According to figures provided by executive recruiting firm CraigSearch, Richardson, Texas, supermarkets are demanding talent in category management, human resources and logistics, and they're paying to get it. (See tables on this and next page.)
Assignments from CraigSearch's supermarket clients around the U.S. showed significant increases in demand over the last year for category managers (up 240%) and human resources/training positions (200%), with distribution/logistics positions gaining 90%. Distribution remains the largest area of demand in total assignments, with 21%, followed by category managers, which account for 17% of all of CraigSearch's assignments. Demand for operations and produce positions declined over the last year, according to CraigSearch.
Training directors, warehouse managers and category managers received the largest pay increases over the last year, CraigSearch statistics show, with increases at medium-sized companies ($500 million-$3 billion in annual revenues) gaining at a slightly greater rate than at large companies.
CraigSearch's 2000 salary review, updated for SN earlier this month, shows average salaries ranging from $40,000 annually (conventional store manager for a small company) to $525,000 (chief executive officer of a large company). Positions at the vice president level and higher pay nearly twice as much at large companies than at smaller ones. Salaries retain more parity among lower-level employees, though large companies generally pay up to 25% more than small companies.
CraigSearch bases its figures upon the salary ranges of positions its has been assigned to fill as well as the salaries of candidates in its database. Salary data does not include special incentives, bonuses or other compensation factors which may affect the bottom line value of the positions listed.
The supermarket industry's efforts to reduce costs and polish its marketing skills are converging on the hiring front, where companies are increasingly looking outside the industry to fill those needs, experts said.
Specifically, jobs in logistics, training and category management are "hot" today, observers told SN, highlighting the industry's effort to develop more sophisticated and cost-efficient practices in those areas. Companies that look outside the industry -- until recently a relatively rare occurrence -- hope the talent they import will help develop competencies in those disciplines company-wide.
"In general, marketing and logistics are two areas of the supermarket business that the chains have been trying to bring to a new and higher level," Ed Comeau, analyst for Donaldson, Lufkin & Jennrette, New York, told SN. "Many companies haven't excelled in those areas and haven't got the the self-developed talent there that they have in real estate and procurement, for example."
Obtaining top-level managers in marketing and logistics has led a number of supermarkets to recruit from industries such as consumer packaged goods, delivery specialists and consulting firms, said Kevin Duffy, principal with Chicago-based recruiting firm Korn/Ferry International. "I think the industry has come a long way in that regard," Duffy told SN. "We're finding that world-class grocery retailers are recruiting diverse, sophisticated talent from other companies such as consumer packaged goods, hard goods and other industries."
Companies such as A&P, Montvale, N.J.; Ahold, Zaandam, The Netherlands, and Supervalu, Minneapolis, have recently gone outside the industry to find top-level talent. Earlier this month, Safeway, Pleasanton, Calif., named a new chief financial officer, Vasant M. Prabhu, with a varied background including, most recently, a stint with information-services giant McGraw-Hill, New York.
"[Safeway chief executive officer] Steve Burd is an example of the ultimate outsider, yet he's one of the most admired CEOs in the business," noted Gary Giblen, director of research for C L King Associates, New York. Burd, a former consultant and transportation industry executive, joined Safeway as part of a leveraged buyout in the late 1980s. "He's known for thinking outside the box and has made a number of key hires from outside the industry," said Giblen. "They've also been able to make good use of the veterans who know the business inside the company."
Still, recruiting outside the industry is not a practice favored by every company -- nor is it within the abilities of some, observers note.
"Five years ago, most of the talent in the supermarket industry was born and raised there. They started at the bottom and moved through the ranks," said Brian Meany, managing director of Herbert Mines Associates, a New York-based executive recruiting firm. "That's excellent training, by the way, but the criticism of it is that it tends to be limiting."
Another observer who asked not to be identified termed reticence to recruit beyond a company's own ranks a "weakness." Others said they feel companies have been slow to embrace the concept because it would represent a fundamental change in the way they do business.
"Asking a company to change its hiring practices is asking a company to change its culture," said Mary Jane Schermer, vice president and managing director for the Boulder, Colo., office of Chicago-based recruiter Cook Associates.
However, continued consolidation and globalization will push supermarkets toward finding the best people for the job, whatever their backgrounds, observers noted.
"If you look at a company like PepsiCo, you'll see people there from IBM, Home Depot, Kraft and FedEx," Meany said. "You won't find that kind of diversity in the supermarket industry. But with consolidation polarizing the industry into strong regional chains and global players, the winners are going to be the companies that have the best people."
The current demand for logistics specialists at supermarket companies is simply explained, observers say: In a low-margin industry, costs must be minimized, and companies see the supply chain as the ripest source of potential cost reductions.
"The major question the supermarkets ask themselves is: How do we make money now?" said Meany. "A lot of them are looking in the back of the house -- at the supply chain."
CraigSearch, a Richardson, Texas-based recruiting firm, has received more assignments to fill vacancies in distribution and logistics than any other discipline in the supermarket industry over the last year, Jose Tamez, partner for CraigSearch, told SN. Distribution and logistics jobs accounted for 21% of all the recruiting assignments CraigSearch handled between August 1999 and August 2000. The previous year those jobs accounted for 11%, he added.
