POWER 50 2006-07-24 (2)

ROBERT VOSBURGH / DAVID MERREFIELD / WENDY TOTH / MATTHEW ENIS / LAURA KLEPACKI / MARK HAMSTRA / JON

1) H. Lee Scott, Jr.

President and CEO, Wal-Mart Stores

Key Development: Launched new marketing platform emphasizing lifestyle over price.

What's Next: Attracting new consumers with expanded offerings.

The list of Wal-Mart's woes has remained fairly consistent during H. Lee Scott Jr.'s tenure as president and chief executive officer. During a time of extraordinary growth for the company, community opposition, stock price, same-store sales, employee benefits and organized labor received regular mentions year after year. The world's largest retailer continues to dominate the market and the headlines, blazing new territory with every single decision it makes.

Nevertheless, enough happened in the past year to propel Scott to the No. 1 position on SN's Power 50 list for the first time ever, an occurrence that also marks the first time a single person has occupied the top spot, rather than representative groups such as investors or the consumer.

Scott, who was not available for an SN interview, is steering the Bentonville, Ark., juggernaut into uncharted waters. It is a gutsy move that has earned him praise and attracted skepticism, sometimes in the same breath. A number of new initiatives address concerns expressed by critics of the super chain, including improvements to stores and transportation that lessen environmental impact, and extending health care benefits to part-time workers and accelerating the eligibility period.

Perhaps the most noticeable change, however, has been the subtle shift in the marketing of the Wal-Mart brand. In 2005, the company appointed John Fleming, Wal-Mart.com's chief and a former Target executive, and Stephen Quinn of Frito-Lay to lead the company's marketing efforts. In early January of this year, the company launched a new television ad campaign via Bernstein-Rein, Kansas City, Mo., around the theme, "Save More, Smile More." Wal-Mart even went so far as to place an ad for its apparel collections in Vogue magazine. The ads' emphasis on lifestyle, rather than price, signified a fundamental shift in the company's direction.

"If you look at the marketing changes, they're no longer this rural company and they're seeking a broader base of consumers," said George Whalin, president of Retail Management Consultants, San Marcos, Calif.

Against this backdrop, Scott touted the company's bottom line for fiscal 2006, which ended Jan. 31, by pointing out record-setting numbers.

"We delivered record financial results and strong, steady growth," he stated in Wal-Mart's annual report. Net sales rose 9.5% to a record $312.4 billion for fiscal 2006. Net income rose 9.4% to a record $11.2 billion, while earnings per share grew more than 10% from $2.41 to $2.68 per share. Comparable-store sales in the United States rose 3.4%.

Some Wal-Mart observers point out that the numbers are not as strong as they should be, and that the stock price remains stubbornly in the mid-$40 range. Scott, an expert on logistics and distribution who came up through the ranks as Wal-Mart's chief supply chain executive, has realized that global expansion and store count can take the company only so far, observers note.

"They're reaching site saturation in the Southeast United States and will start to approach site saturation in the overall U.S. before long," said Burt Flickinger, managing director of Strategic Resource Group, Stratford, Conn. "They're overrelying on the U.S. for growth, and this could be the real Achilles' heel for the company going forward."

The consumer focus is evident at store level, both in merchandise selection and overall format. This spring, the company announced it would begin adding organics to supercenter and Neighborhood Market shelves; some of the first products were infant formula and baby food. The retailer is also experimenting with more diverse store formats within its supercenters and discount stores. One unit in Plano, Texas, offers 2,100 premium food and wine products, a sushi bar, coffee cafe and expanded organics, while another in a Chicago suburb has been selling urban-oriented apparel and has the largest hair care set of any Wal-Mart store. Sales in the Texas unit are 25% higher than other Wal-Marts in the area.

Part of the larger strategy in changing the marketing focus is to get grocery shoppers to do more cross-shopping in the more profitable nonfood and durable goods aisles.

This move is in keeping with the acknowledgement that Wal-Mart - while still a formidable competitor - isn't as frightening as it once was to traditional supermarket retailers, according to Art Turock, president of Art Turock & Associates, a sales-growth strategist based in Kirkland, Wash.

"Wal-Mart has made Kroger and Safeway better competitors, and they're not the only ones. A lot of supermarkets have woken up to the need to differentiate, and not just play the price and efficiency game," he said. "Kroger is doing a lot more customizing of their stores. Safeway, with their lifestyle stores, has tried to position themselves above the typical supermarket chain in terms of the quality of the shopping experience, but below Whole Foods."

One area where the company was able to shine was during Hurricane Katrina, which struck the Gulf Coast in August 2005. Wal-Mart responded in such a way that it served as an epiphany of sorts for Scott, who later used the chain's experience during the disaster in his oft-quoted speech, "Twenty-First Century Leadership," delivered last October.

"At Wal-Mart, we didn't watch it, we experienced it," Scott said. "Some of our stores and clubs were under water. Associates lost their savings, their homes and, in a few cases, their lives. I spent time with a few of them in the Houston Astrodome. I saw the pain, the difficulty and the tears. But I saw something else. I saw a company utilize its people resources and scale to make a big and positive difference in people's lives."

Turock said the speech shows the hurricane relief effort opened Scott's eyes to new possibilities for Wal-Mart and its role in the world.

"Katrina had - and I'm not mincing words here - a transformative effect on him, and in turn, the rest of the company," Turock said. "In crisis, he saw some performance and problem-solving that was just phenomenal. Scott said, basically, 'if that's available in a crisis, why can't we make that happen more often rather than taking weeks and weeks and months dilly-dallying about solutions?'"

Scott will likely continue to battle the same list of problems that has beset the retailing giant since he took over the top spot in 2000. However, Wal-Mart watchers note there is more talk of pride in the company these days, and a seemingly sincere commitment to initiatives that without a doubt soften the company's image, including sustainability, environmental sensitivity and part-time worker benefits.

ROBERT VOSBURGH

2) Jeff Noddle

Chairman and CEO, Supervalu

Key development: Acquisition doubled company size.

What's Next: Managing transformative change.

If anyone has presided over more transformative change in the food distribution industry lately than Jeff Noddle, it would be difficult to think who it might be.

After all, Noddle, chairman and chief executive officer of Supervalu, Minneapolis, led the $17.4 billion breakup of Albertsons, one of the nation's largest food retailers, and, in the process, added more than 1,100 of Albertsons retailing locations to Supervalu's distribution and retailing portfolio. Another group of Albertsons stores, about half as large, went to a capital-management firm and Albertsons' drug store assets went to CVS Corp.

