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50 YEARS OF BEING FIRST IN FOOD RETAILING NEWS

SN was an industry phenomenon from the beginning.When Fairchild Publications put out the first issue of SN on April 21, 1952, the dictum was clear: Get the news before anyone else had it, and don't worry who might get offended as long as the story was accurate.SN's consistent reference point for 50 years has been to cover the news of retailers more than of manufacturers, with supplier-related stories

SN was an industry phenomenon from the beginning.

When Fairchild Publications put out the first issue of SN on April 21, 1952, the dictum was clear: Get the news before anyone else had it, and don't worry who might get offended as long as the story was accurate.

SN's consistent reference point for 50 years has been to cover the news of retailers more than of manufacturers, with supplier-related stories written from a retail point of view. That approach to covering food-industry news has prevailed through several editors and a series of ownership changes.

Top editors over the years have been Julian Handler, 1952; Bill Pyle, 1961; Ron Williams, 1970; Steve Weinstein, 1972; and Tim Simmons, 1986. David Merrefield, named executive editor in 1992, continues as editorial director. David Orgel was named editor-in-chief in 2000. Dan Bagan, to whom both editorial and publishing departments report, joined SN last year.

In addition to SN and its sister publications, Brand Marketing and Executive Technology, Fairchild publishes a number of business and consumer titles, many of which have to do with fashion. Titles in the trade side include Women's Wear Daily, Home Furnishings News, Footwear News and DNR (men's fashion and retailing), among others. On the consumer side are W, Jane and Details.

Fairchild was an independent company until 1968, when it was sold to Capital Cities Broadcasting, which subsequently acquired ABC Inc. in 1986. Cap Cities/ABC was sold to the The Walt Disney Co. in 1995, and Disney spun off Fairchild to the privately held Advance Publications in 1999. Advance, a unit of the Newhouse family of publications, owns Conde Nast, which publishes Vogue, GQ, Vanity Fair, House & Garden, Architectural Digest, Bon Appetit, Gourmet and the New Yorker, among other titles. The company also owns numerous newspapers, along with cable television interests.

Through its first 35 years, SN looked pretty much the same as it did the day it was founded, like a very traditional black-and-white, tabloid-sized newspaper on newsprint. However, as the trade-publishing industry increasingly moved toward the use of coated-paper stock and color photos in the mid-1980s, SN followed suit in 1987. At that time, SN's look changed dramatically, with the upgrade of paper stock, the addition of color and more modern design features. At that time, SN also shifted its traditional reliance on the numerous, out-of-New York news bureaus that it operated in favor of an enlarged headquarters staff of reporters and editors.

Along with those changes, SN's content shifted toward increased space for news articles and features with a merchandising point of view.

"Supermarkets had traditionally perceived themselves as being rather dull and boring, but from the mid-1980s on, retailers began looking at their stores more closely to make them more interesting to consumers and to attract more customers. SN sought to do the same thing in the way it covered the industry," one former staffer recalled.

In more recent years, SN has seen several modest redesigns that have culminated in SN's current look.

Supermarket News Rose Amid Supermarket Boom

SN -- then known only as Supermarket News -- was spawned in 1952 because of the supermarket's advancing place in the lifestyles of post-World War Two Americans. The distribution of U.S. shopping patterns was changing as freestanding retail units gave way to malls, and downtown shopping shifted to suburbs.

"The most revolutionary of all developments in this era of shifting distribution is that of the so-called supermarket," said H.M. Love, director of new publishing activities for Fairchild Publications, Supermarket News' parent company, in a speech in May 1952. He spoke shortly after the first issue of SN was published, and his remarks were printed in a booklet titled, "The Shifting Sands of Distribution."

It was a time when the country was not yet fully linked by interstate highways but already supported approximately 100,000 supermarkets.

The promise of the supermarket was so strong in the early 1950s that Fairchild moved more quickly than usual to launch its new publication. Fairchild began to consider the new era of the supermarket in late 1951 and decided to act fast.

"Six months later we published Volume 1, Number 1 of a new paper called Supermarket News," Love said. "Ordinarily, it would have taken six months to a year to consider even a prospectus for a new publishing property in the number one industry of the country." Love envisioned the supermarket using its food base to build a plethora of other departments and becoming a one-stop-shopping format. He saw the supermarket morphing into the role of junior department store and increasingly displacing the function of downtown shopping. "Food is merely the foundation around which the so-called junior department store is developing by leaps and bounds," he said.

"The downtown department store is in a sense the captive of its location, tradition and success, whereas the supermarket -- young, dynamic, fluid, looking towards tomorrow -- represents not merely a revolution in itself but is constantly experiencing a revolution within a revolution."

Overcoming Challenges Recollections of Executives

The times they are a'changing -- constantly.

