retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: July 17, 2012

    by Michael Sansolo

    Fairly late on July 4th, power came back on to my neighborhood - some 105 hours after it shut off. Truckloads of debris disappeared, home repairs started, and just like that, normalcy returned.

    But it really didn't.

    When I wrote my last column, I was in the midst of recovering from an amazing storm that devastated my suburban Washington, DC, neighborhood. And I’m hoping that both the gratitude and anger that I'm feeling these days, along with many of my neighbors, will offer a life lesson.

    Here’s the gratitude: so many of you sent me e-mails offering sympathy and comfort that it was overwhelming and showed the power of a blog like MNB. However, the message that really hit home came from one long-time industry friend who said he watched coverage of the storm as we watch most things on television: with detachment, as if it were fiction. But knowing someone in the middle of it changed his feeling. Suddenly he worried. That touched me and I’m hoping that I keep that in mind next time I see a natural disaster or other event on television. It isn’t fiction. It’s real people, real families.

    So I thank you all for the kind wishes.

    As for the anger ... well, it has nothing to do with the utilities that failed or the damages we suffered. That stuff happens. Life goes on.

    During my extended clean up, I had some wonderful encounters. I worked side by side with highway department employees to clear branches. Hotel workers were kind and helpful, as were supermarket employees helping us get needed supplies. And there was my wonderful neighbor, whose family worked with mine to help clear both our homes of damage despite 100-degree heat.

    But despite all that - or maybe because of it - I find myself getting angry about the fact that so many people seem to fail to notice the good in each other.

    On July 4, the Washington Post ran a front page story about how the US is more divided than ever. I've read stories like this before, but this one made me really angry ... because I felt no division from all those people working with and around me. When I heard utility crews from Georgia and Oklahoma interviewed on the radio, no one said they regretted coming to a state that voted opposite them in the last election. In fact, one man said he was proud to help us because he knows we will repay the favor.

    Not once did anyone ask my position on the budget, health care, Afghanistan, gay marriage, military spending, etc. All we did was work together. (Okay, I protested once: when my neighbor came out of his house drinking a cola that is not made by the company for whom I do significant work. This neighbor works for the Baltimore Ravens and I told him that he turned me into a major Pittsburgh Steelers’ fan.)

    All we did was focus on the task at hand. I wish more people would do that.

    Our political leaders seem to think that division is what we want because it’s what gets them elected. I’m no Pollyanna and I know there are serious and broad disagreements about issues and politicians. Yet in the middle of a crisis, none of that mattered. It made me think that we are better than what we are getting and I’m hoping the MNB family will agree.

    Here’s my thought: we’re in the middle of another ridiculous election campaign where everything gets discussed and nothing gets done. We’ll see constant ads about how bad the “other” guy is, but little talking about what anyone is going to do better. Those ads run because negativity works, unless we tell them no more. I say it’s time.

    So here’s my proposal: whenever you see a political ad, Tweet or anything that is negative and nothing more - fire off a quick e-mail to the candidate supported by the ad and tell them “we deserve better - MNB 2012.” It’s not quite a Network moment (rent that film if you don’t get the reference) but it could work.

    Just imagine what would happen if a bunch of us started doing that; reminding our “leaders” that we demand better. Working in the dark I got to see the better angels of our nature and I enjoyed it. And what’s the point of a blog if you can’t spread a message like that?

    Next week I’m back to business lessons. I promise.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: July 17, 2012

    The Wall Street Journal reports that troubled Supervalu is expected to send out financial information to a wide range of potential buyers , including C&S Wholesale Grocers, which could be interested in acquiring its distribution business, and a number of private equity firms such as Cerberus Capital Management, Kohlberg Kravis Roberts, and TPG Capital.

    As previously reported, after a quarter in which Supervalu reached neither its sales or earnings goals, and a long and difficult road stretching in front of it before any sort of sustainable positioning could be achieved, the company said it would look into selling all or some of its assets.

    According to the story, C&S "is interested in buying Supervalu's distribution operations, people familiar with the matter said. C&S distributes groceries to around 3,900 stores around the country, according to the Keene, N.H., company's website. Run as a family business, C&S could look to partner up with a buyout firm to bid jointly for Supervalu and then separate the assets, the people added.