All that happened since the first of the year, warranting Noddle's elevation from No. 7 in last year's Top 50 to second this year.

Noddle told SN the decision to acquire Albertsons had its genesis in a Supervalu future-planning meeting last fall, when it was decided Supervalu needed to become a larger player to secure its place during the next five to 10 years.

"We thought we would have to get bigger in the retail business," he related. "We decided we should go down that path over a number of years. We considered acquiring properties we thought were appropriate should they became available, and we anticipated which ones that might be and which ones we might be interested in."

But not long after that meeting, lightning struck. The bolt was the availability of Albertsons. It suddenly became evident Supervalu's go-slow growth approach wouldn't be required. The Albertsons opportunity looked especially propitious since it featured the chance to cherry-pick the best of Albertsons' assets.

"We had not anticipated that all of Albertsons would put itself up for sale. So when that opportunity came along, we had to look. The chance to go inside a company the size of Albertsons and be able to select those properties that were interesting - and at the time there were others interested in taking what wasn't interesting to us - is something that doesn't come along too often. The board decided our stakeholders would be better off if we took that opportunity to put the base in place we would need in the next several years, as opposed to trying to accumulate that base over many years."

At the time the deal closed last month, Supervalu was catapulted from a company with a top line of about $20 billion, generated in roughly equal parts by wholesaling and owned retailing, to a $44 billion behemoth, driven by an 80% retailing stake. It became the nation's second-largest conventional food retailer, just behind Kroger Co.

Despite Supervalu's tip to retailing, it remains committed to its independent retailers, Noddle said.

"We remain committed to supplying independent retailers. We are rooted in the retail food business and part of those roots are supporting independent retailers: the regional chains and all those various people we support. We remain as committed to that tomorrow as we were yesterday. This transaction will facilitate an infrastructure that is so critical to them. There will be advantage no matter what retail we support, whether it be something owned by us or owned by others."

Meanwhile, Noddle is in his second year of a two-year term as chairman of the Food Marketing Institute. Perhaps one of the biggest changes in the recent history of FMI came on his watch, and with his close involvement, namely the decision to supplant the annual FMI booth show with an alternating-year show format starting in 2008. An educational event is to be held on the off-show year.

Noddle pointed out that the educational event will involve industry collaboration, not just the thinking of FMI. "More important than [the show format] is the world-class educational exhibit," he said. "[FMI] will be working collaboratively with Grocery Manufacturers Association on that; in fact, there will be a committee formed between FMI and GMA to really help us create two years from now a world-class [educational event] that everybody in the industry will want to be a part of."

Indeed, Noddle sees the concept of collaboration among various industry segments to be key to the slate of activities he has promoted as FMI chairman. Included are challenges such as backhaul and planning for a more coordinated industry role in emergency relief in the event further disasters strike.

DAVID MERREFIELD

3) David Dillon

Chairman and CEO, Kroger Co.

Key developments: First payment of quarterly cash dividend in 18 years; fine-tuned alternative formats.

What's next: Recruiting, retaining employees at store level.

With 11 consecutive quarters of increased same-store sales, expanded Marketplace format stores and the best quarterly sales in more than 15 years, David Dillon has Kroger on a roll.

Kroger Co., Cincinnati, earned $306.4 million, or 42 cents a share, on overall sales of $19.4 billion during the first quarter of 2006. Net earnings in the same period last year were $294.3 million.

"In March 2006, Kroger's board of directors declared the payment of a quarterly cash dividend," Dillon, chairman and chief executive officer, told SN. "Needless to say, this was a monumental event for the company as Kroger had not paid a cash dividend since our leveraged recapitalization in 1988 - some 18 years ago.

"[In addition,] during the past several years, Kroger has changed our business strategy to align everything we do with meeting the needs and expectations of our customers."

For example, following its 2003 partnership with London-based loyalty marketing firm Dunnhumby to create Dunnhumby USA, Kroger went a step beyond using customer loyalty data to track product sales and recently began using it to make decisions on store design, SN reported earlier this year.

Rodney McMullen, Kroger's vice chairman, said during a conference call last month that increased capital expenses - around $50 million during the fiscal first quarter that ended May 20 - were devoted mainly to developing alternative formats such as the multi-department Marketplace store, which is currently in Arizona, Utah and Columbus, Ohio; under development in Cincinnati; and headed toward "a few other markets," he said.

"Kroger has taken the idea of having different store formats and refined it so that they have everything from warehouse-style Food 4 Less Supermarkets to the multi-department Marketplace stores," said Jonathan Ziegler, principal, PUPS Investment Management, Santa Barbara, Calif.

The Marketplace stores sell a locally tailored variety of food and enhanced nonfood offerings. "Many

of our stores now offer expanded general merchandise areas in addition to full-service grocery and pharmacy departments," Dillon said. "These expanded areas include outdoor living products and home goods. We believe this is added convenience and value for our customers."

"Nonfood is less commodity focused and satisfies more consumer needs in their weekly trip," said Neil Stern, senior partner, McMillan-Doolittle, Chicago. "It is definitely part of how Kroger can differentiate against direct competitors."

Dillon will be focused on the company's employees in the coming year. "One of the biggest challenges is to recruit and retain people who love serving customers," he said. "We can have beautiful stores, all the products people want and good prices, and we still have nothing without great people.

"We pay very competitive wages and offer good benefits and opportunities. But retail is not as attractive as it once was. Now people have so many more employment choices than in the past."

WENDY TOTH

4) Steve Burd

Chairman, president and CEO, Safeway

Key developments: Rolled out "lifestyle" remodels; launched "O Organics" line.

What's next: Continued store remodels; negotiation of a new UFCW contract in Southern California.

Safeway's Steve Burd is an agent of change in the supermarket industry.

Amid uncertainty in the marketplace for traditional-format Safeway stores, the chairman, president and chief executive officer began a large-scale transformation of Safeway into its new "lifestyle" format in 2004. In 2005, a marketing campaign called "Ingredients for Life" accompanied the makeover, and this year about 550 stores, or 26% of Safeway's store base, operate under the lifestyle design.

Three hundred more conversions are planned for 2006, with another 300 in 2007. By 2008, Burd expects 77% of Safeway's 1,772 stores in the new format.

