11. CHARLES JENKINS JR., CEO, Publix Supermarkets
Key development: Growing Publix throughout the Southeast.
What's next: Shooting to be the largest retailer east of the Mississippi.
Before assuming the job of chief executive officer of Publix Super Markets in 2001, Charles Jenkins Jr. spent many years in the real-estate department for the Lakeland, Fla.-based retailer. The influence, observers said, still shows.
"Charlie was always very astute at finding locations," said Asa Candler, president of Atlanta-based Candler Development, whose firm has developed around 35 Publix-anchored neighborhood shopping centers. "The locations were just like the Publix stores themselves: convenient and appealing, particularly for the ladies who were their biggest customers. That's something that was handed down to Charlie from his uncle [Publix founder George Jenkins] and his cousin [Howard Jenkins, Charles' predecessor as CEO]."
According to Candler, Jenkins' success at carrying out the Publix strategy through real estate -- its stores were not only better located, he said, but featured wider aisles and slightly wider parking spaces than many competitors' stores -- helped make Publix into $16.9 billion company he runs today. Under Jenkins' leadership, Publix has continued to break new ground: the Atlanta area in the 1990s and, more recently, Tennessee, Alabama and South Carolina.
"Charles was chief architect of reversing General Sherman's march to the sea and took the Atlanta market by storm," said Burt P. Flickinger III, managing director of Strategic Resource Group, New York. "He took on tough, entrenched competitors like Kroger, A&P and Supervalu, and is now a co-share leader in Atlanta. They're also doing quite well in Tennessee. While Bruno's is giving Publix quite a battle in Alabama, Publix is starting to do well there."
The chain opened 78 new supermarkets and closed 18 during 2003, bringing its total to 801 stores, 600 of which are in its home state of Florida. According to a filing with the Securities and Exchange Commission, Publix plans to open 57 new stores this year as part of a long-range plan to open 300 new stores between 2001 and 2006.
Publix, whose stock is owned by its directors and employees, has faced down competition from traditional competitors and mass merchants by combining an emphasis on customer service at store level with innovative business ideas and training at headquarters, observers said. According to Flickinger, Jenkins studies his competitors thoroughly and sends Publix operators each year to Cornell University's summer executive program.
"Publix has fought off a number of challenges," Flickinger said. "Winn-Dixie was a better and more powerful competitor for the better part of a century, but in the 1990s when Winn-Dixie was going through a number of iterations, Charles was really studying competition in every channel.
"As Winn-Dixie tried to reorganize and as Wal-Mart began to site-saturate their markets, Publix was so successful [that] Wal-Mart sucked sales almost uniquely out of Winn-Dixie and weaker independents, but not out of Publix."
Flickinger said he thinks Publix can eventually become a $25 billion to $30 billion company, and the largest food retailer east of the Mississippi, with stores stretching north to the Mason-Dixon line. "Publix is never satisfied with success, and under Charles, looks to get better every single year. It stays strong no matter how strong the competition."
12. PIERRE-OLIVIER BECKERS, CEO, Delhaize America
Key developments: Pushed for global standards; built new platforms for U.S. banners.
What's next: Prepare the industry for RFID; roll out new concepts in the U.S.
If Pierre-Olivier Beckers were not the head of one of the largest supermarket companies in the United States, he might have had a career as a political leader.
The chief executive officer of Delhaize America, Salisbury, N.C., who also serves as president and CEO of parent company Delhaize Group, Brussels, Belgium, has a knack for bringing diverse factions together to achieve a mutually beneficial goal. It is a talent he has used to steer Delhaize in new directions in the past year as the company seeks to build a competitive platform for the future.
Recent strategic innovations at Delhaize, which generated about 73% of its total 2003 sales, or about $15.5 billion, from its four U.S. banners, include the debut in May of a new convenience-oriented Food Lion brand, called Bloom, and the planned conversion of the entire Kash N Karry chain in Florida to a new concept called Sweetbay Supermarkets. In both cases, the company is blending the expertise of the company's various divisions in the U.S. and overseas.