SN contacted several industry executives past and present to ask them to meander through their memory banks to recall some of the events that shaped their careers and the industry itself over the past 50 years.

Some talked about the pleasures of working in a smaller, less complicated industry; some recalled major events and technological developments that reshaped their companies and the industry, while others shared more personal moments. But all expressed an affection for the food industry and the years they spent working in it. Their comments follow:

Jim Moody

Retired chairman and CEO

Hannaford Bros. Markets, Scarborough, Maine

Hannaford was a leader in the use of direct-product profitability to determine what to stock, rather than the more traditional method of using just gross margins. We started using DPP more than 20 years ago, at the urging of Dr. Walter Salmon, from the Harvard Business School, who was a Hannaford director at the time. We were aware of the concept because of Salmon -- he did work with Harvard that led him to the idea that DPP was a more appropriate way for retailers to measure profitability of the items we sold, and he was right. We were able to do a better job determining the costs of handling product from the warehouse through the distribution system to the store until it went out the door.

Byron Allumbaugh

Former chairman and CEO

Ralphs Grocery Co., Compton, Calif.

One of the major events I recall was the conversion of supermarkets to self-service in the late 1940s and early 1950s and then, in the late 1950s, the conversion to self-service meat, which was a big deal. And I remember the conversion to block-ready beef, which Ralphs pioneered. That was a major decision -- to take the cutting and breaking down of quarters of beef out of the backroom and consolidate it into central plants, where the beef was broken down into block-ready pieces. Ralphs had always been a progressive company, willing to try new things, and it was a family business, so we could make a case for trying anything we wanted. People from all over the industry came to see how we did it, and Iowa Beef learned to do block-ready meats in our little meat plant.

Another pioneering effort by Ralphs was the test of scanning in 1974, which was the most revolutionary thing to hit the industry in 25 years. By 1978 we had converted all our stores to scanning, and that provided us with a whole mountain of data that we'd never had before, which enabled us to operate better. We became the first full-scanning chain in the West and Giant Food was the first in the East, and we shared information because we were not competing with each other.

Roger Stangeland

Former chairman and CEO

Vons Cos., Arcadia, Calif., and Grand Union, Wayne, N.J.

Most of my business life was spent at Vons, where we created Pavilions and Tianguis to go along with the conventional Vons stores. Unfortunately, we ran into Cesar Chavez at Tianguis, but Pavilions really worked. Pavilions was conceived as an upscale combination store, and though we tried not to use the word "upscale," the stores did carry Angus beef instead of USDA Select, and we bought larger sizes of produce and offered a wider assortment to meet a broader spectrum of customer preferences. And the proof was in the pudding -- Pavilions was a howling success, with the first unit going very quickly to $1 million in volume.

Grand Union was a tragedy that didn't have to happen. But the bondholders got overheated, and the lead shareholders got overconfident they could handle the bondholders. The investors, including myself, were prepared to put substantial new equity into the business, but the bondholders who had control wanted to get us out of there, and they succeeded. The result was, they hired people to run the company without investing any capital, and in spite of that, the new people tried to expand the company instead of contracting it and cleaning it up, which is what my management team tried to do, and the plan didn't work. They gambled, and everyone lost.

Bill Davila

Former president and CEO

Vons Cos., Arcadia, Calif.

The week I started working at Vons [in January 1948], Vons opened its first store outside the downtown shopping area, in a major shopping center. The store was 50,000 square feet, with 25,000 square feet of selling area and 25,000 feet of backroom space, which was below the store because in that particular center, they had a subterranean delivery system that ran under the parking lot, and they used to unload products at one end of the parking lot and move them underground to our receiving dock.

The store, like all stores at that time, was open only six days a week, from 9 a.m. to 7 p.m., and when Vons extended its Friday hours to 10 p.m., people were astounded.

The store lacked assortment. It had a center aisle that cut the store in half, and it had grocery gondolas on each side that were only 25 or 30 feet long, and I remember that one gondola side had only olives and a few pickles. There were just enormous displays of product, but the assortment was very limited. And we were just getting into frozen foods at that time, with one or two cabinets.

Jeff Noddle

Chairman and CEO

Supervalu, Minneapolis

Technology has been a key factor in the supermarket industry's survival. When you look at the technology that is used today, I think scanning has probably been the most key -- it's made such a difference not only in how you operate a store but also in the kinds of data and information that we now have to run our business. I think those strides have continued to accelerate and will continue for some time.

Bob Tobin

Former chairman

Ahold USA, Chantilly, Va.

Former chairman and CEO

Stop & Shop Cos., Quincy, Mass.

Of course, the big thing that did happen was scanning, which has been a remarkable thing.

It helped us not only in productivity but also enabled us to do a lot of customer-specific marketing things, plus reordering systems and labor scheduling. It was really the catalyst for a lot of things.