Meanwhile, the Pleasanton, Calif., company, under Burd's direction, is watching how the situation unfolds with Albertsons stores that might be sold or closed. "Whatever happens in those markets, we think it's a real advantage we're in four of those five markets," he said. "We think that presents a nice opportunity for us, and frankly, there's a degree of uncertainty out there that's an opportunity in itself."

"Safeway has effectively turned around its business with the deployment of the lifestyle stores and its marketing campaign," said Neil Stern, senior partner, McMillan-Doolittle, Chicago.

Inside the walls of the new format stores is a "remarkable transformation," said Jonathan Ziegler, principal, PUPS Investment Management, Santa Barbara, Calif., who recently visited a few of the remodeled units. "Steve Burd realized he had to drive sales and differentiate from the mass-market guys, and he did it, not necessarily through price but through something that the name implies: lifestyle.

The company significantly enhanced its proprietary product offering in the past year with its new line of "O Organic" products and Rancher's Reserve beef, said spokesman Brian Dowling.

"Under Steve's leadership, we took steps to further distinguish Safeway in ways that consumers find attractive and, in the process, separate us from the competition," Dowling said.

Meanwhile, the current contract in Southern California between supermarket retailers and the United Food and Commercial Workers Union expires in March 2007. During the last negotiations in 2003, Safeway's Southern California units were the target of a strike that, in its course from October 2003 to March 2004, cost Safeway about 25% of its sales volume.

"Labor will continue to be an issue for traditional supermarket retailers, but Safeway effectively made a stand to head off major increases," Stern said.

WENDY TOTH

5) John Mackey

Founder and CEO, Whole Foods Market

Key developments: Debuted on Fortune 500 list; grew sales per square foot to $870; made largest-ever corporate purchase of wind energy.

What's next: Navigating a period of rapid expansion.

Whether discussing his choice to follow a vegan diet or debating with Nobel Laureate Milton Friedman about whether corporations have a responsibility to improve society, John Mackey isn't a typical chief executive officer. Of course, Whole Foods Market, the company he cofounded 25 years ago, isn't a typical supermarket chain.

The 183-unit overachiever enjoyed yet another year of eye-popping growth in 2005, with comparable-store sales up 13%; average weekly sales per store growing more than $100,000, to reach $587,000; and sales per square foot now up to $870. Total sales of $4.7 billion netted the company its debut on the Fortune 500 list.

The Austin, Texas based retailer continues to grow in tandem with the booming market for natural and organic products - a market that the chain has played a fundamental role in developing. Now, with the rapid expansion of these categories into conventional channels, Mackey is betting that the company's environmentally conscious business philosophy, as well as a pipeline of huge, dazzling new stores that are opening as quickly as they can be staffed, will continue to allow the chain to dominate.

"Due to our success, we have seen many competitors over the years add a limited selection of natural and organic commodity products," Mackey said when announcing Whole Foods' most recent quarterly results. "To understand why that has not hurt us, but has instead created a gateway experience [for consumers] as evidenced by our accelerating comps, you have to understand that Whole Foods Market is about much more than just selling commodity natural and organic products."

During the past year, the company added to its already lengthy list of earth-friendly and fair-trade credentials by establishing the Whole Planet Foundation, which funds collateral-free microloans to farmers and poor entrepreneurs in developing countries.

In January, Whole Foods made the largest-ever corporate purchase of sustainable wind-energy credits - sufficient to supply 100% of its electricity needs. In June, citing humane treatment concerns, the chain stopped selling live lobsters. And this month, Mackey announced a plan to invest $10 million per year in a revolving loan fund for small U.S. farmers, as part of an effort to source more food locally.

It would be deeply cynical to characterize these initiatives purely as branding ploys, but ignoring Mackey's timing would also grossly underestimate his acumen for this business and its move into the mainstream. The wind-energy purchase, for example, came at a time of heightened national concern about fuel prices, global warming and dependence on foreign sources of energy. While Whole Foods was saying that live lobsters weren't happy in tanks, other chains, such as Safeway, were announcing that they would phase them out due to declining sales. And both of the new loan programs indicate that Mackey is planning for future challenges well in advance.

Notably, with Wal-Mart and other conventional retailers entering the organics market more aggressively, "the big risk is that you run into some supply shortfall, and that it has a negative impact on both commodity costs and availability," noted Scott Van Winkle, managing director for Boston-based financial services firm Canaccord Adams. "That $10 million they are loaning to small farmers might be an indication that they're looking to shore up some long-term relationships with farmers and locally sourced products because they see a tough supply market ahead."

Despite those potential challenges, Van Winkle said the company "hasn't scratched the surface" of their potential for growth, and appears to have found a sweet spot with their new, larger-store formats between 55,000 and 80,000 square feet - all of which are more productive on a square-foot basis than their older, smaller locations.

Determined to maintain momentum, Whole Foods has amassed a relatively ambitious national development pipeline of 78 stores totaling 4.4 million square feet, and some investors are beginning to gripe that the company still isn't moving fast enough.

The company is flush with cash and still has plenty of room to grow, but Mackey insists that Whole Foods faces a significant hurdle. Specifically, recruiting and training the type of employees needed to maintain the company's upscale, energetic culture will limit the chain to an average of 14% square-footage growth per year.

"We are frequently asked that given the large opportunity before us, why aren't we opening more stores per year," Mackey said in his most recent letter to Whole Foods stakeholders. "Clearly, as evidenced by our record store development pipeline and cash balance, the growth opportunity is there and we have sufficient capital; however, the constraint we face is human capital."

MATTHEW ENIS

6) Dan Bane

Chairman and CEO, Trader Joe's

Key developments: Expanded Trader Joe's operations into new markets, including Minneapolis and Manhattan.

What's next: Anticipates opening stores in Georgia and North Carolina.

Dan Bane has Trader Joe's Co. sailing on smooth waters.

The chairman and chief executive officer of the 255-unit nautical-themed specialty grocery chain, based in Monrovia, Calif., has, according to local observers, brought increased consistency to store operations while building on the legacies of his two predecessors: Joe Coloumbe, the chain's founder, who set the stage for the company's success by establishing its reputation for variety and bargain pricing on wine and cheese, and John Shields, a former Macy's executive, who brought fashion-buying concepts to Trader Joe's.

"Dan has kept the magic of both approaches while adding some magic of his own by making it all work better," one industry source told SN.