"I think under his management there's much more exchange of know-how between the different chains, and between the U.S. and Belgium, and between Eastern Europe and the rest of the company," said Pascale Nachtergaele, analyst, Delta Lloyd Securities, Antwerp, Belgium. "I think he gets a lot of respect from the people in the company and in the sector."
Bloom, for example, includes several features that have been adopted from Delhaize Europe, while Sweetbay is being developed under the auspices of Hannaford Bros., Delhaize's highly successful New England banner.
"The name of the game is differentiation," Beckers told SN in an interview. "Consumers are not just going for the closest supermarket. They are more educated, and they expect more from their retailers."
Beckers last year oversaw an increase in the net income of Delhaize Group of 32.1% at constant exchange rates, to about $212 million. Operating margins grew to 4.3%, up from 3.9% in the year-ago period, after a huge streamlining initiative at Food Lion.
"It was a turning year for our company," he said. "We created a new momentum at our core formats that will deliver fruits in 2004 and beyond."
He added that he is also proud of the company's debt reduction during the past year, when total debt fell 22.4%, to about $3.75 billion.
Rick Anicetti, president, Food Lion, said Beckers leads Delhaize with "enthusiasm, optimism and passion" for both the individual Delhaize banners and the industry overall.
"His ability to relentlessly communicate his vision unquestionably moves people and consequently their organizations," Anicetti told SN. "Pierre-Olivier's natural curiosity deepens the quality of conversations, analysis and learning throughout the [company]."
Beckers' work for the industry includes his membership on the board of Food Marketing Institute, Washington, and his chairmanship of CIES, the global industry association.
At CIES, Beckers has been a champion of global standardization and the development of global food-safety initiatives. Under his leadership, CIES created a food-safety benchmarking tool f0r retailers.
He also has been pushing for increased technology standards in advance of the anticipated rollout of radio frequency identification technology.
13. BILL GRIZE, President and CEO, Ahold USA
Recent development: Guiding a major player in the supermarket arena into a stronger position.
What's next: Continuing to streamline and consolidate to bolster the bottom line.
Bill Grize has his work cut out for him.
As president and chief executive officer of Ahold USA, Chantilly, Va., Grize is charged with getting the fourth-largest supermarket operator in this country on a strong, money-making track that will equip it for the future. Practically speaking, that means consolidating some of Ahold USA's six operating companies, integrating their best practices, getting in the fast lane on the technological front, and selling off the companies that are draining profits.
Since this time last year, Grize has spearheaded the nearly completed consolidation of Ahold USA's Giant Foods, Landover, Md., chain with its top-performing Stop & Shop, Quincy, Mass. Its Giant Food Stores, Carlisle, Pa., and Tops Markets, Buffalo, N.Y., are already operating primarily as a single company. Under Grize's guidance, Ahold also put financially troubled Bruno's, Birmingham, Ala., and Bi-Lo, Mauldin, S.C., on the selling block.
Even in the midst of such a monumental task, Grize is characteristically modest, giving much of the credit to his company's personnel, right down to the front-liners.
"Looking back over the past 12 months, the most significant issue Ahold addressed was stabilizing our business and getting our finances and balance sheet in shape. Our people worked diligently to hold our business together and stay focused. I am personally very proud of our associates who helped pull us through very difficult, unprecedented times," Grize said.
Industry sources told SN that Grize is proof positive that a powerful leader who initiates real change can also be a nice guy.
"I've found Bill Grize to be a very nice person who's willing to answer any questions. My personal opinion is that he's also extremely competent, a real retail man who knows what's going on in the marketplace. Hence the changes he's leading," said a Netherlands-based financial analyst.
Another analyst who's very familiar with the doings of Ahold and Ahold USA, seconded that.
