 |
         |
Taking Stock
Division Separation, Carlisle Focus Are Keys To Ahold Reorg
Who woulda thunk it? Central Pennsylvania shortly could become one of the most powerful headquarters markets in the country. While huge markets like Chicago, Los Angeles, Miami, San Francisco and Baltimore-Washington have little or no decision-making presence anymore, smallish mid-state bergs in the Keystone State such as Sunbury, Robesonia and Carlisle are gaining greater importance and clout as the fluid world of food retailing keeps evolving.
The big news is that Ahold USA is going to restructure its entire organization, and in a nutshell, will focus on store operations as it splits its approximately 700 supermarkets into four separate operating divisions to maximize the distinct regional opportunities each division offers. Additionally, Carlisle, PA is set to receive more of the spotlight in terms of merchandising/procurement firepower.
To this reporter, the restructuring is not shocking, although the potential magnitude of the announcement is certainly vast. From July 10, 2008 when former Giant/Carlisle CEO Carl Schlicker was named chief executive of the combined Stop & Shop/Giant-Landover businesses, I knew a change was a comin’. Fundamental to all of this was Schlicker’s sensational 23 year track record at Carlisle where he served as both EVP (under Tony Schiano) and as chief executive. One of the achievements under his watch was more than 50 consecutive quarters of positive identical sales. More importantly, Schlicker was instrumental in developing a culture that had great chemistry, could execute under pressure and at a high level, and operated in a bare bones, no frills manner.
It wasn’t long before “Jersey Carl” experienced the “mother of all bureaucracies” when he ventured to Quincy, MA. To be fair, there are many talented and dedicated Stop & Shop associates who were not provided the leadership or direction to maximize their abilities. But there were also a lot of posers – individuals too intransigent or unable to make the necessary changes in order for the Stop & Shop/Giant-Landover to “sell more stuff” in the same efficient manner that Giant/Carlisle had for years.
With the help of Schlicker, who possesses one of the most accurate BS-ometers in the industry, and Jeff Martin, who came to Quincy last January after 30 years with Giant/Carlisle, they ultimately identified who would make the roster and would gain starting positions. Not so amazingly, sales, earnings and market share also began to improve dramatically, reaching levels not seen by either Stoppie or Giant-Landover since earlier this decade.
Now, it’s time for a bigger reorganization – one that will eliminate duplication, reward the “best of the best” and attempt to fully utilize best practices as visualized by Schlicker and his boss, Ahold USA COO Larry Benjamin.
Or as the company put it, “…we are announcing organizational changes that will provide a foundation for accelerating the growth of our U.S. retail businesses and strengthen our ability to provide the highest quality products and services at low prices. To support these objectives, we need to create a simpler, leaner and more nimble organization. We need an organization that will better leverage our size and resources as one of the largest food retailers in the U.S. We need an organization that will allow us to make speedier decisions, reduce bureaucracy and simplify decision-making. We need an organization that will preserve and enhance the regional character and heritage of our retail brands, and improve our ability to meet the needs of our local customers, associates and communities.”
The move also helps clear the deck for Benjamin to seek acquisition opportunities, something that’s essentially been back burnered by the company since the U.S. Foodservice accounting scandal of 2003 and the subsequent departure of former Royal Ahold CEO Cees van der Hoeven.
Yes, there will changes – primarily in Quincy - and yes, at the end of the day (or month, or year) some additional functions – including merchandising/procurement – will be centralized into Carlisle, PA, which will soon become almost as popular as another small city in Arkansas.
While I have traditionally been an outspoken critic of centralized merchandising efforts (it’s not mainly because of the model, it’s primarily because of the execution and indifference to local/regional items), both Benjamin and Schlicker promise this will be better. Both acknowledge this whole process couldn’t have even begun if it weren’t for the depth of talent and leadership available at all banners (something that might have not been as internally apparent 15 months ago and a key reason why Supervalu’s SuperFusion model has significantly underperformed thus far).