Bane declined comment when contacted by SN.

"Dan has really been the driver of the process that led to the significant growth of Trader Joe's," according to one observer. "He's established targets for growth, which to many in this industry would not seem achievable, but the company has been able to reach or exceed those goals because of Dan's strong leadership and commitment to the company's business philosophy - a focus on quality foods and market-leading prices in a festive store atmosphere with helpful, courteous employees.

"People like Trader Joe's for the customer experience in the stores, and that's a key strength that has been driven by Dan."

Bane joined Trader Joe's in 1998 after 13 years as a public accountant and four years as senior vice president, finance and administration, for Unified Western Grocers, Los Angeles. He was initially hired as president of Trader's Joe's western operations and named chairman and CEO in July 2001.

Al Plamann, president and CEO of Unified, described Bane as "hard working, very disciplined and also very creative, and he's helped Trader Joe's hold onto its great brand equity while maintaining the important part of the company's old culture - making everyone an important part of the organization and staying close to customers. At the same time, he's added new technologies without jeopardizing that culture."

Among those technologies were the introduction of scanning and development of more supply chain efficiencies, Plamann said.

Trader Joe's sales for the fiscal year that ended June 25 were expected to rise 11% to "somewhere north of $5 billion," sources told SN.

The company operates stores in 19 states, adding Minnesota to the list earlier this year when it opened a

store in Minneapolis. It is also expected to open its first store in Georgia, in the Atlanta market; and its first store in North Carolina, possibly in the Raleigh area.

It will also accelerate the number of store openings to 25 next year, observers said.

Trader Joe's is not brand-oriented, with 70% of its mix in private label, sources pointed out. "For most customers, it's their first shop but not their only shop because they can't fill all their shopping needs there," one observer told SN.

While known for its low-cost wine selections - often referred to as "two-buck Chuck" at the lowest end - Trader Joe's began stocking $49 bottles of wine on a regular basis a few years ago, and during the past year it has started to promote that line more aggressively, with a positive customer response, sources said.

Trader Joe's was acquired by the Albrecht family of Germany in 1979. Although Albrecht also owns Aldi, the limited-assortment chain operating in the Midwest, the two companies operate completely separately.

ELLIOT ZWIEBACH

7) A.G. Lafley

Chairman, president and CEO, Procter & Gamble Co.

Key development: Closed the $54 billion Gillette deal and began the merger process.

What's next: Delivering on increased sales growth projections of 5% to 7% annually through 2010.

In increments much larger than the savviest industry forecasters imagined, Procter & Gamble has been growing by leaps and bounds.

Since June 2000 when A.G. Lafley was handed the task of steering the now 169-year-old company into the 21st century, P&G has ballooned by nearly 75% from a $40 billion firm to one of almost $70 billion.

Yet despite the massive business he has put together, Lafley is proudest of the staff he has assembled.

"My greatest accomplishment is continuing to build a strong, proven leadership team that is increasingly diverse in terms of nationality, thinking style, functional background, business experience and more," said Lafley, the Cincinnati firm's chairman, president and chief executive officer. "This is important because our consumers, customers and suppliers are increasingly diverse. Together, we're a 'whole brain.'"

In terms of business direction, the October 2006 acquisition of Gillette for a staggering $54 billion left no doubt that P&G's future would be driven just as much by superior marketing of beauty and personal care as by soap and detergent. In just four years, the company has swallowed three multibillion-dollar beauty and personal care firms, beginning with Clairol in 2001 for $4.9 billion, followed by a major stake in Wella AG for $5 billion in 2003.

With the addition of the Gillette businesses with revenues of some $10 billion - including razors, shave creams and oral care - roughly half of the company's sales will be in beauty and health businesses and the other half from baby, family and household goods.

P&G projects that with the addition of Gillette, it will deliver annual sales growth of 5% to 7% through 2010. That is up from the pre-Gillette days of 4% to 6% annual growth.

Now the tough task of digesting Gillette in the most efficient and profitable way is at hand. Already, the company has announced the closure of 200 distribution centers worldwide and the consolidation of P&G's Crest and Gillette's Oral-B sales forces.

"The challenge is obvious: They [P&G] have to make Gillette work," said Neil Stern, senior partner, McMillan-Doolittle, a Chicago-based retail consultant group. "The second challenge is, once you get as big as P&G it is harder to maintain that kind of growth pace."

To a degree, the Gillette acquisition gives P&G additional leverage in the marketplace, he observed. "But in a way, it is the industry keeping up with themselves. Retailers are growing and so are the suppliers serving them."

Consultant Bill Bishop, president of Willard Bishop, Barrington, Ill., predicts the melding of the firms will go well. "The P&G company and culture is a processed and systematic place and they work hard at identifying what they want to do and then at getting it done."

What could be tricky for P&G is finding new ways to project a strong brand message at store level. "Retailers are progressively more concentrated and simultaneously more sophisticated and focused on maintaining their own brand for the store," Bishop said. "I do think the key will be in finding ways to derive benefit from their collaborative activities with retailers."

From the very beginning, Lafley has quickened the pace of product introductions and encouraged creative thinking from employees. Through multiple external partnerships, the company is tapping developing technologies to apply in its products and also improve system efficiency.

Under Lafley, the company has built a successful tooth-whitening business that did not previously exist and launched the rapidly expanding Swiffer cleaning brand. Across P&G brands there has been a sharing of ingredients and technologies. For instance, its facial-cleansing cloths use diaper materials, and laundry detergents are now being scented with Febreze.

While looking to find new ways to reach consumers, Lafley has stood by the old-school P&G philosophy that there is power in branding and has fostered the development of mega-brands. The company now boasts 22 billion-dollar brands, led by Tide with sales of $3 billion.

Lafley, affable but determined, has the knack to make the complicated seem simple. While he is steward of a global consumer products behemoth, he says he is not really in charge. "The consumer," he said, "is the boss."

LAURA KLEPACK

8) Charles Jenkins, Jr.

CEO, Publix Super Markets

Key developments: Drove the company to new levels of sales and earnings; continued to experiment with new concepts.

What's next: Opening an organic concept, GreenWise.

Perhaps it is fitting that one of the fastest-growing supermarket chains in the country is based in the Sunshine State.

As Publix Super Markets, Lakeland, Fla., rapidly approaches the 1,000-unit mark, the man responsible for cultivating much of its recent growth maintains a steady, disciplined oversight that has long characterized the chain's leadership.