    "According to the people familiar with the matter, buyout firms could be interested in Supervalu's retail store brands, which include Albertsons, Shaw's, Acme, Jewel-Osco and Save-A-Lot. The Save-A-Lot discount chain brings in steady cash flow and, with 1,332 stores in cities such as Detroit and Tampa, could be especially attractive to private equity, the people said."

    The story goes on to say that "some Wall Street analysts have said Supervalu's debt load of more than $6 billion and operating struggles make a sale of the whole company difficult. The company also had about $1.7 billion of unfunded pension liabilities on a pre-tax basis at the end of its fiscal year in April - a burden that could limit what potential buyers are willing to pay for Supervalu, said the people familiar with the matter."
    KC's View:
    The big question may be whether anybody is willing to pay what Supervalu is going to want in terms of a check for all or part of the company. It is fairly well know that Supervalu tried to sell Shaws, its New England retail banner, several years ago but could not get the price it wanted.

    Right now, when it comes to Supervalu's assets, it seems safe to say that it is a buyer's market, not a seller's, and that Supervalu has diminishing leverage in the marketplace.

    Other than that, I would refer you to the emails on the subject in "Your Views," below.

    Published on: July 17, 2012

    by Kevin Coupe

    Worth noting this morning...the Los Angeles Times recalls an interview that it did in early 2011 with Marissa Mayer, Google's first female engineer and just its 20th employee, who yesterday was named Yahoo's new CEO at age 37.

    In that interview, the Times writes, Mayer "revealed that much of her work ethic came from her time as a grocery clerk when she was in high school. At that job, she said, she learned from others who had been working there for 20 years and could check out 40 items a minute.
    'At the grocery store, you have to remember to charge $4.99 a pound for grapes and 99 cents a pound for cantaloupe by typing in a number code,' said Mayer, who said she averaged between 38 to 41 items a minute. 'The more numbers you could memorize, the better off you are. If you had to stop to look up a price in a book, it totally killed your average'."

    There's another quote from the story, about Mayer's career philosophy, that is worth considering: "I realized in all the cases where I was happy with the decision I made, there were two common threads: Surround myself with the smartest people who challenge you to think about things in new ways, and do something you are not ready to do so you can learn the most."

    Eye-opening stuff.
    KC's View:

    Published on: July 17, 2012

    USA Today reports that a Delaware judge has denied motions brought by the California State Teachers Retirement System, and a group of New York City funds, each of which was looking to gain legal primacy in their efforts to sue Walmart and its senior executives over allegations that they "breached their fiduciary duties by allowing and covering up" widespread, systematic and systemic bribery in the company's Mexico operations.

    According to the story, the judge essentially said that both groups should take a deep breath and stop making "sloppy complaints" that seemed more driven by a need to be first than a need to be right. The judge, the paper says, "urged them to work together in demanding corporate records from Wal-Mart, taking time to investigate, then acting in the best interests of Wal-Mart stockholders."
    KC's View:
    Second day in a row when we've had lawyers in high profile cases being put in their places by judges. Must be something in the water...

    Listen, my suspicion is that there will be plenty to sue Walmart about when all the facts come out. So the judge is right - take a chill pill, and just follow the money, as Deep Throat famously said to Bob Woodward in All The President's Men.

    Published on: July 17, 2012

    ...with brief, occasional, italicized and sometimes gratuitous commentary...

    • Weis Markets announced it has lowered the prices on over 1,000 staple items and that it will freeze the prices of these products for 100 days in recognition of its 100 year anniversary this year.

    The company said that this is its ninth Price Freeze since 2009.

    • The Chicago Tribune reports that "Ace Hardware has launched a scaled-down version of itself in nearly 400 locations ... The new format, designed for 5,000 square feet or less, stocks more than 11,000 of the retailer's most popular and profitable products, the company said in a statement."

    According to the story, "Ace is following the footsteps of big box retailers such as Walmart, Target and Meijer, which are also shrinking their physical  footprint as they seek to continue growing in markets that aren't able to accommodate full-size retail locations."

    Small doesn't mean better, or more relevant, or even more convenient. It just means small. I'm a big fan of trying to find express versions of big box stores, but they require a rethinking of the concept and the mission, just just a little shrinkage around the edges.
    KC's View:

    Published on: July 17, 2012

    Yesterday, MNB took note of a CNN report on an Easley, North Carolina, funeral home where the owner recently expanded - and added a Starbucks coffee shop.