But it's still pretty much about knowing the customers. It was then, and it is now.

Pat Quinn

Retired president and CEO

Spartan Stores, Grand Rapids, Mich.

Probably my greatest undertaking at Spartan was re-engineering the whole technology department in the early 1990s. We used Efficient Consumer Response as the basis for what we were doing. We weren't too far behind the industry, but we were behind when we looked at Wal-Mart and saw how sophisticated their technology was.

Once Wal-Mart came on the scene, it became quite evident they would change the face of retailing forever, and they've done that.

Mike O'Connor

Former president

Super Market Institute

Before the merger [between SMI and the National Association of Food Chains that created Food Marketing Institute], SMI was concerned strictly with research and education, not lobbying efforts, and the businesses we represented were much more concerned with employees and customers than they are today.

The emphasis today is on pleasing security analysts with better quarterly numbers, but SMI's programs were more concerned with operational and personnel matters like how to train people, how to get them to work together, how to be more productive and how to do a better job satisfying customers.

Robert O. Aders

Former chairman

Kroger Co., Cincinnati

Former chairman

Food Marketing Institute

Foremost in my memory of my early years at Kroger is the enormous emphasis by the FTC and the Justice Department to prevent mergers -- they completely blocked us in those days -- which meant we had only one way to grow -- building new stores. We were able to expand territorially if there was no overlap, but even then, we were challenged if one of the acquired companies was too big.

The FTC challenged Kroger when we took over the food departments at some stores in Dayton, and we had to give up that deal. We tried to make acquisitions in Chicago, but we were blocked. We got into Washington, D.C., by acquiring a co-op, but when we tried to acquire additional stores, the FTC blocked us there. There was a very strong, anti-growth attitude -- a holdover from the 1930s that small is better than big -- and that made it frustrating to try to grow the company.

Al Marasca

Former president

Ralphs Grocery Co., Compton, Calif.

One of my memories involves a time I was executive vice president of Ralphs, in 1985, when we had a one-time opportunity to acquire 17 Zody's [discount department stores] that were going under. I was given the task of taking those 80,000-square-foot stores and converting them to a new format, which we called The Giant. We converted one store a week for 17 weeks, which had never been done before. It was a monumental task that we planned for six months, during which we put together a high-powered team that included our top store managers and merchandisers. The Giant stores were forerunners of the warehouse store -- they were big stores with expanded service departments. At the time they opened, they were doing $1 million a week, though over time we lost much of that business and ultimately downsized them and converted them to Ralphs stores or to Food 4 Less locations.

Jim Toopes

Outgoing president and CEO

Big V Supermarkets, Florida, N.Y.

The way supermarkets have recognized and used technology to their advantage early on has been one of the most significant developments I've seen in the industry. The development of consumer information through the various loyalty cards have, I think, been very significant, and I think that's been where I've learned the most about consumers and marketing and merchandising trends.

I think today's technology really allows us to drill down into the detail and really understand better what customers' shopping habits are and to better identify trends and shopping patterns, and I think the way to utilize that has not been tapped to its full potential.

Ron Pearson

Chairman, president and CEO, Hy-Vee, Des Moines, Iowa

The most dramatic changes in the industry have included the introduction of the UPC code, the explosion in the amount of produce available and the introduction of prepackaged meats. The industry has adapted well to consumer lifestyle changes as well, especially with the introduction of food service at retail stores.

Ken Olsen

Former chairman and CEO

Vons Cos., Arcadia, Calif.

One of my memories of my years in the food industry -- one that was not so fond at the time but turned out to be very positive -- was the order by the Federal Trade Commission to break up the merger between Vons and Shopping Bag in 1959. The merger was a perfect fit because we had 30 stores on the west side of the city and they had 30 stores on the east side, with no overlap. And although we fought it and lost [in the Supreme Court in 1966], the order to divest turned out to be a big break for Vons because we sold 30 of the stores for about $30 million and used that money to open 30 new stores over the next three to four years and ended up with a better situation than we had before, including Shopping Bag's 60-acre distribution center that we were able to keep.

Don Ritchey

Former chairman and CEO

Lucky Stores, San Leandro, Calif.

Jerry Awes, the chairman of Lucky, hired Bud Fisher to run Lucky's Gemco membership department stores in the early 1960s, and Bud hired me to work at the Gemco in San Jose. Gemco was truly unique at the time. It was founded in Anaheim, [Calif.], by people from the jewelry business -- hence, the name. It was a discount store with a collection of leased departments, with the founders running the jewelry departments and the other departments leased out. Lucky wanted two things: to get experience in general merchandise and to get experience selling food at discount, so they put 20,000-square-foot discount food departments at the back end of the first few Gemcos, and those were the first combined food-and-general merchandise stores in the West.