Charles Jenkins Jr., chief executive officer, five years ago inherited the reins of the enormously successful chain created by his uncle, industry legend George Jenkins. In that time, he has put his personal stamp on the business and driven it to record sales and profits.

"Charlie is a leader who is extremely decisive when he makes up his mind," Joseph W. Carvin, a former vice president of human resources at Publix and author of the book, "A Piece of the Pie: The Story of Customer Service at Publix," told SN. "He's an excellent listener, and considers all points of view - but once he's heard them, he makes his decision."

Jenkins is also "extremely organized, methodical and thorough," Carvin said, and is largely a hands-off leader. "If it's your job, he lets you do it, and doesn't get involved, generally."

In 2005, Publix opened 36 new stores, ending the year with 875, and breached the $20 billion sales mark with a gain of nearly 11% over year-earlier levels. Comparable-store sales grew 5.4%, exceeding those of the industry overall as Publix capitalized on the Winn-Dixie bankruptcy to extend its dominance of the Florida market, where it operates 641 stores.

Net income for 2005 almost totaled $989 million, up about 21% over 2004 results, and giving the company one of the best profit margins among food retailers.

Over the past year the company has also continued to dabble in new store formats, with two Publix Sabor outlets targeting Hispanic consumers and a planned GreenWise concept featuring natural and organic products.

"They are a very disciplined company, and it's a type of discipline that they practice relentlessly in terms of their values and their long-term goals," said Rick McAllister, president and CEO of the Florida Retail Federation, Tallahassee. "The Jenkins family and Publix are one of those retailers that have simply made a practice of doing everything right. They treat their employees right, they treat their customers right, they treat their vendors right and they engage in the industry

in the right fashion."

Carvin attributes the company's success to its employee ownership program and promotion from within, which he said create a "sense of egalitarianism" and help the chain maintain high levels of service.

"You don't talk to a customer very long or an employee very long before you notice the incredible loyalty they have for Publix," said McAllister of the FRF. "How they have maintained that sort of culture, and how that not only breeds itself in the employee but also breeds itself in the customer is extraordinary to me."

Carvin also described Jenkins as "a hell of a nice guy" who has a knack for injecting a dry sense of humor into the workplace. He recalled an instance in which Jenkins handed Carvin, who was at that time an attorney working for Publix, a note meant to rib Carvin about his long-winded explanations. The small piece of paper had a tiny blank square drawn in the center labeled "Lawyer Response Form."

"He always made me laugh," Carvin said. "He can tell you 'no' and make you laugh at the same time."

MARK HAMSTRA

9) Pierre-Olivier Beckers

CEO, Delhaize Group

Key development: Financial and operating improvements through a culture of diversity and risk-taking.

What's next: "Best in class" concept differentiation.

Leading an organization where ideas travel up and down along the coast and back and forth across the ocean, Pierre Olivier Beckers understands he cannot pilot the good ship Delhaize solo.

"I'm the first to say I can't work at my best if I work alone," Beckers, the chief executive officer of Belgium-based Delhaize Group, remarked in a recent interview with SN. "I'm certainly not a dictatorial, top-down leader. I believe in developing people and giving them ownership of their ideas and sharing in their success. I'm a fanatic about the strength of diversity in operations and the acceleration of new ideas.

"I feel mistakes are OK," he added, "as long as we learn from them."

Beckers' aspiration to create what he calls "a culture of confidence and trust," and "a learning company," can be seen throughout Delhaize's U.S. banners, each of which have experienced rapid and sometimes dramatic change recently.

In New England, Delhaize's Hannaford Bros. chain continues to roll up gains in same-store sales, margins and market share. Hannaford, named SN's 2005 Retailer of the Year, has also become a talent and idea wellspring for the Florida-based Kash n' Karry chain, which has continued its transformation from a struggling, nondescript price retailer to the vibrant Sweetbay banner.

"Eighteen months ago, Sweetbay was just a test," Beckers marveled. "Now we're converting 45 stores in our core Tampa-St. Petersburg market."

Concept differentiation, Beckers added, is perhaps most active at Food Lion, where in addition to a new multiple-banner strategy, Delhaize has used internal data derived from loyalty card purchases, along with external statistics, to identify eight distinct customer segments that shop in Delhaize's largest U.S. chain.

"This is a new and absolutely exciting concept," Beckers said. "It's totally exclusive, absolutely best-in-class. We've identified eight different customer segments where most other retailers doing this recognize two or three. I'm genuinely excited about what this can offer us on a store-by-store basis."

Food Lion's nascent extreme concepts - a discount banner called Bottom Dollar and the upscale Bloom - are also progressing this year. Both stores arrived for the first time this year in the Washington, D.C., area as part of Food Lion's "market renewal" remodeling strategy there.

Beckers is based in Belgium, but estimates he visits Delhaize's U.S. operations an average of one week per month. "I am a Belgian, I was born here in Belgium, but I have lived and studied and worked in the U.S.," he said. "And I think that has helped develop an understanding of complementary strategies."

As an example, he cited private-label goods: While Delhaize is known for private-label leadership in Europe, the area is currently underdeveloped in the U.S., he said. "That leadership and knowledge can be acquired from Europe to the U.S."

Rick Anicetti, chief executive officer of Food Lion, told SN that Beckers has influenced progress at Food Lion "through his commitment to being here personally and thereby staying close to the evolution of our thinking and strategy, and by encouraging us to expand those we receive input from to include leaders from across the Delhaize organization."

Beckers has inspired the organization with "active participation and support

of risk taking, and his constant encouragement of our journey to success," Anicetti added.

Delhaize has also made financial progress in recent years, Beckers noted, reducing what was one of the industry's highest debt loads ($550 million following the Hannaford acquisition in 1999), mainly through internal cash. Sales are expected to grow between 4% and 5% this fiscal year.

"I have the impression Pierre is very well respected by the employees of the company, and in my opinion, he's very respected by the market in general," Pascale Nachtergaele, an analyst with Delta Lloyd Securities, Antwerp, Belgium, told SN. "He seems to have a really good view on the strategy the company has to follow."

JON SPRINGER

10) Rick Cohen

CEO, C&S Wholesale Grocer

Key developments: Added $2 billion in sales and acquired 12 Tops Markets in New York, warehouse in Stockton, Calif.

What's next: Possible role in consolidation of the Northeast.

