New Boss at Pathmark
By George Anderson
Yucaipa wants a solid return on the $150 million it has put into Pathmark and the investment firm now has its own man, former Rite Aid chief financial officer John Standley, to lead the company in the direction it wants to go.
Mr. Standley was named as chief executive of the grocery chain to replace Eilleen Scott. In addition to his work at Rite Aid, Pathmark’s new CEO has worked in finance jobs for several Yucaipa-owned grocery businesses. He also served as CFO for Fleming Foods.
Harvey Gutman, senior vice president, retail development for Pathmark, told Newark’s Star-Ledger, “Yucaipa has a terrific track record. John is someone who contributed to that track record.”
“There’s no question in my mind Yucaipa in their business model says, ‘We’re going to stick dollars into the company and bring in people we feel will help us accomplish what has to be done,’ ” said Harvey Whille, president of United Food and Commercial Workers (UFCW) Local 1262, which represents 7,200 Pathmark employees.
Burt Flickinger III, president of the Strategic Resource Group, was enthusiastic about the prospects of Mr. Standley leading Pathmark. “It’s a real coup for the company because
he’s a terrific strategic thinker,” he said.
Moderator’s Comment: What will it take to get Pathmark turned around?
Pathmark’s sales have been flat and it has lost money over the past year. Yucaipa has been seen as white knight since it agreed to invest $150 million in
the chain five months ago. –
George Anderson – Moderator
I’m a Field Merchandiser for a company that services Pathmarks. The overall attitude of the company’s workers is terrible. No matter what they do, they’ll have to weed out the bad eggs. Apparently, they cannot do that because of the unions. It seems to me that it’s a lose-lose situation. It is a shame because of the locations of some of these stores in the NY metro area. They are PRIME. Unfortunately, it seems that many people go there for location, not for the value or the cleanliness. The stores are filthy, the merchandising of the product is terrible on all ends, and the communication from the top to the bottom is the worst I’ve seen in my many years dealing with different companies. I’m not sure what this new guy will do, but I hope it’s for the best.
Rite Aid’s stock has trouble staying above $4.00 per share, with declining pharmacy sales. This is hardly a ringing endorsement for the new Pathmark CEO. Surely they can do better!
Kudos to “Swordfish.” Bean counters are generally not good merchants, because you can only sell your way to growth; you can’t control your way to growth.
Visits to Pathmark’s dingy headquarters reveals disenchanted employees who’ve “heard that, forgotten that.” The revolving door in Pathmark’s (grungy) executive suite has created a corporate ennui that may be impossible to eradicate. Time after time, I’ve dealt with PM at the top levels, received approval, and gotten nothing but resistance at subordinate levels.
As sterling as John Standley’s pedigree is, Pathmark needs a culture-shift, bottom-up solution. Let’s hope he has the requisite skills — and BOD forbearance — to get the job done properly.
Pathmark has locations with some of the richest demographics in the US. Its locations are being wasted. The easiest path to success is to copy Whole Foods down to the last detail or merge the Pathmark locations into Whole Foods. Running a conventional supermarket/drug combo in this market will never lead to superior profitability.
Jim Donald (now President of Starbucks) couldn’t get Pathmark on track, so it may be a no-win proposition.
Apparently, the highest sales per store don’t compensate for the highest costs per store associated with Pathmark.
For years, Pathmark has gone up against weak competition (remember Bohack and Grand Union?) and has never found the formula to thrive despite the lack of competition from major well financed, well run grocery stores.
From the outside looking in, it appears that Eileen Scott was a merchant but not a leader. The “new boss at Pathmark” is a financial guru that possibly possesses the leadership skills, but is not a merchant. Without a fresh approach to merchandising, Pathmark will be left in the dust by the competition. What does Pathmark stand for?
Pathmark has a lot going for it. First, it has one of the highest sales per unit for large USA chains. For conventional stores, perhaps only Wegmans is higher. Second, it has the benefit of competing against two large struggling chains – A&P and Ahold. If they can’t make that work for them, then they are sitting on a pile of valuable NYC metro real estate.
Tree’s comments about bad eggs touches on part of the problem, but blaming unions for perpetuation of the poor attitudes is pandering to the current anti-union feeling in many discussions about the grocery industry. Without unions to protect workers from arbitrary dismissal and minimal scheduling, the industry would implode from bean counter cost reduction programs leaving only poorly staffed, inexperienced clerks. In a business that requires skills that include proficiency with ever changing technologies, mechanical aptitudes, physical strength and endurance, product knowledge, and an understanding of the local demographics and buying habits of individual neighborhoods, it works against all interests when those in the executive offices continue to propagate the idea that clerks are unskilled labor. Recognition that employees are demoralized should indicate where some attention should be focused. Cutting staff to save money adds to the workload of those who remain, further demoralizing otherwise well adjusted and motivated workers. Executives continue to add suits to the suites while paring down the crews that do the actual physical work of replenishing the stores. Compensation schemes that reward middle management for increasing productivity through personnel reductions foster a situation where supervisors pressure managers to pressure crews to do more work with fewer hands. DSD vendors are under similar pressures adding to territories of individual jobbers. Demoralization increases until ennui is reached. Without applied psychological intervention and innovation in management compensation schemes, the problem becomes a permanent part of the environment. An aging union workforce will lead to attrition due to retirement and mortality and replacement workers are not in the queue.