A&P’s CEO Merry-Go-Round Continues
Back in January when Christian Haub, executive chairman
of Great Atlantic & Pacific
Tea Company, announced the company had hired Ron Marshall as its new CEO, he
said, "With Ron as our next chief executive officer I am confident that
we will realize the tremendous strategic value of the company and capitalize
on our leadership position in the Northeast."
Mr. Marshall replaced Eric
Claus, who left the company last October.
On Friday, the company made another
change at the top. Mr. Marshall is out and in is Sam Martin, most recently
COO of OfficeMax and, prior to that, COO of Wild Oats.
In announcing the change,
Mr. Haub said, "The board and the company’s
major shareholders, Tengelmann and Yucaipa, have been instrumental in developing
what I believe is the right turnaround strategy for A&P. As we moved to
the implementation and execution stage of this comprehensive operational and
revenue-driven turnaround, the board determined that the company needed a leader
at the helm with the skill set Sam Martin possesses… He has an ideal mix
of food industry management experience encompassing operations, merchandising
and supply chain."
Discussion Questions: Is Sam Martin the right person to lead A&P to a "revenue-driven
turnaround?" Does Mr. Martin’s previous association with Yucaipa Cos. (the
largest investor in Wild Oats) suggest a shift in power at the board level at
A&P?
- The Board of Directors of Great Atlantic & Pacific Tea Company, Inc. Appoints
Sam Martin President and CEO – The Great Atlantic & Pacific Tea Company,
Inc. - The Great Atlantic & Pacific Tea Company, Inc. Announces Appointment of
Ron Marshall as President & Chief Executive Officer effective February 8,
2010 – The Great Atlantic & Pacific Tea Company, Inc. - A&P Names New CEO; Loss Widens As Woes Persist – The Wall Street
Journal - A&P
names new CEO as financial woes persist – The Star-Ledger
Little recovery will likely come from this latest A&P discovery. Eric Claus proved he was not Santa Claus. The current pass from Ron Marshall to Sam Martin might possibly connect for a surprise victory in the Tenglemann-Yucaipa Bowl but with so many dropped passes in the past, can anyone really believe this move is regenerative for the formerly Great A&P?
A&P has a track record of hiring highly accomplished executives, but the task is formidable. After such a short time, it’s not really easy to assess Ron Marshall’s success or failure. Sam Martin knows what he is doing, but so many changes may work against turning A&P around.
Yucaipa has a proven track record in the grocery business and if this is a power shift it may be the only way to save A&P. There have been too many failures during the Tengleman regime to have any confidence in their ability to rescue this company. They are probably too far gone for Yucaipa to save but they certainly have as good a chance as anyone to get this monumental task accomplished.
It’s interesting A&P is talking about the new CEO in terms of building revenues. Ron Marshall, love him or leave him, has always been known as a guy who cuts costs, sometimes providing a short-term boost to the bottom line, but not usually the top. That was a known when he was hired. Yucaipa’s support will help here, but the question remains if it has enough clout to enable the new CEO to push needed changes through.
It’s refreshing to see a strategy described as “revenue driven,” even if it’s probably a tacit admission that all the possible cost savings have been wrung out.
I wish them well.
A&P hires quality people. They do not last long and the results show no strong movement. Could the problem be not the CEO, but the roadblocks placed in his path?
The longer this continues, the further behind they get. Publix, Giant, Walmart, Wegmans, et al are not taking a timeout waiting for A&P to get their act moving.
It seems to me that the issue is not so much with the retail strategy of A&P, nor is there a severe operational problem with the chain. At this point, it is a perception problem. The brand is tired, seems out of date to most people, and the brand possesses no cache. What A&P needs is an image makeover.
Interesting that over the weekend, there was a report that The Gap has opened a test store in Chicago for their 1969 brand jeans, and in a brand strategy, made the decision not to include The Gap name anywhere. This would not be a bad strategy for A&P; create a chain within the chain (remember Plus stores), roll out the “new”chain to compete against Whole Foods, Trader Joe’s, Fresh Choice, etc., and in essence remake itself. It has the expertise and the talent to do this; now all it needs is the right strategy. And the patience to allow it to work!
Joel makes an interesting point in addressing A&P’s challenge: relevance. Their brand and their offering is not compelling given the “newer” entrants and competition from the WalMmart’s and Targets of the world.
Growing revenues is going to take innovation beyond their current offering.
My fans expect a comment from me when it comes to A&P. I’ll try to be nice and not brutally attack anyone.
There will be no turnaround. There was never expected to be a turnaround. Nobody hires Ron Marshall because they want to improve sales. That’s not his specialty. A&P needs to dismantle, sell off stores, lay off employees, and outsource more services. If Yucaipa says Mr. Martin is the man to lead the company, then he is the right choice.
But please, let’s get away from talking turnaround. Without mentioning names we all know who the failure of A&P falls upon. It appears that we may soon be able to move past that issue.
The Great A&P is endearing to millions of customers. That is not the problem.
As a history buff of all things Great A&P, executives in the 1960s tried a store front called Gold Key, It only had national brands and you could not find any mention of A&P, Jane Parker, Ann Page, Sultana, Iona, Super Right, Cap’n John, etc. The experiment didn’t work. But A&P did abandon their hold on private label, and the financial edge they had in private label, was lost forever.
Maybe going back to what worked, private label can and probably will get A&P back in the game. Their Via Roma authentic Italian food product line is superb, their Green Way organics line is fantastic and soon they will be introducing an entry line, Food Basics and Home Basics to compete with Aldi.
Staying focused, having quality brands no one else carries, and keeping competitive, is what wins customer loyalty. With great Angus beef, quality poultry, fantastic seafood and award-winning deli meats and cheeses, they should play their strong cards and make fresh affordable.