Rick Cohen, the chief executive officer of C&S Wholesale Grocers, Keene, N.H., has had a lot to digest - but he has a plan.

"He has an expression: 'Eating the elephant one bite at a time,'" said Mark Gross, who recently left C&S after nine years to form his own investment firm, Surry Investment Advisors. "He tackles a problem step by step, and what seems impossible can be achieved."

Cohen's stewardship of C&S has taken it from being a regional distributor focused on chain accounts in the Northeast to a sprawling, national powerhouse serving both chains and independents. Since coordinating the purchase of Fleming Cos. from bankruptcy in 2002, C&S has been a leader on the acquisition front and is mentioned as a potential player in nearly every industry deal.

The company boosted sales by $2 billion last year, for a total of about $15.2 billion, according to estimates reported in SN's Top 75 list in January. That total ranks it as the No. 2 wholesaler in the country, behind only Minneapolis-based Supervalu.

Last year included some significant gains for the company with the addition of wholesaling contracts to supply A&P in the Northeast and Bi-Lo/Bruno's in the Southeast, and C&S continued to add new business this year with the purchase of a dozen Tops Markets in upstate New York and a distribution center in Stockton, Calif.

The Tops stores were converted to the GU Family Markets Banner, an outgrowth of the company's previous acquisition of Grand Union. The California warehouse will supply Kroger-owned stores in Northern California and augment the warehouses C&S acquired from Fleming in the region in 2002.

"Rick's goal for the business, and for every aspect of the business, is continuous improvement," Gross said. "He lives in a world where, as good as C&S might be, it could be better, and as big as C&S is, it could be bigger.

"He will never be a guy who will rest on his laurels and be content, because he knows it could be better."

He prods those who run the various divisions of his company to constantly strive for bigger achievements.

"You could be doing $10 million worth of sales, and he'll say, 'Within three years, we will be doing $15 million worth of sales.' Then, 2 years later, you are doing $15 million, and then he's telling you how you can get to $20 million."

Cohen, grandson of C&S co-founder Israel Cohen, instills a sense of teamwork in the corporate headquarters that permeates the organization, according to an article in the New Hampshire Business Review. The publication, in partnership with Citizens Bank, earlier this year recognized C&S with a "Not Your Typical Business" award for its success and its community service.

"It's a team that is given real responsibility on an everyday basis and empowered to come up with innovative

solutions," Carl Wistreich, senior vice president, C&S, was quoted as saying about the C&S workforce.

Cohen, known for shunning publicity, declined to be interviewed for this article.

Gross said he remains a down-to-earth leader.

"There's no arrogance to Rick," he said. "He is a very grounded individual, who has never forgotten that our business rests on the strength of the men and women in the warehouse, and the tools that we give them to succeed. He has never forgotten his time working in the warehouse - that keeps him close to everyone. There's no imperial CEO."

MARK HAMSTRA

11) Anders Moberg

President and CEO,Ahold

Key developments: Revised financial goals; sale of 46 Tops stores.

What's next: Value program at Stop & Shop/Giant-Landover; nonfood growth.

When Anders Moberg took over the top job at Ahold in 2003 in the wake of the company's $1 billion-plus accounting scandal, he knew he had his work cut out for him.

And while the Swedish-born president and chief executive officer is steering the Amsterdam-based retail giant out of trouble through his Road to Recovery strategy, he may not have anticipated the extent of the challenge.

Last year, in his first appearance on SN's Power 50 list at No. 12, Moberg said his goals for the company - net sales growth of 5%, operating margin of 5% and return on assets of 14% - already a year behind schedule, were achievable in 2006.

But in its recently revised guidance to the investment community in March, Ahold's management trimmed those goals to 2.5% to 3% growth of net sales, and 4% to 4.5% growth for EBIT margins.

Halfway through 2006, Ahold has a "mixed retail performance to date," he said. And last December, the company agreed to a $1.1 billion settlement of a U.S. shareholder class-action suit.

"In recent years, the financial targets we originally set for retail in 2003 have become increasingly challenging," he acknowledged. "Competitive and operating cost pressures have been greater than expected and the turnaround of certain businesses has been slower than planned. The revised guidance, however, does not change our view for the longer term. We continue to work toward a 5% retail operating margin and we are currently rolling out several strategic initiatives to realize this ambition."

Moberg, who previously was president of Swedish furniture retailer IKEA for 13 years, starting at age 35, said his overall strategy for Ahold was "to take costs out of the business and then to reinvest in the price-value equation."

Although the competitive environment continued to be challenging for the Stop & Shop/Giant-Landover division, "we reported an underlying EBIT margin of 6%, so we are more than holding our own," he said. Approximately 40% of the existing store base at Giant Food, Landover, Md., is expected to undergo either remodels or relocations through 2008.

Ahold is also well under way toward implementing its "value improvement program" at Stop & Shop Supermarkets, Quincy, Mass., and Giant-Landover in the second half of this year. The program, which features lower prices and reduced promotions, was introduced

at the company's Albert Heijn chain in the Netherlands several years ago, where it "has met with considerable success," Moberg said.

Conditions remain difficult at Tops Friendly Markets, Williamsville, N.Y., especially in northeastern Ohio. On July 6, Ahold announced its intention to sell 46 Tops stores there in order to focus on strengthening its Tops positions in its core markets of New York and Pennsylvania, with approximately three-quarters of the stores scheduled for remodeling through 2007.

Moberg said he was "delighted" with continued strong performance at Giant Food, Carlisle, Pa., where the first quarter saw the 15th consecutive quarter of positive same-store sales. "We continue to take market share."

In other moves, Dick Boer, Albert Heijn's chief executive officer, and the latest addition to Ahold's Corporate Executive Board, is leading a strategic review - focused on driving and funding identical sales volume growth across Ahold's global retail businesses - that Moberg said will be completed in the fall.

Ahold also plans to increase its share of nonfood sales and expects to see initial results in the first half of 2007. With general merchandise, Moberg said the goal is to increase Ahold's percentage of sales from 5% to 10% by the end of the decade.

With regard to its expanding private-label program, Moberg said Ahold intends to create "a more sophisticated approach in our U.S. retail operations. We are encouraged by the results we have had with our Nature's Promise line so far, especially in perishables."

Moberg sounded a cautionary note relative to managing short-term expectations. "I believe that success is a journey, not a destination," he said. "Our journey continues. I am confident that our businesses have both the determination and the skills to achieve our goals."

