QUICK THINKING

David Merrefield

It's nearly impossible to pick a highlight from this big, 172-page issue of Supermarket News, so let's make it easy by seeing what can be learned by taking a quick look at the news features cited on the front page. Two very special companies -- and a lot of very special people -- are mentioned on Page 1 and profiled this week: They are Byron Allumbaugh, chairman of Ralphs Grocery Co., Compton, Calif., and the six-member family team that runs Schnuck Markets, St. Louis. Both news features were written by SN Senior Editor David Orgel.

These are very different companies, Ralphs being a company that has gone through a host of ownership changes in recent years, while Schnuck has remained a family owned and operated company through its history. Executives at the companies are at quite different places in their careers, too: Byron Allumbaugh plans to retire early next year at age 65 after perhaps the longest-running chairmanship in the industry, while the Schnuck-family executives will likely remain active in management for years to come.

But, different as they are, there is one theme that unifies the executives behind these companies: They all demonstrate the ability to learn new skills and apply them quickly. And they all have learned a lot during financial transactions.

As for Byron Allumbaugh's career, he entered food retailing at a young age as a meat manager. As time went on, he moved up the corporate ladder, taking a topside post not long after the founding family sold Ralphs to Federated Department Stores. Then, a few years later, another series of quick transactions buffeted Ralphs.

This put the former meat man into the center of financially driven change. And that could have been a big problem: "I knew nothing about venture capital, but in 1987 it became apparent that Federated was thinking of selling Ralphs, so I took a crash course in finance," he told SN. Good thing. Several more big transactions followed, including one that started with investment bankers, competitors and others swarming all over, and ending with his participation in a leveraged buyout attempt. The Schnuck executives also faced an unusual financial situation that required innovative problem-solving: When they set out last year to buy National Tea Co. from Loblaw Cos., the seller wanted to divest National as a unit despite the fact National had operations both in St. Louis (which Schnuck sought) and New Orleans (which Schnuck didn't want). So the Schnuck executives set up a two-tier buyout situation in which Schnuck bought both National store groups, but immediately spun off the Southern store group to Schwegmann Giant Super Markets, New Orleans, in a pre-arranged deal. After that transaction was settled, they were able to negotiate store-divestment requirements with the Federal Trade Commission based on a St. Louis marketplace definition that included supercenters, not just other conventional supermarkets. Even though Schnuck had to divest more St. Louis stores than had been originally hoped, the strategy allowed them to keep more stores than otherwise would have been possible. And their market analysis set a precedent for the industry.

"When [the FTC] looked at supermarket acquisitions in the past, they never considered anything other than supermarkets as competition," Craig D. Schnuck, chairman, told SN. "We were the first to get them to accept supercenters as part of the overall definition of the marketplace."

Take a look at these important news articles for a lot more on how innovative executives face the challenge of change.

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