Equally important, while administrative centralization will certainly provide internal savings and potentially create operating efficiencies, the difference maker in this deal is that the company is actually decentralizing its operations by creating four divisions (Giant/Landover, Giant/Carlisle, Stop & Shop/Metro NY and Stop & Shop/New England). With New England’s sales approaching $7 billion annually, and the other three units at about $5 billion a year, the company can compartmentalize its business on a regional basis, giving them a keener eye on local issues and opportunities. And I’m betting that these four divisions will have a lot more input into local buying and merchandising decisions than with any other centralized model operating today.
And getting back to the leadership, Schlicker and Martin’s increased presence in Carlisle (Martin will be headquartered there) will help solidify the base, while other division presidents such as Robin Michel (Giant/Landover) and Ron Onorato (Metro NY) have already moved Ahold’s sales needle forward and enhanced the company’s cultures over the past 18 months. As for Mark McGowan (New England), he’s a Stop & Shop veteran with strong people skills who emerged from the old passive-aggressive culture at Stop & Shop to demonstrate excellent potential. Now he’ll get his shot to oversee a business he’s lived and breathed for 18 years.
As for the leadership role at Giant/Carlisle to replace Sander van der Laan (who’s returning to the Netherlands to become general manager of the company’s core Albert Heijn unit), the speculating has already begun. I’m not taking the bait at this point, but believe that choice will be made from inside the halls of Carlisle and should be revealed in the next six weeks.
The ultimate proof will be in coordination, communication and of course, execution, but this is where Schlicker and Martin have earned their stripes for many years.
In the next six months, there will be a lot of movement and refining of this big decision. Ahold has assembled a blue chip team to ensure a smooth transition to the new organization, the change process will be overseen by a transition committee consisting of Benjamin, Marten Booisma (executive VP-human resources for Royal Ahold), the underrated and very talented John Bussenger (executive VP-organizational development at Giant/Carlisle), van der Laan and Schlicker.
The scope of this effort is huge and not only impacts Ahold’s associates, but also its vendors. With the company producing some of the “best in class” ID sales and earnings, a leadership team as focused and talented as Ahold has ever fielded and ample capital to spend on building new stores and potentially acquiring others, this plan has the right feel to it.
Welcome to Carlisle, Pennsylvania – merchandising capital of the Northeast.
The big news is that Ahold USA is going to restructure its entire organization, and in a nutshell, will focus on store operations as it splits its approximately 700 supermarkets into four separate operating divisions to maximize the distinct regional opportunities each division offers. Additionally, Carlisle, PA is set to receive more of the spotlight in terms of merchandising/procurement firepower.
To this reporter, the restructuring is not shocking, although the potential magnitude of the announcement is certainly vast. From July 10, 2008 when former Giant/Carlisle CEO Carl Schlicker was named chief executive of the combined Stop & Shop/Giant-Landover businesses, I knew a change was a comin’. Fundamental to all of this was Schlicker’s sensational 23 year track record at Carlisle where he served as both EVP (under Tony Schiano) and as chief executive. One of the achievements under his watch was more than 50 consecutive quarters of positive identical sales. More importantly, Schlicker was instrumental in developing a culture that had great chemistry, could execute under pressure and at a high level, and operated in a bare bones, no frills manner.
It wasn’t long before “Jersey Carl” experienced the “mother of all bureaucracies” when he ventured to Quincy, MA. To be fair, there are many talented and dedicated Stop & Shop associates who were not provided the leadership or direction to maximize their abilities. But there were also a lot of posers – individuals too intransigent or unable to make the necessary changes in order for the Stop & Shop/Giant-Landover to “sell more stuff” in the same efficient manner that Giant/Carlisle had for years.
With the help of Schlicker, who possesses one of the most accurate BS-ometers in the industry, and Jeff Martin, who came to Quincy last January after 30 years with Giant/Carlisle, they ultimately identified who would make the roster and would gain starting positions. Not so amazingly, sales, earnings and market share also began to improve dramatically, reaching levels not seen by either Stoppie or Giant-Landover since earlier this decade.
Now, it’s time for a bigger reorganization – one that will eliminate duplication, reward the “best of the best” and attempt to fully utilize best practices as visualized by Schlicker and his boss, Ahold USA COO Larry Benjamin.