LIZ PARKS

12) Danny Wegman

CEO, Wegmans Food Markets

Key development: Used data synchronization to save company more than $4 million.

What's next: Sharpen focus on fresh foods to strengthen market edge.

Danny Wegman is on a mission - to do right by his customers.

He never stops looking for new ways to make shopping at Rochester, N.Y.-based Wegmans Food Markets even better. Technology plays an important role, he said. Though it may seem Wegman is immersed in technology, he views it simply as a means to an end.

"I've been mostly involved in using technology better to improve our company and our industry," the chief executive officer told SN. "The difficulty, though, is that with all our work on RFID and [electronic product codes], we're sometimes viewed as a technological organization, when, really, we're a people company."

To stay in touch with folks, Wegman said he tries to spend half of the week in stores.

While Wegman talks about using technology to save time, his work on data synchronization is also saving the company a lot of money. A Wegmans study conducted with seven of its suppliers showed savings - through data synchronization - of $3.5 million in transportation costs and $1 million in labor and inventory-carrying expenses. Furthermore, coupon rejections at checkout have been reduced by 40%.

Wegman's daughter, Colleen, who is president of the company, presented the findings at the Grocery Manufacturers Association Executive Conference at White Sulphur Springs, W.Va., in June.

"Business is a number of small transactions. If we can put them together efficiently and get them done through technology, it frees more time for human interaction," Wegman said. "We can use the time to work on quality, improve relationships with suppliers, make a better workplace for our associates, and, in the end, give our customers more attention."

Others in the food industry see Wegman as a visionary.

"I think he understands how interconnected the entire enterprise of running a modern supermarket is, and he's proved to be a fantastic leader," said Neil Stern, senior partner at McMillan-Doolittle, a Chicago-based retail consulting firm.

The company's culture is out of the ordinary, noted Bryan Silbermann, president of the Produce Marketing Association, Wilmington, Del. "Danny Wegman has fostered a culture in which everyone and every food item is geared to delighting the customer," Silbermann said. "The genius of Wegmans is that they treat their stores as real food theater and their associates as real actors. When you add to that mix the leadership role Danny has taken in driving efficiencies through the company and its trading partners, you have a model for what most other food retailers aspire to be."

This year, Wegman was appointed chairman of GS1 Global, the group that, in addition to other things, monitors advances in technological applications. Wegman had

been chairman of GS1 US.

"It's important that we be involved with Global through GMA and [Food Marketing Institute] so we'll get a global perspective faster," Wegman said.

Wegman's total involvement is exceptional, said Tim Hammonds, FMI's president and CEO.

"What Danny has done is strike a remarkable balance in his life - between his customers, his associates, his family and the broader industry."

Hammonds alluded to Wegman's grooming his daughters for top posts in the family-owned, 70-store chain.

Colleen Wegman was named president last year, and Wegman's younger daughter, Nicole, runs Wegmans' restaurant, Tastings, at the Pittsford, N.Y., store. That concept is due for expansion and then a possible rollout to selected stores, Wegman said.

Indeed, prepared foods, in different forms and presentations, will assume an even stronger role at Wegmans in the future, and help the retailer stand out in a competitive market, Wegman said.

ROSEANNE HARPER

13) Charles C. Butt

Chairman and CEO, H.E. Butt Grocery Co.

Key development: Took H-E-B Plus to the next level.

What's next: To saturate Texas markets.

A century of food retailing is no mean feat for a family-controlled business concentrated in one state, albeit that state is Texas.

Coming off its centennial year, H.E. Butt Grocery Co., San Antonio, under the leadership of Charles Butt, continued to do what it has always done best - serving customers and communities in Texas and Mexico with retail innovations, competitive prices and community outreach.

"We attempted to focus on the future, not the past, and used it as a period to herald new products, new stores and the advancement of our people into new positions of responsibility," H-E-B's chairman and chief executive officer said in a written response to SN about reaching the 100-year milestone.

The company continued to expand its H-E-B Plus format, which adds a broad range of merchandise to its core food component. Butt said Plus is the future. Since its debut in San Juan in 2004, the 109,000-square-foot concept has gotten bigger.

"During this past 12 months, we've had an opportunity to open new larger stores in different sizes - three at 109,000 square feet and three at 177,000 square feet," Butt said. "We're pleased with the results of both formats and will be opening a group of stores around 140,000 square feet in size starting later this year.

"It's our view that the supermarket format of the past will likely transition into a retailer with broader offerings as we are attempting to do ourselves. Of course, there will always be plenty of opportunities for well-tailored niche stores for various income and cultural groups."

"Plus is a major push in a pretty high degree of refinement from what they initially opened to what they are planning to open," said Neil Stern, senior partner, McMillan-Doolittle, Chicago. He noted the huge undertaking of H-E-B as a food retailer to becoming a nonfood merchant.

While some observers expect H-E-B to eventually break out of Texas with its Central Market or Plus stores, for now Butt has his eye squarely on Texas and Mexico.

The company has Dallas in its target for future expansion, Butt said. "We operate three Central Market stores successfully in the Dallas/Fort Worth Metroplex - Fort Worth, Plano and Dallas," he said. "We are pleased with these stores and will open a fourth later this year in South Lake."

While battling Wal-Mart supercenters in Houston, Butt said, "We continue to make progress in Houston and will open several additional stores there within the next year, including larger ones. We'll also open a 125,000-square-foot store in September in Beaumont, Texas - an area known as the Golden Triangle near the Louisiana border."

Butt indicated he was pleased with growth in Mexico, where the company now operates 24 stores served by a distribution center and headquarters in Monterrey, Nuevo Le=n. "Our latest store is in Le=n, 581 miles from the border, and 240 miles from Mexico City," he said. "We're also opening a second store in Saltillo and, for the first time, a store in Torre=n. Our market entry in San Luis Potosi is going well."

H-E-B continues to build its store brands. It introduced a new line of baby products and extended its line of Central Market Organics and All Natural product to 150 H-E-B stores. It also is at the forefront of

promoting renewable alternative fuel with the introduction earlier this year of E-85 fuel at five locations along Interstate Highway 35.

John Rand, director of Retail Insight, Management Ventures, Cambridge, Mass., attributes H-E-B's growth to its "culture of innovation," which he said Butt willingly fosters. "They have a questioning atmosphere and freedom to sail, which is one of those things everybody talks about but so few people actually do," he said.