"His focus on Stop & Shop certainly makes sense. It's the strongest of all [the Ahold USA companies]. In fact, it's the crown jewel of U.S. chains, with very high margins. Consolidating, combining skills and best practices can save [Ahold USA] a lot of money. It'll help a lot, too, once Bruno's and Bi-Lo are sold," said Pascale Nachtergaele at Delta Lloyd Securities, Antwerp, Belgium.
The proceeds from the sale of those two chains will be used to reduce the company's debt, which currently stands at $7 billion, Grize told SN. He added that cost-cutting moves will include the closing of Ahold USA's Chantilly, Va., headquarters office.
"We are moving some of the staff to Quincy, and some of our HR people will remain in the northern Virginia area. As we integrated our store operations, we also saw many opportunities to streamline Chantilly administrative functions."
Even as competition heats up, Grize said he's confident and excited about the future of his company.
"In order to increase our market share, we have an aggressive new store and remodeling program in place, plus a focus on increasing existing stores' sales."
14. DANNY WEGMAN, President, Wegman's Food Markets
Key developments: Data synchronization with suppliers; highest top 10 ranking yet on Fortune Magazine's list of 100 Best Companies to Work for in America.
What's next: Expansion of EPC/RFID programs; completion of 1 million-square-foot distribution center in Pennsylvania.
Danny Wegman, third-generation owner of one of the industry's most-watched and -admired private companies, continues to surprise much larger rivals.
At the retail level, customers notice the Wegmans difference in the 66-store chain's selection of artisan breads and cheeses, cooking demos, nutrition lectures and store-by-store flourishes such as an upscale kitchenware department in one New Jersey location or the elegant "Tastings" continental restaurant and bar at another in Rochester, N.Y.
The company's strategy, which Forbes magazine recently described as "a sweet spot between price and quality," last year led to more than $3.3 billion in sales for the chain -- up an impressive 9% from a year earlier.
Those numbers, along with Danny Wegman's post as chairman on the Uniform Code Council's board of directors, have frequently found the company mentioned in the same breath as Wal-Mart Stores and Royal Ahold as one of the heavy hitters in the world of data synchronization.
An aggressive move last summer demonstrated that the small company was playing in the big leagues. In June 2003, Wegmans stipulated a series of data synchronization deadlines for its suppliers, warning in a letter that failure to have data loaded into the Uniform Code Council's Global Registry by March 2004 and begin synchronizing data with the company by January 2005, "will significantly affect your business with Wegmans."
So far, the plan is working well. In March, Wegmans announced that it had synchronized item-level data for 6,000 products with 250 suppliers, more than 50% of its grocery and dairy volume. The changes had, at the time of the announcement, saved the company more than half a million dollars in annual costs related to logistics and warehouse operations.
Future developments should create even greater supply chain efficiency.
"I can see [Electronic Product Codes embedded in RFID tags] having a significant effect on many parts of our business in the future," said Wegman, citing everything from accuracy of prescriptions filled in stores to fresher perishables and enhanced product traceability.
Although the chain plans to open only a few stores this year, they are likely to be huge. To facilitate expansion, the company launched construction on a 1 million-square-foot distribution center in Schuylkill, Pa.
15. CHARLES BUTT, Chairman and CEO, H.E. Butt Grocery
Key development: Moving forward on expansion and merchandising initiatives in Texas and Mexico.
What's next: Planning a larger U.S. store format and a new Mexico distribution center.
The longtime leader of H.E. Butt Grocery, San Antonio, is characteristically low-key, preferring to work behind the scenes and let his people take the credit.
Make no mistake, however. Charles Butt, chairman and chief executive officer of the family-owned company, is the key visionary player steering the ship.
H-E-B is expected to finish 2004 with about $11.5 billion in sales from more than 300 stores in Texas and northern Mexico. The company won SN's Retail Excellence Award in 2003.
In an interview with SN this month, Butt underlined the continuing innovation and momentum at the much-praised organization, and stressed that one constant is the retailer's associate-centered environment.