    Except that I screwed up. Easley, apparently, is in South Carolina.

    Apologies for the goof. This is not the first time I've made this mistake ... apparently I have some sort of Yankee block when it comes to the Carolinas.

    I'll try to do better.
    KC's View:

    Published on: July 17, 2012

    • Stephen R. Covey, the best-selling author of “The Seven Habits of Highly Effective People: Restoring the Character Ethic" and a number of sequels, died on Monday at age 79, of complications related to a recent bicycle accident.
    KC's View:

    Published on: July 17, 2012

    Since I am currently spending the month in Portland, Oregon, team-teaching a course at Portland State University, I've gotten a number of requests from folks asking if I would have one of those casual get-togethers of MNB readers that I do around the country from time to time.

    My answer: Absolutely!

    Next Tuesday, July 24, at about 6 pm, I am going to be sitting in the open courtyard at Nel Centro, located in the Hotel Modera at 515 SW Clay St in downtown Portland. (You'll know me because I'll be wearing the smile of a guy who is living the dream...) I'll buy the first couple of bottles of wine, and will hang out as long as anyone wants me to ... or at least until I have to head back to my home-away-from home to get MNB done for Wednesday.

    I hope I see you there...
    KC's View:

    Published on: July 17, 2012

    Lots of email responding to yesterday's reporting and commentary about the fine mess that Supervalu seems to find itself in...

    One reader wrote:

    What you have to realize to understand Supervalu's management is that Walmart and Costco are not seen as "traditional" competitors - let alone Amazon. Most of the management benchmarks against old-school grocery chains like Giant and Dominick's. Walmart is an emerging threat if anything, and there is no widely-understood high-level strategy in place to compete with them.

    All of our emphasis has been on short-term, unprofitable promotions for the past 2-3 years, while anyone bold enough to raise the bigger issues of brand strategy and competitive positioning has been sidelined or let go.

    Really? There is someone at Supervalu who has described Walmart recently as "an emerging threat"?

    Because if there is someone like that, they ought to be fired for incompetence.

    Saying Walmart is an emerging threat is like saying that one of these days, Tom Brady will really learn how to throw a football....

    From another reader:

    Concerning your story about Supervalu, it really points out the dire straights this company is in.  The current cuts are dramatic.... Whereas Supervalu used to provide it's corporate employees with free coffee, tea, paper plates and plastic eating utensils, the new policy is that you pay for it or you bring your own from home. Whereas Supervalu used to provide a wastepaper basket and a recycle basket for each cubicle, now employees have to take their trash and recycles to a central location.  These are the hard hitting decisions corporate is making to save this company.  Not only is this a token move (how much can they actually save) it highlights to the employees that they are an expense rather than an asset.  Is this the type of big decision making that stockholders are looking for?  I can't imagine there are too many at Supervalu who feel confident in their jobs.  What a lovely working atmosphere.

    As far as getting competitive on prices, why does it take so long to implement?  Competitive pricing has been the mantra for some time now.  Why not give the store managers the discretion to shop competition and price accordingly?  After all, they are the ones on the firing line.  They are the ones whose jobs are in jeopardy if profits and sales aren't there.  If a person is good enough to manage a store, they should be good enough to set pricing.  I'm not sure where the idea came from that Corporate is the genius behind running stores, but that philosophy hasn't worked.

    Supervalu is on a very slippery slope.  Laying off front line people will only make their stores less attractive destinations for customers.  Here's a novel idea, why not lay off some of their multitude of Directors and VP's.  These are the people that are making the decisions that don't seem to be working.  Their salaries would have saved a bunch of part time store personnel from being let go....  It would also have paid for a few cups of coffee or tea.

    Interesting how some of this same territory was covered by another email, though with a more positive slant:

    Changes are being made at our Store Support Centers and outlying facilities to help reduce expenses. First, a decision has been made to change our food service vendor at seven office locations across SUPERVALU, effective July 30.

    After reviewing all potential food service suppliers, including the current suppliers at SUPERVALU office locations, Treat America was chosen as the food service supplier for seven of our locations including Boise; Eden Prairie (2 sites), Chanhassen and Hopkins, Minn.; Earth City, Mo.; and Franklin Park, Ill. This change should not have an impact on prices for our cafeteria offerings.

