Published on: May 7, 2009Supervalu Inc. announced yesterday that it has hired Craig Herkert, 49, who has been running Walmart’s Western Hemisphere operations outside the US, to be its new CEO, succeeding Jeff Noddle, 62, who has been in the job since 2001.
Noddle will remain as chairman for the time being, leading the company’s strategic efforts as the transition to the Herkert regime begins.
Previous to joining Walmart in 2000, Herkert worked for Albertsons, many of the assets of which Supervalu acquired in 2006.
Lawrence Del Santo, Supervalu’s lead director, said that Herkert's "recent experience leading diverse formats in some of Wal-Mart's fastest-growing markets, combined with his previous experience working at Jewel-Osco, Acme Markets and Albertsons, make Craig the ideal executive to lead the company forward."
The Wall Street Journal this morning suggests that there could be one possible wrinkle in Herkert’s move to Supervalu – a non-compete clause in his Walmart contract. The Journal writes: “Supervalu … may have to deal with a Wal-Mart noncompete agreement, which typically prevents the company's top executives from joining a specific list of rivals for at least a year, one grocery-industry recruiter said. Supervalu, the third largest U.S. food retailer by sales, is a Wal-Mart competitor. A Wal-Mart spokesman declined to comment about Mr. Herkert's noncompete agreement.
“Supervalu wouldn't comment whether or not Mr. Herkert has a noncompete clause with Wal-Mart. However, Mr. Herkert will start during the company's fiscal first quarter, which began March 1, a company spokeswoman said.”
The Journal also speculates that Herkert may be leaving Walmart because his path to the top of the company was effectively blocked, and that he had few other options within the Walmart bureaucracy. For example, when Doug McMillon recently became head of Wal-Mart's international division, the company went outside its own management team and brought in Brian Cornell, of the Michaels crafts chain and formerly of Safeway, to take McMillon’s old job running Sam’s Club.
- KC's View:
- One can imagine that at least some of the independent grocers that Supervalu serves might be distraught by the idea that their wholesaler will now be run by a man who worked for the company that has done its level best to put many of them out of business. It is our guess here that there will have to be some strategic diplomatic missions to certain retailers to assure them that things are going to be okay.
This hire underlines the fact that Supervalu is a very different company now--one of the largest retailers in the nation--and this hire suggests the increasingly importance on retail management. It's a massive change for such an old and storied wholesaler…and it may be tough for its wholesaler customers to swallow.
Now, there is certainly an argument that coming from Walmart, Herkert could be ideally positioned to help independents compete with his former employer. But one can also expect that some of Supervalu’s competitors will be out there looking for disenchanted customers that they can lure away. (I also would guess that there could be a few Supervalu executives getting calls from headhunters now that this move has been announced.)
It also occurs to me that this is not the first time that a Walmart executive has been enticed to leave the Bentonville Behemoth to run a major wholesaler. If I’m not mistaken, Mark Hansen ran Walmart’s Sam’s Club division for a couple of years before he went over to run Fleming…and we all know how that little experiment worked out. (I’ve met people who even now reserve a few minutes each day to curse Hansen and his tenure at Fleming.)
Herkert may indeed be “the ideal executive” to run Supervalu. But there will be those who will think that this may not be the perfect fit – especially because Jeff Noddle is a tough act to follow - and that will make his job a lot tougher.
In Minnesota, the Star Tribune quotes the always on-the-money Burt P. Flickinger III as saying, “To retire at 62 is too soon. It's absolutely critical to Supervalu as a competitor, as an employer and a company facing one of its most challenging times in its history, that Jeff Noddle stay on for at least a full year.”