"The focus on our people is the defining element of our culture," he said, referring to the associate team that is more than 60,000 strong. "That comes out in their attitude of excellence."
H-E-B is accelerating on many fronts, Butt explained. The company is on an expansion drive in Houston. It will add another unit to its group of seven Central Market stores, which are considered the crowned jewels of the company's retail offerings and a mecca for foodies. The retailer plans to build a few H-E-B stores that are larger than the current largest format of 109,000 square feet in order to showcase expanded departments for sections that include baby, cards and party, cosmetics, and lawn and garden, he said. H-E-B will soon add a large Mexico distribution center for its 20 stores in that country and will further increase its commitment by doubling the number of stores in there in the next few years.
The retailer is also growing popular store-brand merchandising programs, such as its Creamy Creations ice cream and its Fully Cooked Line of primarily meat items that specializes in Texas palettes.
H-E-B is managing to grow in a state that Wal-Mart has chosen for intense supercenter development over the past few years. Butt subscribes to the view that good competition has made H-E-B a better operator.
"Wal-Mart is a powerful player in food and other aspects of retailing," he said. "We're challenged to be a better company when we compete with them. We must do all the blocking and tackling to compete, including aspects related to supply chain, managing costs, continued excellence in fresh, and our focus on people."
H-E-B has one important advantage that Wal-Mart cannot claim. It was raised in Texas. That fact continues to be a powerful contributor to the company's well-known community service and local marketing, including marketing to ethnic communities in the state. "We've always had somewhat of a bicultural environment in Texas," he said. "We grew up from a tiny company in small towns."
16. DAVID SHAPIRA, Chairman and CEO, Giant Eagle
Key developments: Tripling presence in Columbus, Ohio, market; increasing number of GetGo convenience stores/gas stations to 48.
What's next: Solidifying market position in Columbus; upgrading store base elsewhere; expanding into more contiguous markets.
David Shapira has Giant Eagle, Pittsburgh, growing by all means possible.
As the chairman and chief executive officer climbs SN's Power 50 list, his company is adding stores (including a new energy-efficient unit in Brunswick, Ohio), adding markets, expanding its GetGo convenience store and gas station business to 48, enhancing category presentations like health and beauty care, and moving closer to the goal Shapira set of increasing sales from $4.7 billion (according to the company's Web site) to $9 billion by 2007.
"At Giant Eagle, we focus on expanding our business through acquisitions and organic growth," Shapira told SN.
One of the chain's biggest accomplishments this past year was tripling its store presence in the Columbus, Ohio, market with the purchase of nine units from Penn Traffic's defunct Big Bear operation, outbidding rival Kroger. However, Columbus represents one of Giant Eagle's biggest challenges for the year ahead as it seeks to solidify its presence in that market, where competition is much more intense than in its home Pittsburgh market, or in Cleveland, where it is now established as the market leader.
"A great example of how we continue to grow our business is our current development strategy in the Columbus market. In Columbus, we have been very successful in combining both acquisitions and organic growth to triple our market presence in less than six months. We continue to witness extremely positive customer acceptance of our new supermarkets in this market," Shapira said.
In Columbus, Giant Eagle faces competition from Wal-Mart and Meijer, as well as non-traditional food retailers, and the very well-entrenched Kroger.
Neil Stern, partner, McMillan-Doolittle, Chicago, said Giant Eagle is "quietly" becoming a regional force, "and one of the best regional supermarket chains in the country. They are getting up to the vaulted status of a Publix or an H-E-B."
"I like the way the company has succeeded in greater Cleveland after entering the market several years ago," Chuck Cerankosky, analyst, McDonald Investments, Cleveland, said of the privately held company. "They've been creeping into new markets, specifically Columbus, and they were able to take advantage of some of the Big Bear units that were put up for sale."
As to Shapira himself, Stern said, "What you are seeing -- and it seems to be the hallmark of leaders of great private companies -- is the willingness to experiment, to take risks, basically not to play it safe."