    As part of these changes, a decision has also been made to eliminate the free coffee and hot beverages traditionally provided at our Store Support Centers and outlying office facilities, also effective July 30. Additionally, complimentary cups, sweeteners, creamers, stir sticks, plates and utensils will no longer be provided. Associates from across the company have suggested this change as a cost-savings idea, and this modification alone will save SUPERVALU over $350,000 per year that can be reinvested into our business. As an alternative, at some locations, coffee and hot beverages will be available for purchase at a moderate cost, or a coffee maker will be made available to allow associates to prepare their own hot beverages on site.

    Another MNB user wrote:

    I have been a follower of  the grocery business and news as I have made my living developing grocery anchored shopping centers since 1980.  You hit on something when you mentioned Jeff Noddle and his departure.   My contacts in SV told me at the time of his departure that it was a combination of him shown the door and his willingness to walk through it because of the Albertson purchase debacle.  They recognized  almost immediately that the new debt, in addition to the cost of integrating the purchase was through the  roof compared to what he thought it was going to be.  While I am definitely  not a fan of Craig Herkert, I think he realized pretty quick after he came on board what a pile he has stepped in.

    Another MNB user chimed in:

    Been reading your blog since the day I left Albertson's - basically when the transition to Minneapolis happened. While I admit ALB had problems - I have watched from the side lines and watched this decline - it started the day we turned out the lights in Boise in May 2007.

    I've been through a number of sales and transitions and this was the worst I've seen  - SV pitted legacy teams against other and tossed Daymon in the middle with the power to collect as many fees as possible. There was never any culture of collaboration - it was aggressive, nasty and did irreparable damage to vendor relationships (no wonder vendors won't help on pricing - they've given all they can for years with no return). The result of this nastiness - the percentage of experienced retail, private label and store ops people who first signed on and then changed their minds was staggering (from 60 people to less than 8 in one Dept.) We all sat there and said how are they going to run thousands of stores with no one moving to Minneapolis.

    I consulted for a few month after but even as a contractor got sick of the "rudderless ship" and took an offer to get back in the biz and ended up at Target working on PFresh - cashed out my SV stock at $46 a share and never looked back. I'm sad for both the legacy Albertsons and the legacy Supervalu peeps - they got screwed by both Larry Johnson and Jeff Noodle and now watching Craig Herckert drive it into the ground - what is the airline or fighter jet term "unrecoverable stall"? Aren't you supposed to push the nose down and pick up speed to recover-  not pull back and slow down till you stall in 2014.

    Lucky you sold that stock at $46 a share. Yesterday, it closed at $2.48.

    One MNB user wrote:

    Your story and commentary concerning Supervalu’s plan to prosper by cutting made me shake my head in bewilderment.  It also brought to mind a piece I first read about on one of my hometown TV news channel’s (WHEC TV 10) website:

    The website Business, has named Wegmans one of 16 brands that have "fanatical cult following."

    The article lists Wegmans with other popular brands like Harley Davidson. It says Wegmans is something that people want to be a part of and they feel a sense of belonging while they're shopping.

    Customers say they are proud to be fanatics. Shoppers said it's a combination of atmosphere, variety and freshness.

    Genevieve Yaeger said, "It's like heaven on earth. It's like if God made heaven and put it in a store."

    Jason Berman said, "Whenever we have out of town guests, this is always on the list of where you have to go and visit."

    Some of the other brands with "cult followings" according to Business Insider are Zappos, the online shoe retailers; Yuengling Beer, Mini Cooper, IKEA furniture and Trader's Joe.

    Full disclosure – Wegmans was my very first full time employer when I gave up my paper route back in 1974.  I grew up in Rochester in a time when Wegmans was the “in” place to work in the retail world (Oh, wait . . . 40 years later it still is).  I remember fondly the connection between Bob and Danny Wegman and every single employee they came in contact with as they toured the stores on a regular business.  This is a company that still today understands who the most important people in their organization are.  I worked for Wegmans for the about 10 years, the first four of which helped get me through college.  I could go on and on singing their praises, but I’ll spare you the nostalgia.  Suffice to say there are some companies that just “get it”, and then there’s Supervalu.

    KC's View: