brief “Q&A” followed which revealed that the growth of Peapod is a major initiative in Ahold’s future plans and that the company hopes to achieve a whopping 40 percent sales level of penetration with it is own brands.

And in true Carl Schlicker form, in closing, the former Marine from New Jersey declared, “It’s not the glory, it’s the mission.”

 ‘Round The Trade

Acme Markets cut the ribbon June 1 at its Bryn Mawr, PA replacement store and the new unit represents a major, major upgrade from the old store, which like most of the Ac-a-me’s “Main Line” units was old, small and dingy. It’s too bad that former president Dan Sanders wasn’t around to see the “birthin’ of the baby.” Instead, in his first major move as head of Supervalu’s large Southern California Albertsons division, Sanders had to riff more than 2,000 associates (he must feel like it’s Acme – déjà vu all over again). According to an internal memo, “Every district and store will approach this in ways to best meet the needs of their respective business and neighborhood. This process should be complete by the week of July 1. We anticipate that the workforce reduction will impact about 2,200-2,500 positions. In addition to the layoffs, some positions will be reduced from full-time to part-time status. All of this will be done in accordance with union contracts. We expect this change will directly impact a small number of positions at any specific store location.” And as for Supervalu CEO Craig Herkert, the brilliant mastermind who’s really behind all the whackin’ and hackin,’ don’t feel badly for him. Supervalu just released Herkert’s salary and bonus for the year ended February 28, 2012. While his company may have had a putrid year, Herkert wasn’t feeling too much pain as witnessed by his total compensation of $2.09 million. Part of that robust figure included a $364,395 bonus which the company paid to him in April. And because of his continued “stellar” performance, the board sought fit to give him a $75,000 basic salary increase for fiscal 2013. That’s a true Mutual Admiration Society: SVU’s board of directors and “The Spinmeister” himself. Perhaps by the time Supervalu holds its annual shareholder’s meeting on July 17 in St. Louis, disgruntled shareholders will mount enough resistance to finally force some changes to the board and leadership of a once mighty company…according to several sources, the Wal-Mart annual shareholders meeting held June 1 in Fayetteville, ARwas a much more subdued affair than usual. The somewhat somber tone of the meeting was set by CEO Mike Duke, who emphasized to shareholders that the world’s largest retailer, which is celebrating its 50th anniversary in 2012, will fully investigate its bribery scandal, which occurred about eight years ago, but just came to light in April, when the New York Times published a blistering story about the methods of Wal-Mart’s growth in Mexico. “Let me be clear,” Duke pledged to the crowd of about 16,000 who gathered at the Bud Walton Arena at theUniversity ofArkansas, “Wal-Mart is committed to compliance and integrity everywhere we operate. I want to personally assure you that we’re doing everything we can to get to the bottom of this matter.” And despite the efforts of three of the largest pension funds (and Wal-Mart shareholders), who voted against members of Wal-Mart’s board (Duke, former CEO Lee Scott and chairman Rob Walton were specifically targeted), all 16 director were reappointed. However, before the business affairs part of the meeting occurred, Wal-Mart once again staged an extravagant entertainment-fest for the shareholders. Taylor Swift, Justin Timberlake, Lionel Richie, Celine Dion, Juanes and the Zac Brown Band all performed before the large and enthusiastic audience. Even former President Bill Clinton appeared in a pre-recorded video in which he praised Wal-Mart’s sustainability efforts. In other Wal-Mart news, the Bentonville, AR based merchant reported that its first quarter financials were improving. In the U.S., operating income rose 8.1 percent and comp sales increased 2.6 percent. Other positive metrics included a 1.1 percent growth in traffic and a 1.5 percent gain in average ticket size. “Price was the focus of our first quarter marketing and this will continue to be a key message this year,” said Bill Simon, president and CEO of Wal-MartU.S. While Wal-Mart clearly made gains focusing on its core price programs, they did come at some cost as its gross profit rate declined by 24 basis points, reflecting those price investments. And the Behemoth just can’t seem to rid itself from those “frivolous” lawsuits and settlements. Last month, the big retailer agreed to pay $4.8 million in back wages to more than 4,000 associates after an investigation of the U.S. Department of Labor found violations of the Fair Labor Standards Act’s overtime provisions. On top of the $4.8 million, Wal-Mart will pay about $464,000 in civil fines…Wegmans has completed the third phase of its largePottsville,PA (Schuylkill County) distribution center. The $70 million investment includes a new 492,000 square foot depot and will warehouse fresh and frozen foods. About 200 new jobs will be added, bringing the total number of Wegmans associates at the Pottsville complex to 529. A bit further south, Wegmans enjoyed another uber-huge at its store in Columbia, MD. And could there be a Wegmans coming toWashington,DC in the near future? After a meeting with Wegmans officials last month, DC Mayor Vincent Gray suggested that theRochester,NY retailer is interested coming to the District. Gray mentioned two possible sites: the Walter Reed Medical Center in Northwest and the St. Elizabeth’s Hospital redevelopment project in Southeast DC…one of the recurring issues that the grocery industry has to face is the growing number of bottle bills that seem to be part of many city governments’ attempts to secure more revenue. Last month it was announced that the city of Richmond (VA) voted to put a special soda tax proposal on the general ballot on November 6. Earlier, Baltimore City tried to raise the ante on its already harmful 2 cents per bottle tax to 5 cents. Earlier, this month, New York City Mayor Michael Bloomberg offered