"David exemplifies the family-operated philosophy that has been the Giant Eagle foundation for more than 73 years," said Anthony Rego, vice chairman and CEO, Cleveland Operating Division, Giant Eagle. "Understanding the value of teamwork and taking a very hands-on approach to all of his daily operational responsibilities, David continues to play an active role in the overall performance of the company, in addition to his far-reaching involvement in many area community and civic initiatives."
"Over the years, David Shapira has demonstrated a lot of vision and a lot of integrity," said Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill. "That combination of vision and integrity is a very powerful motivator for his team. He has a long-term sense of where the company needs to go and has demonstrated both the imagination and flexibility to take them there."
17. RON PEARSON, Chairman of the board and chairman of the executive committee, Hy-Vee
Key development: Over 5% comparable-store growth this year.
What's next: Continue modernization of store base; update front-end and back-office systems.
If autonomy is the fuel of Hy-Vee's success, Ron Pearson is the driver who keeps this uniquely managed supermarket retailer on track to record sales figures.
With a "21st century" store base and employees empowered to act like owners, Hy-Vee, West Des Moines, Iowa, is achieving its greatest success in same-store sales, and doing so under intense competition from Wal-Mart Supercenters, Pearson told SN.
"Autonomy and employee ownership are two of the biggest keys to our success, and why we are growing at a rapid rate and having our best years right now," Pearson said. "All of that comes together in doing the right things and making the right decisions."
After nine months of Hy-Vee's fiscal year, which began in October, the company has 5.51% comparable-store increases in an industry that is probably less than 1%, he said. While up from last year's 3.6%, this is not an aberration, Pearson said. Previous years were 3.8% and 3.7%. Annual sales for the privately held chain are $4.2 billion, according to its Web site.
Meanwhile, growth in nonfood categories, one of many focus areas for Hy-Vee, is reaching 15% to 20% in some stores, he said. Pharmacy plays a big role in this growth, as do in-store banks, which are operated by a Hy-Vee division, Midwest Heritage Bank.
All this has been accomplished with 100 Wal-Mart Supercenters operating in the Upper Midwest trading areas of Hy-Vee's 220 total stores, a number that includes 25 Drug Town drug stores, he said. Pearson noted that a high-volume supermarket, located near the site of Target's first supercenter, is now doing about $250,000 a week more than before the competition opened.
Pearson is quick to attribute this success to the company's employees, many of whom have ownership in the company, and the store directors who have an unparalleled amount of autonomy. It's this culture of autonomy and entrepreneurship that keeps everyone motivated and focused on the local needs of the customers. "When you own the company, you try harder, you're more productive, you care more, you work toward success, and I think we have had the vision to see what is needed in the future and we've provided it better than most," he said.
However, an autonomous, decentralized corporate environment like Hy-Vee's is not easy to sustain as the natural inclination of most executives is to amass and retain power. Pearson, who started with the company in 1960 as a part-time employee and worked his way up to the top position, is very dedicated to this business philosophy, which is unique in the supermarket trade. One of his biggest contributions to the company is to foster this characteristic, observers said.
"Ron is the personification of Hy-Vee's strategy. He makes it come to life," said Neil Stern, partner, McMillan-Doolittle, Chicago. "Ron is the first one to make sure everybody understands that the success of the chain doesn't happen at his level, but at the store manager level.
"Unlike a lot of leaders where it is about 'me' and 'how good I am,' Ron always deflects the success of the company onto the stores, the management and the people. He is truly an eagle-list leader of an eagle-list company," Stern said.
Tim Hammonds, president and chief executive officer, Food Marketing Institute, Washington, said Pearson's approach to management translated well to a successful tenure as FMI chairman from 2001 to 2002. "He has an extraordinary talent and ability to pull a consensus together from a large group of people and point them all in the same direction, and motivate them toward a very high level of performance," Hammonds said.