What sets the company apart, according to Bill Bishop, president, Willard Bishop, Barrington, Ill., is the "quality, intellect, energy and focus of its people."

Butt said they continue to add to H-E-B's leadership staff and he feels the current team, which added a chief strategic officer as a new position last year for future planning, is the "most powerful we've ever had."

H-E-B's focus on serving the community is integral to its operating philosophy.

Eric Cooper, executive director of San Antonio Food Bank, considers Butt, who serves on the food bank's advisory board, his hero.

"I've worked with Charles on several different occasions, and found him to be humble, generous and kind," Cooper said. "He really applies incredible business wizardry while never forgetting the core needs of the people and community. H-E-B's commitment and support is unmatched in the industry. That is attributed to Charles and what he has laid in the company's foundation."

CHRISTINA VEIDERS

14) David Shapira

CEO, Giant Eagle

Key developments: Expanded into new concepts with Market District destination stores and GetGo Superette.

What's next: Expanding the fuelperks! program; continuing toward EDLP.

It's been a busy year for Giant Eagle.

Under the leadership of David Shapira, the Pittsburgh-based, privately held retailer has opened new concept stores across the board, and has continued to cultivate loyalty through its market-leading fuelperks! program.

With the omnipresent threat of Wal-Mart creeping into its territory, Giant Eagle has been hard at work to keep its customers loyal.

"They are pursuing an aggressive strategy of defending their home turf," said Neil Stern, a senior partner with McMillan-Doolittle, Chicago.

Giant Eagle opened two new upscale destination stores, called Market District, in June in Pittsburgh; they offer specialty and organic items as well as everyday goods. Market District was launched in 2005 as an upscale, yet affordable, private-label line of Center Store items. Although Giant Eagle has no plans to expand the concept until it can assess its success, the company is optimistic because of the lack of high-end competition in the area. An in-store flier, FreshFinds, is published quarterly.

"Consistency of leadership is David's foremost attribute," Stern said of the chief executive officer. "Giant Eagle has been following a focused and clear strategy. They are not flashy but have a real sense of purpose in their mission."

Also in June, Giant Eagle opened its first GetGo Superette, a 5,000-square-foot expanded version of its GetGo fuel and convenience store concept, in Wilkinsburg, Pa.

With gas prices soaring, Giant Eagle is seeking to alleviate some of that cost for consumers. Its fuelperks! program offers a 10-cent discount on each gallon of gas purchased at GetGo gas stations for every $50 spent with the chain's Advantage Card.

"We are continually looking for ways to expand our popular fuelperks! program and increase the number of ways our customers can save money as a reward for their loyal shopping," Giant Eagle spokesman Dan Donovan told SN in an interview earlier this year.

The company recently added a third-party dry-cleaning operation, run by Dress for Success Cleaners, Santa Ana, Calif., found in select Giant Eagle locations, to the fuelperks! program, as well as its video rental program.

Giant Eagle has also used fuelperks! to build its customer base. For example, when a Cleveland-area drug chain was absorbed by Walgreen Co., Deerfield, Ill., the retailer offered $1 off per gallon of gas with a new or transferred prescription, SN reported in March.

Earlier this year, the company opened its first in-store Giant Eagle Optical vision care center, in partnership with specialty eyeglass retailer Eyetique. The retailer is also testing a nurse-staffed health clinic in a store in Euclid, Ohio.

"This is a great story of focus and leadership," Stern said.

In October 2005, the chain lowered prices on 3,000 items an average of 10%, following rollbacks the prior April and November on 1,700 and 3,000 items, respectively. Giant Eagle is continuing its everyday-low-price program, propelled by widespread price competition with dollar stores and Wal-Mart.

SN presented Giant Eagle with a Technology Excellence Award in the chain category at the Food Marketing Institute's Marketechnics show in January in San Diego.

MARIA TORTORETO

15) Robert G. Miller

CEO, Albertsons LLC

Key development: Returned to Albertsons to run underperforming assets recently acquired by an investment group.

What's next: Trying to add value to the stores he oversees before putting them on the market.

Robert G. Miller has returned to his roots, serving as chief executive officer of Boise, Idaho-based Albertsons LLC, the chain where he spent the first 30 years of his industry career.

It's not quite the same company he grew up with and helped build, however. Rather, Albertsons LLC is a chain of 661 stores that was formed earlier this year by Cerberus Capital Management and other investors through the acquisition of the company's underperforming assets while Minneapolis-based Supervalu acquired the premier operations.

"Cerberus wanted a marquee name with a lot of credibility in the marketplace, and Bob certainly has that," Dick King, vice president, Associated Food Stores, Salt Lake City, told SN. King is a former colleague of Miller's when both were at Albertsons. "Hiring Bob was a smart move because he knows the Albertsons markets well. He walks the talk, and he understands this business as well as anyone."

Andrew Wolf, an industry analyst with BB&T Capital Markets, Richmond, Va., also said Miller's involvement strengthens Cerberus' hand. "Cerberus needs someone with the instant credibility Miller provides so it has an alternative to just trying to sell groups of stores in a buyers' market," he explained.

"With Miller as part of the operation, Albertsons LLC is not just a financial company with hedge funds and real estate groups that lack savvy trying to dispose of properties as soon as possible. Miller strengthens the operation, which increases the likelihood it will get a better return on its investment because it doesn't have to sell immediately but can take time to run the business."

Miller spent 30 years at the original Albertsons, attaining the post of executive vice president, retail operations, before leaving in 1991 - when he wasn't named CEO, industry sources believe - to become chairman and CEO of Fred Meyer, Portland, Ore. After Fred Meyer was acquired by Kroger Co. in 1999, Miller stayed on as vice chairman of Kroger for less than a year before joining Rite Aid Corp., Camp Hill, Pa., as chairman and CEO. He was named chairman of Wild Oats Markets, Boulder, Colo., in December 2004 - a post from which he resigned earlier this year when he joined Albertsons LLC. He retains the chairman's title at Rite Aid.

Miller, 62, declined to talk with SN for this article. Although the company has already announced plans to close more than 100 stores, Miller didn't sound like a man presiding over a group of stores slated for extinction when he spoke with SN earlier this year.

"We have a number of great locations in fast-growing states," he said. "There's lots of work to do, but we think we've put a great team together and we're excited about the opportunities.