up the granddaddy of all stupid bills when he proposed a ban on the sales of sugared sodas larger than 16 ounces. We all agree that most of our country’s larger cities are facing huge revenue shortfalls. And I think we can all acknowledge that obesity, particularly, childhood obesity, represents a major health crisis today. On the first point, it is not the responsibility of beverage industry or the retailers its services (or for that matter most businesses) to subsidize the financial problems of any municipality. And as for obesity, you can’t change social habits by restricting availability of a product. The problem doesn’t lie with the manufacturer that produces the product or the retailer that sells it…very solid opening for the new 56,000 square foot ShopRite on Perring Parkway in Baltimore which cut the ribbon on June 1. The former Super Fresh store (which has been closed since 2007) has been very nicely refurbished and is in an area that is somewhat underserved. The project is the first of two that ShopRite operators the Klein family and Jeff Brown will open. Next year, the two retailers will open their 68,000 square foot “from the ground up” ShopRite store in the Howard Park (Liberty Heights Road) section of Baltimore, which clearly is a food desert. And at parent company Wakefern, ground was broken last month on a new 524,000 square foot distribution center that will replace a 50 year old depot in Elizabeth,NJ. The new warehouse is expected to be operational by May 2014 and will primarily handle dry groceries. And Wakefern’s second largest member, Village Super Markets, tripled its profit in its third quarter ended April 28. Net income was $6.54 million compared to $1.67 million in the prior year. Excluding a $4.24 million tax charge for the withdrawal liability from a multi-employer pension plan in the prior year, net income increased profit 11 percent. Same store sales rose a solid 3.8 percent and the 29 store Springfield, NJ retailer’s profit jumped despite losses in its two newMaryland stores as overall sales were $347 million in the 13 week period, an increase of 9.6 percent. During the third quarter, Village acquired Charlie Shakoor’s ShopRite in Old Bridge, NJ…on June 11, Weis officially closed the deal to acquire three Genuardi’s stores in Pennsylvania – Conshohocken, Doylestown and Norristown – and will re-open them by June 16…at presstime (June 15), Ahold USA still had not received official approval to close its 15 Genuardi’s store acquisition, although the company is hopeful of getting the final OK any day now. Once that deal is sanctioned, expect the 16th store in the original deal (Newtown, PA) to be sold to McCaffrey Markets, a potentially excellent location for the quality retailing style that Jim McCaffrey and his team have to offer…another high-volume, high quality retailer, Fairway Markets, which is considering going public (the high-volume retailer is principally owned by private equity firm Sterling Investment Partners), cut the ribbon on its second New Jersey unit, and 10th overall, in Woodland Park (Passaic County) on June 6 and early reports from the 63,000 square foot “foodie-a-torium” were that business is booming…I’m sad to report too many deaths this month, both from our industry and from the world of entertainment. Passing away at the age of 78 was Jack Twyman. Many of us old farts remember Twyman from his days as a National Basketball Association player with the Cincinnati Royals in the 1950s and 60s. During his basketball career he became the legal guardian for teammate Maurice Stokes, who had been left paralyzed after a head injury suffered during a game in 1958. His guardianship ensured that Stokes would receive medical benefits. After Twyman retired from basketball, he joinedDayton,OH based grocery wholesaler Super Food Service and in 1972 was named CEO of the company. Back in my earliest years in the food business, I remember Jack as being a true gentleman and a real industry leader on a national scale. Also passing on was Alan Dickson, co-founder of Ruddick Corp. , the former parent company of Harris Teeter. Dickson, 81, and his brother Stuart, founded Ruddick in 1968, which at the time consisted of the American & Efird Thread Company. A year later, the brothers purchased Harris Teeter. Also entering grocery heaven in the past month was Pat Roche, 83, who along with his brother, Daniel “Bud” Roche, founded Roche Bros. regional grocery chain in the Boston area. When I entered the grocery business in the mid 1970s, Pat and Bud were two of the most entertaining and shrewdest independent retailers in the Boston area. Pat Roche was a member of the Massachusetts Food Association’s Hall of Fame and was well known in New England as a great philanthropist. His good works included a $20 million donation to his alma mater, BostonCollege. Richard Dawson, one of the wittiest game show personalities in the history of television, passed away late last month at the age of 79. The British born entertainer first gained fame on the sitcom “Hogan’s Heroes” which aired 1967-1971. In 1976,Dawson debuted as the host of “Family Feud.” The game show become so popular it was aired in both daytime and evening versions for nine years. And one of my favorite guitar players of all time, “Doc” Watson, has left us at the age of 89. Blind since the age of one, Watson didn’t record his first album until he was nearly 40. To hear his lightning fast style of flatpicking was to listen to a true master at work. Watson received seven Grammy Awards. If you have a moment, listen to Watson’s rendition of “Tennessee Stud.” It will leave you craving more…one final note about Jeff Martin’s departure: during Ahold’s annual vendor meeting. Carl Schlicker paid tribute to Martin, noting his impact on the company and the 15 years of personal and professional friendship he enjoyed the him. “We will miss him,” Schlicker said to an audience filled with vendors and Ahold associates. “This hit us hard, but I’d like to thank him for 33 years of dedicated service to the company. He will always be a friend.” That was a classy thing to say about a classy guy from one of the classiest, most professional leaders in the entire industry.