Pearson, in turn, is appreciative of his work with FMI and the opportunity to learn from the many resources the trade association provides.
This points to a commitment to education and motivation that Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill., said is another component of Pearson's leadership, and contributes to Hy-Vee's vitality. "Ron's focus on learning, both his own and his associates, sets him apart," he said.
Pearson also attributed part of the company's success to its "modern 21st century stores" and willingness to reinvest its profits in its physical assets.
Now that store modernization is nearly complete, the company will upgrade the front-end systems in all its stores over the next year and a half, he said. "We believe in analyzing and updating equipment," he said.
Meanwhile, the company is revamping its procurement technology and other back-office systems, "so we have the most modern software to take costs out of the system, while reducing inventories and doing more just-in-time deliveries," he said.
Expansion will continue with 10 to 15 new, remodeled or replacement stores a year, and very few acquisitions. "We believe that organic growth is the healthiest. It may not be as fast, but it is the most solid and it has served us well over the years," Pearson said. This will only be in the Upper Midwest, which has many markets Hy-Vee hasn't entered yet.
18. EILEEN SCOTT, CEO Pathmark Stores
Key developments: Grew and upgraded the business; kept Pathmark healthy financially.
What's next: Renovate older stores. Expand in suburbs and urban neighborhoods.
Eileen Scott is on the offensive.
As chief executive officer of Carteret, N.J.-based Pathmark Stores, Scott faces the daunting task of keeping sales from falling off the $4 billion mark and retaining market share and customer loyalty in a hotly contested promotional region.
So far, she has done a good job and won praise from Wall Street analysts. Last year, Pathmark grew to be stronger, Scott told SN. Year-end sales rose 1.4%, same-store sales were up 1.2%, and net income increased 24.1% to $16.5 million. These achievements were made at a time when most food retailers were bogged down by a sluggish economy and fought competition from all sectors.
In a very difficult food retail environment, Scott was able to keep the company focused on growth and improve the bottom line. During this period, Pathmark instituted a new sales program and was the first company in the New York, New Jersey and Philadelphia markets to change the advertising day from Sunday to Friday to better satisfy peak weekend demand. The new program improved in-stocks and efficiencies in merchandising and operations. The company also rewarded its loyal shoppers with targeted promotions. Pathmark elevated its customer service level above the competition, Scott said.
She controlled costs, improved productivity, and pursued an aggressive $79.3 million capital investment program. This year the company has slated $95 million for cap ex.
Then came the first quarter of the year and things slipped. Guidance for the year was adjusted downward. Scott admitted mistakes in Pathmark's promotional strategy focused on secondary product categories, saying the company didn't react quickly enough to correct the situation. "We were blocking and tackling," she stated, at a time when food inflation was escalating too fast.
Jim Donald, the former chairman and CEO of Pathmark and current president of Seattle-based Starbucks North America, said such decisions show that Scott "has what all top executives have, and that is the understanding to take risks. Going forward, what she needs to do is continue the same strategy -- be on the offensive. It sounds like that is what she is doing. Run the business for the customers."
As a Pathmark insider who rose through the ranks from a part-time cashier to assume the top slot in October 2002 after Donald resigned to go to Starbucks, Scott is well-equipped to apply her food retailing knowledge to continue to grow Pathmark and achieve her goal of making Pathmark "a superior place to shop and work."
While she remains cautious, she said the company is back on track after fine-tuning its promotional approach and refocusing on commodity categories.
The big challenge is growth in markets of dense and fragmented populations where competitive price wars are frequent. "We see growth in the suburbs as well as urban markets that are underserved by supermarkets." Such growth will be achieved through new store development and an aggressive renovation program, said Scott.
Scott pointed to renewing the company's training and development program as her biggest recent accomplishment. As one of the few top executive women in the food industry, Scott said she brings the natural instinct of nurturing to her role. Training, development and mentoring throughout the Pathmark organization is the result.