retail news in context, analysis with attitude

Published on: December 7, 2012

Seven weeks after taking over as president/CEO of Delhaize America, Roland Smith has announced a series of sweeping executive and structural changes that include moving some top chain execs around, as well as the departures of Food Lion President Cathy Green Burns and Delhaize America Chief Supply Chain Officer Mark Doiron.

In addition, Smith has served notice that he intends to seriously look at "consolidating support services" for the company's various chains in late 2013 or early 2014.

In a memo sent to company associates, Smith makes the following reassignments:

• Beth Newlands Campbell, the president of Hannaford Supermarkets, will be the new President, Food Lion/Harveys.

• Brad Wise, SVP, Human Resources, Delhaize America, becomes the President of Hannaford/Sweetbay.

• Mike Vail, the president of Sweetbay Supermarkets, will assume the role of Chief Supply Chain Officer, Delhaize America.

• Greg Amoroso, SVP, Business Service Center and Sustainability for Delhaize America, becomes CFO for Delhaize America.

• David Criscione will assume the role of Chief Strategy & Development Officer, Delhaize America; most recently, he has been SVP, Strategy, Marketing and Business Development, at Hannaford.

The memo also says that Meg Ham will continue in her role as President, Bottom Dollar Food; Deborah Dixson will continue in her role as Chief Information Officer, Delhaize America; and Linn Evans will continue in his role as Chief Legal Officer, Delhaize America.

These positions will all report to Smith, according to the memo, as he streamlines the organizational structure to "provide clarity of responsibility and accountability for the newly formed Delhaize America Leadership Team (DALT)."

In making the announcement, Smith writes that "it is important to note ... that although it’s early in my tenure, I have had hundreds of significant and substantial conversations and interactions with trusted leaders across the organization. I mention this only to say that these decisions and moves were made with a great deal of input." Smith writes that "through hours of one-on-one conversations, pages of written correspondence, and informal exchanges, I have explored both thoroughly and quickly what can be done to realize the potential of our business."

Smith also says that a search has begun for an individual to serve as Chief People Officer, Delhaize America.

In addition, the company is forming a temporary Strategic Task Force, that will be charged with "developing a Delhaize America vision and strategy"; "clearly defining key critical priorities for 2013 and beyond"; "establishing operating principles"; and "building the right structure throughout the organization to ensure and simplify accountability."

"he full composition of the Strategic Task Force will be announced in the coming weeks," Smith writes, "however it is important to note at this time that Robert Canipe, who has served as Delhaize America CFO since 2010, has accepted a role with this group."

The executive departures are handled this way in the memo:

"Effective Friday, Food Lion President Cathy Green Burns and Delhaize America Chief Supply Chain Officer Mark Doiron are leaving the organization.

"Cathy has been a tireless and trusted Delhaize America associate for nearly 30 years, rising from a bagger in Bangor, Maine, to the top leadership position of our largest banner. Along the way, she held senior leadership positions in Merchandising, Distribution, and Operations at both Hannaford and Food Lion before becoming Chief Operating Officer at Food Lion from 2005 to 2010. She became the president of Food Lion in 2010.

"Cathy is known for her graceful, caring manner and broad understanding of the grocery industry. I appreciate her vast contributions to the organization and the lasting relationships she has built throughout her career.

"Mark has dedicated his career to building Delhaize America into a world-class organization after starting with Hannaford in 1985. After serving as a Category Manager, Mark took on advanced leadership roles throughout Merchandising, achieving the position of Executive Vice President, Hannaford Merchandising, Distribution and IT in 2008. Mark has served Delhaize America as Chief Supply Chain Officer since 2010.

"Mark is known for his ability to understand large systems and build teams to support complex processes. His contributions across many years and many departments within the organization are appreciated."

In addressing the issue of centralization of Delhaize's various businesses, Smith writes:

"I want to share with you my thinking on the question of whether we consolidate and/or relocate our corporate support services functions (formerly known as Shared Services).

"After a great deal of consideration regarding the future of our business, I have decided that centralizing these functions into one location is not a top priority at this time.

"That said, I and a vast majority of the leaders with whom I’ve spoken continue to believe that a central location for corporate support services is critical and necessary to strengthening our organization. However, there needs to be a demonstrable benefit to our business and our bottom line before implementing plans to consolidate corporate support services. Also, we need to stabilize our business and complete our reorganization plans before causing the significant disruption for associates that moving would entail and spending the millions of dollars necessary to facilitate such a major move.

"We will begin exploratory analysis about consolidating support services in late 2013 or early 2014. However, for the purposes of meeting our immediate needs, my intent is to relocate my team of direct reports and a select group of their key leaders to North Carolina. One notable exception is Brad Wise, who will lead Hannaford and Sweetbay from Maine."

The memo concludes this way:

"Over the next few weeks, my new team and I will focus on refining our business strategies and building the right structures to refocus, execute, and succeed.

"Similar to my personal entry into the organization, we intend to move quickly in making decisions and setting the right direction for Delhaize America so we can take action to improve our position in the marketplace. In that spirit, we are committed to communicating the next level of structural changes within the first six weeks of 2013.

"I appreciate that this is a lot of complex and potentially emotional information to process. While it represents significant change for the organization, this work raises my confidence in the future of Delhaize America. I believe that this structure, team of talented leaders, and focus on clear priorities represents a solid foundation for future success. However, I firmly believe the success of Delhaize America will ultimately be driven by your continued hard work and commitment to excellence."

Published on: December 7, 2012

by Michael Sansolo

There’s probably no greater gift in life than getting to work at what you love. With the passing of jazz legend Dave Brubeck this week, I was reminded of how that kind of gift can even push back the hands of time.

In October of 2008, we were attending Parents Weekend for my son at the Eastman School of Music. There, at a special assembly, an honorary doctorate was conferred upon Brubeck, who clearly looked all of his nearly 88 years. That is, until he took a seat at the piano.

Suddenly he was a man transformed. The stooped, elderly gentleman, who just seconds earlier needed help getting to his seat on the stage, became the jazz giant yet again. The music flowed from the piano with energy and clarity. He played only briefly, but his music, his skill and his demeanor overwhelmed the room.

It was the kind of moment you can never forget. The wonder of seeing a legend perform combined with witnessing the joy of a person who spent his life doing exactly what he loved to do…and did it as well as anyone ever did.

It was an Eye-Opener.

Published on: December 7, 2012

Reuters reports that Starbucks has agreed to pay the equivalent of as much as $30 million (US) in corporate taxes for 2013 and 2014, as it "surrenders" to an enormous amount of government criticism, media coverage and public outrage over what has been viewed as a policy of tax avoidance there.

According to the story, "over the past three years Starbucks has paid no corporation tax in Britain despite telling investors that the local business was highly profitable, while reporting an actual loss ... One of the tax-deductible costs weighing on Starbucks' British business has been the royalties paid to an Amsterdam-based Starbucks company for the use of intellectual property, such as the brand."

While Starbucks has continued to maintain that everything it has done has been legal, the new approach signals a recognition that it was losing the public relations battle.

"We are making a commitment that we will propose to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years," said Starbucks UK managing director Kris Engskov.

It remains possible that the controversy does not end here. Reuters also reports that "the coffee chain's units in Germany and France also fail to report profits due to inter-company royalty payments, the Reuters investigation of the company's accounts showed last month.
Engskov told Reuters there was no plan to extend the proposal on tax payments in Britain to other markets where Starbucks operates."

Published on: December 7, 2012

Reuters reports that "soda makers and restaurants say they will face daunting logistical hurdles such as needing to retool manufacturing, change distribution systems and even introduce new plastic cups if New York's ban on large-size sweet drinks in food outlets survives a legal challenge."

The New York City Health Department has decreed that, as of March 2013, sugary soft drinks larger than 16 ounces cannot be sold in restaurants, movie theaters and food carts, though the ban does not affect supermarkets and c-stores.

The businesses involved say it will take more than three months to retool their systems to comply with the new rules, and have asked the judge hearing an appeal of the rule to move up oral arguments from January to an earlier date.

Published on: December 7, 2012

The Financial Times reports that Netflix CEO Reed Hastings is being scrutinized by the US Securities and Exchange Commission (SEC) over a July 3 posting on Facebook saying that Netflix members had watched more than 1billion hours of Netflix programming for the first time in June.
According to the story, the SEC's issue with the posting is related to a federal regulation saying that a public company has to release material performance information to all investors at the same time. In this case, Hastings posted the info on Facebook, but there was no press release or filing with SEC noting the milestone.

The story suggests that how the SEC disposes of the case " is likely to be watched by corporations that increasingly tap social media to disseminate information."

For his part, Hastings remains unrepentant, arguing that the Facebook posting was "very public," though he concedes that this is a "fascinating social media story."

Published on: December 7, 2012

• The Wall Street Journal reports that Starbucks is testing "new displays modeled after the ones found in its cafés. Instead of the stark, standard-issue supermarket shelving, the displays are trimmed in dark wood, with a faux-tile backsplash." The new endcaps and shelves are being tested in 12 stores in Chicago, Seattle and Northern California., in advance of a rollout of a "signature" coffee section to US supermarkets in 2013.

• Tops Friendly Markets announced that the company has entered into an agreement with the Farrugia family to acquire three Big M supermarkets located in Elbridge, Mexico, and Jordan, NY.

This marks the third acquisition deal this year for Tops and, the company said, "will expand Tops’ footprint further into areas of northern and central New York State. The planned acquisition of the three stores follows the 2010 acquisition of the Penn Traffic stores and 2012 acquisitions of 21 Grand Union stores and a store in North Boston, NY. "

Terms of the deal were not disclosed.

• The Chicago Tribune reports that Macy's plans to keep all of its stores open for 48 hours straight before Christmas, from 7 a.m. on Friday, December 21 through 7 a.m. on Sunday, Dec. 23.

According to the story, "Macy's experimented with the 48-hour retail marathon in certain test markets last year and found that enough consumers took advantage of the extended hours to warrant rolling out the program to their entire fleet this holiday season."

• The Wall Street Journal this morning reports that "Martha Stewart Living Omnimedia is shutting down Whole Living, its healthy-eating magazine, having failed in its attempts to sell it, the company said.

"The company will wrap Whole Living's content into its flagship publication Martha Stewart Living. The move comes a little more than a month after the company announced it planned to either sell or shut down the magazine by the end of the year as part of a broader restructuring aimed at cutting costs."

The company had already said that it would "cease standalone publication of cooking magazine Everyday Food and make it a supplement to Martha Stewart Living magazine published five times a year."

Published on: December 7, 2012

• It has been reported, here and elsewhere, that as Tesco prepares for what appears to be the inevitable sale or closure of its US Fresh & Easy Neighborhood Market division, it already has shown Tim Mason - the 30-year Tesco veteran who has been running Fresh & Easy since the beginning - the door.

It is, however, a door made of gold. In the UK, the Guardian reports that between his pension, severance pay, bonuses and shares in hand, Mason walks away with at least $9 million (US). Maybe much more, depending on the company's share price behaves.

Published on: December 7, 2012

Just a few emails this morning...

Yesterday, I quoted an email from an MNB user that accused me of being slavishly devoted to Amazon.com, and suggested that I was ignoring the larger implications of Amazon's march to world domination - that it has developed a variety of advantages that are next to impossible for other retailers to compete with, which means that "small retailers are dropping like flies and the internet is becoming one homogenous platform.  Not necessarily good ultimately for the consumer."

I responded that I was sympathetic, but that I really just had one word for him:

Tough.

I went on, in part:

Amazon isn't doing all these things because Jeff Bezos sold his soul to the devil, like Robert Johnson. (Though when you think about it...)

Amazon is able to do these things because it figured something out about how people's shopping habits were going to change before everybody else did, or at least better than everybody else did.

If Amazon is able to price better and faster than everybody else ... or take advantage of show-rooming better than everyone else ... or ship cheaper than everybody else ... this doesn't make Amazon evil. Just really, really good at its job.

When I write about what Amazon does - about Amazon Fresh or Subscribe and Save or delivering on what it promises faster than anyone else, or using shopper information more extensively than anyone else - I have two agendas in mind.

One, enormous professional interest. I think that any retailer in virtually any industry that isn;t thinking about how Amazon could disrupt his or her business is making an enormous mistake ... My goal with MNB is to spotlight what Amazon is doing - the same way I spotlight what a lot of retailers do - so we can all learn from it.

Second, I look at Amazon from the shopper's point of view. And yes ... I find that Amazon, better than many other retailers, is good at satisfying my shopping needs in a way that delivers value and convenience. Doesn't mean that I don't go to stores, but time and again, Amazon manages to play the trump card. And so I shop there. Often, but not always.

When I write about this for MNB, it is with the belief that a lot of people feel the same way I do ... Does this make me slavishly devoted to Amazon? I don't think so. What I probably am slavishly devoted to is retailing that is aspirational, that delivers a solid value, that seems relevant to the way I live my life.

I think that's what most people want. Retailers have to deliver it.

Those that don't will find that someone else will. And that ought to scare the crap out of them.

Well, the fellow who wrote the original email got back to me yesterday:

Just watched your video and have only one response.  You’re right. 

“Tough” is the correct rejoinder.  The situation I described in my rant/vent is a paradigm shift.  A structural change in the online retail market that renders traditional business models, including my own 12 year old site no longer viable.  The retail environment is littered with formats that failed to recognize and cope with change e.g. Netflix, Best Buy, Borders, local drug stores, family department stores, etc.

So after howling at the moon, I either adapt and change or quit.  Onward and upward.

We all have to howl at the moon from time to time. Hell, I practically do it for a living.

So I sympathize.

MNB user Donna Brockway wrote:

I couldn’t agree more with your thoughts on this.  Having spent over 25 years in the retail industry, I am stunned how little most bricks and mortar companies are doing to prepare themselves for the radical changes that we are experiencing – changes that will definitely make it very difficult, or impossible, for them to continue to exist in the coming years.  I have coined a word (or I think I have, I haven’t heard anyone else using it) to describe some of what’s going on with consumers – “De Retailing”.  That is, the slow loss of relevance of bricks and mortar to consumption.  There are so many other ways we have to experience and purchase, and more on the way, that “retail” is going to lose it’s meaning and importance.  I don’t know how far this movement will go – but I do know the changes are here to stay.  And, there is more to come.

This isn’t a new movement – we have been seeing it for at least 15 years.  Retailers have had years to adjust, and if they  haven’t, then they are part of the “De Retailing” activity that has been steamrolling across the industry.  They are contributing to their own demise.  Smart companies are in the fore front of the changes, and will reap the rewards, and those of us who recognize this will continue to extoll their virtues ... and foresight.

MNB user Mark Raddant wrote:

I live in an area of Kansas City called Brookside.  It has 80-100 year old homes, and a shopping area of small locally owned stores and restaurants.  The stores’ merchandise can all be replaced by Amazon, and probably at a better price, but not the ambience and sense of community.  You will never run into a person you haven’t seen since your kids quit playing on the same soccer team while at Amazon, nor will the neat kid down the block, suddenly over five feet tall, smile and tell you “thank-you Mr. Coupe” when they hand you your purchase.  The area has two grocery stores, both owned by the same family.  One tries to be competitively priced with the big box stores, the other doesn’t even try, but is often a source for the wines you recommend.  Retailing can be about much more than just price and convenience.

And, from another reader:

I think the thing about Amazon is that there is some element of the dot.com boom that causes people to not always think rationally about their value proposition.

Don't get me wrong, I think they currently do some things right, but that doesn't mean the have an airtight business model.

The stock is valued much like Microsoft was in the mid 90s, as if it could become a soaring profit machine at any day now. But the problem is that the business is not scalable like software is. Likewise it is bleeding money and further expansion requires building huge facilities and filling them with people. And their Amazon Prime program is great (for me) but it's eating into already thin margins. People look at Amazon Fresh or their decision to put lockers in 7-11 and think "Oh god, that's the wave of the future!" But honestly, how profitable is it to drive a truck around delivering groceries on razor thin margins to old people and new moms (the vast majority of their Amazon Fresh customer base). And who really wants to drive to a 7-11--many of which are sketchy--to pick up a book or a scarf? To that end Redbox is already seeing shrinking sales.