"Companies are focused today on getting technical people who can drive costs out of the business, gain efficiencies and drive margins," said Schermer. "The person who works for the industry today has to be a good technical manager. It's not the old school way anymore, when a person could come up on the operations side or up the sales side. You see more top people serving in different disciplines throughout their careers. And no matter what side they come up on, they need a strong financial background, because it's all about getting costs out of the business."
While top-level executives who can spearhead cost-saving logistics strategies are in demand, Tamez said companies are also under pressure today to fill mid-level positions in the supply chain. One hurdle to that is a perception of the field as not particularly attractive to outsiders and young people, Tamez explained.
"Distribution and logistics is one area where you're seeing the bench strength depleted," he said. "The talent is not there. One reason for that is that it's not considered very exciting from an outside point of view. Seems like gen-Xers aren't interested in this field much at all. They want to know, how fast can I get to the top, what's going to be exciting for me, and where am I going to make the most money fastest. This field doesn't lend itself to that."
Tamez reports that his clients are having a particularly hard time finding warehouse supervisors and other middle- to upper-management positions.
Salaries in the logistics field have accordingly increased with the demand over the last year, according to Tamez, with the average warehouse manager's job paying $84,000 at a medium-sized company ($500 million-$3 billion in annual sales) and $110,000 at a $3 billion-plus company. Those salaries represent increases over last year of 14% and 25% respectively, Tamez said.
Companies looking for top-level managers outside the supermarket industry can look to "any company that knows how to get a product from point A to point B," according to Meany.
"That could be Federal Express, UPS or J.D. Hunt," he said. "Though supermarkets are a perishable industry, there are some similarities between moving nuts and bolts and microchips and milk and cheese. Best practices from either business can be applied."
Another area where changing demands are affecting hiring is in category management, experts say. As in logistics, supermarkets feel taking a more sophisticated approach to the category management field can be profitable.
"I think there's a good scramble going on for good category managers," said Tamez. "Today the job requires more partnering and getting more money from the vendors and brokers than they had to a few years back. The top chains today are requiring individuals with advanced degrees and more experience."
For many chains, that means tapping the talent pool previously reserved for consumer packaged goods companies.
"There's an evolution going on on the merchandising side," said Meany. "The category manager is really evolving into a position that, instead of just putting the product on the shelf and getting a good deal, is mining consumer data and making it work for their particular customer in their particular area. Vendors have traditionally done this better than the retailers, so retailers today are turning to them."
Category managers finished just behind distribution and logistics among all supermarket disciplines in number of recruiting assignments over the last year at CraigSearch, Tamez said. It also grew the most over the last year, Tamez added, with demand up 240% as compared with the previous year.
Some recruiters, including Schermer, said supermarket companies historically have not been very successful luring away talent from CPGs, nor have they fared well in competing with CPGs for young talent.
"[Supermarkets] would like to get the people going into the Campbells Soups or the Gillettes but its been a struggle," she said. "They haven't overall been very aggressive or successful pulling people out of MBA programs."
"Supermarkets can offer a decent starting salary but things tend to top off at middle management. It's difficult to compete with consumer products companies on compensation packages. The supermarket business is traditionally operations driven with very low margins, and that leans back into the pay scale."
According to Tamez, category manager salaries in the supermarket business range from around $70,000 to $80,000 annually, depending on the size of the company.
Struggling companies have needed to get creative, Tamez said, including offers of guaranteed contracts or bonuses. "This is mostly at the senior level, but I've also seen it happen with category managers," he said.
Supermarkets could be catching a break as a result of recent consolidation among consumer packaged goods companies, Giblen suggested.
"I think some talented people have become available recently as a result of mergers in the packaged goods industry, and that will continue to happen," Giblen said. "And people who have fallen out of the loop in big mergers tend not to be in position for huge increases in salary."
Elsewhere, observers see increases in demand for jobs in training and in marketing and branding. Trainers are needed to help companies reinforce the more sophisticated overall approaches food retailing companies are taking to their business, while branding and marketing specialists develop deeper consumer loyalty.
"I see companies today paying a lot of attention to marketing and branding positions," Schermer said. "Chains today are very concerned with creating and maintaining a brand -- Whole Foods is a great example, and companies like Ahold are working very hard to create a brand for each of their divisions. That helps customer loyalty."
Training director salaries saw an increase of 25% over the last year, according to Tamez, and now average $88,000 at medium-sized and $100,000 for at large companies.
Jobs in less demand today than a few years back include any of the duplicate disciplines created as a result of the most recent wave in company mergers, observers say, including back office functions such as real estate and finance. As for the future, many predict an increased need for information technology talent as companies tackle Internet retailing, Web-based product exchanges and other new applications. As with recent trends in category management and logistics, companies may do well to go outside in an attempt to gain that knowledge for themselves.
"Food retailers' skill sets will eventually evolve, and what they go outside to learn will become a part of their overall competency," Meany said. "But for now, they are going to where those skills are more relevant."