Or as the company put it, “…we are announcing organizational changes that will provide a foundation for accelerating the growth of our U.S. retail businesses and strengthen our ability to provide the highest quality products and services at low prices. To support these objectives, we need to create a simpler, leaner and more nimble organization. We need an organization that will better leverage our size and resources as one of the largest food retailers in the U.S. We need an organization that will allow us to make speedier decisions, reduce bureaucracy and simplify decision-making. We need an organization that will preserve and enhance the regional character and heritage of our retail brands, and improve our ability to meet the needs of our local customers, associates and communities.”
The move also helps clear the deck for Benjamin to seek acquisition opportunities, something that’s essentially been back burnered by the company since the U.S. Foodservice accounting scandal of 2003 and the subsequent departure of former Royal Ahold CEO Cees van der Hoeven.
Yes, there will changes – primarily in Quincy - and yes, at the end of the day (or month, or year) some additional functions – including merchandising/procurement – will be centralized into Carlisle, PA, which will soon become almost as popular as another small city in Arkansas.
While I have traditionally been an outspoken critic of centralized merchandising efforts (it’s not mainly because of the model, it’s primarily because of the execution and indifference to local/regional items), both Benjamin and Schlicker promise this will be better. Both acknowledge this whole process couldn’t have even begun if it weren’t for the depth of talent and leadership available at all banners (something that might have not been as internally apparent 15 months ago and a key reason why Supervalu’s SuperFusion model has significantly underperformed thus far).
Equally important, while administrative centralization will certainly provide internal savings and potentially create operating efficiencies, the difference maker in this deal is that the company is actually decentralizing its operations by creating four divisions (Giant/Landover, Giant/Carlisle, Stop & Shop/Metro NY and Stop & Shop/New England). With New England’s sales approaching $7 billion annually, and the other three units at about $5 billion a year, the company can compartmentalize its business on a regional basis, giving them a keener eye on local issues and opportunities. And I’m betting that these four divisions will have a lot more input into local buying and merchandising decisions than with any other centralized model operating today.
And getting back to the leadership, Schlicker and Martin’s increased presence in Carlisle (Martin will be headquartered there) will help solidify the base, while other division presidents such as Robin Michel (Giant/Landover) and Ron Onorato (Metro NY) have already moved Ahold’s sales needle forward and enhanced the company’s cultures over the past 18 months. As for Mark McGowan (New England), he’s a Stop & Shop veteran with strong people skills who emerged from the old passive-aggressive culture at Stop & Shop to demonstrate excellent potential. Now he’ll get his shot to oversee a business he’s lived and breathed for 18 years.
As for the leadership role at Giant/Carlisle to replace Sander van der Laan (who’s returning to the Netherlands to become general manager of the company’s core Albert Heijn unit), the speculating has already begun. I’m not taking the bait at this point, but believe that choice will be made from inside the halls of Carlisle and should be revealed in the next six weeks.
The ultimate proof will be in coordination, communication and of course, execution, but this is where Schlicker and Martin have earned their stripes for many years.
In the next six months, there will be a lot of movement and refining of this big decision. Ahold has assembled a blue chip team to ensure a smooth transition to the new organization, the change process will be overseen by a transition committee consisting of Benjamin, Marten Booisma (executive VP-human resources for Royal Ahold), the underrated and very talented John Bussenger (executive VP-organizational development at Giant/Carlisle), van der Laan and Schlicker.
The scope of this effort is huge and not only impacts Ahold’s associates, but also its vendors. With the company producing some of the “best in class” ID sales and earnings, a leadership team as focused and talented as Ahold has ever fielded and ample capital to spend on building new stores and potentially acquiring others, this plan has the right feel to it.
Welcome to Carlisle, Pennsylvania – merchandising capital of the Northeast.
This is only part of Jeff Metzger's Taking Stock column. The complete, full-length version of Taking Stock is available only to subscribers of Food World and Food Trade News. Subscribe now to receive the the best analysis of the Mid-Atlantic grocery industry available only in Food World and Food Trade News.
© Copyright 2008 Best-Met Publishing Co., Inc.