Again, I think they are doing some things well, I just find that people seem to forget to examine it with a skeptical eye. Put another way, assume everything they do is wrong and look for instance where your assumption is wrong, rather than vice-versa.

Let's be clear. I have never said that I think retailers cannot compete against Amazon ... just that, if they want to compete against Amazon, they need to define, exploit, celebrate and then redefine their differential advantages.

Published on: December 7, 2012

In Thursday Night Football action, the Denver Broncos defeated the Oakland Raiders 26-13.

Published on: December 7, 2012

A reminder that I will be in Chicago today, attending the evening performance of "A Klingon Christmas Carol," in which my eldest son has a role, at the Raven Theater. (You can check it out here .)

Since I'm going to be in Chicago, I thought it might be nice to have one of our little MNB get-togethers before the show. So late this afternoon I'll be at the bar at Bin 36, located at 339 North Dearborn Street, if anyone would like to join me for a glass of wine (not Klingon bloodwine, alas). I'll be there from 4:30 pm to 6 pm. (I'll have to leave at 6 if I'm going to make the 7:30 pm curtain for "A Klingon Christmas Carol.")

We can raise our glasses and say, "Heghlu'meH QaQ jajvam!"

Published on: December 7, 2012

I know we have a lot of Star Trek fans in the MNB community, so I think it is perfectly appropriate to take note of the fact that the first "teaser trailer" for the next movie in the series, Star Trek Into Darkness has just gone online.

You can see it here.

I don't know about you, but I think the trailer looks totally cool, and unlike any Star Trek movie that I've seen before. I think that Paramount is being very smart about how they let out little bits and pieces about the movie, while not giving too much away about a movie that, after all, won't be in theaters until May 17, 2013. We know that the villain is played by Benedict Cumberbatch (who has won kudos for his portrayal of the title character in the BBC's "Sherlock"), but we don't know the character's name or motivations. At least, not yet.

The next taste we'll all get will come when nine minutes of footage is shown before The Hobbit when it arrives in theaters next weekend.

I can't wait.




One of the best things about having a daughter in college is that occasionally she has to read books that I find utterly irresistible. That happened last weekend when I picked up her copy of a book about American political dysfunction, by Thomas E. Mann and Norman J. Ornstein.

"It's Even Worse Than It Looks: How The American Constitutional System Collided With The New Extremism," is a terrific piece of work - 200 pages that are utterly accessible, even when getting into the weeds about problems with the filibuster, in discussing the structural and philosophical problems that have beset the US Congress.

It is a timely piece of writing, considering all the dithering and posturing about the fiscal cliff that seems to be taking place in Washington these days.

(I loved it last week when Jon Stewart, on "The Daily Show," explained the situation this way: "See, here's what happened. Two summers ago, Congress realized that if they couldn't compromise on a deficit and revenue plan, our economy would crash ... Well, it turns out they couldn't compromise. So here's what they did: In order to force themselves to work together and compromise, they concocted a catastrophic penalty that would itself crash our economy.

"Let me put it another way: There's an asteroid headed toward the Earth. We made it and fired it at ourselves. Because otherwise we never would have done the hard work required to protect ourselves from asteroids."

Perfect.)

Ultimately, the authors argue for some pretty radical change, and suggest that time won't solve the systemic problems that seem to plague the government. But whether one agrees with their conclusions or not, their descriptions of the problems seem persuasive, and made me think that while Abraham Lincoln described the US as "the last best hope of earth," that may not be enough anymore.''

Worth reading, I think.




My wine of the week: the 2009 Ramsay North Coast Pinot Noir, which we had the other night with a nice, spicy risotto. Both were excellent.




That's it for this week. I'm off to Chicago, and will report back next week about "A Klingon Christmas Carol."

I hope you have a great weekend, and I'll see you Monday.

Slàinte!

Published on: December 7, 2012

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