REBUILDING AN INDUSTRY

Elliot Zwiebach / Mark Hamstra / Jon Springer

Just as the hurricanes that devastated Florida this summer forced food retailers there to scrub down their stores and start over with new inventory, supermarket companies around the country also spent much of 2004 putting a fresh sheen on their operations.

In a tumultuous year in which commodity-price inflation put pressure on margins and consumer confidence seemed stubbornly stuck in second gear, the industry took a great many steps toward ensuring that they would be better prepared for the years ahead.

Kroger, Albertsons and Safeway held out for better labor contracts in the pivotal Southern California region, winning concessions from the United Food and Commercial Workers that have since been replicated in other regions. The new contracts, the operators say, will help them better compete against the growing competition of Wal-Mart Stores and other nonunion formats.

Several food retailers also took steps to distinguish themselves from their competition by experimenting with new store designs to enhance convenience and upgrade consumers' experience, exemplified by Marsh's "Lifestyle" stores and Food Lion's "Bloom" concept. Others rolled out concepts that focused on low overhead and low prices, such as Albertsons' Super Saver and A&P's Food Basics.

Meanwhile, operators continued to expand upon their bases of strength with acquisitions of small groups of stores as fill-in opportunities. The year also saw an increase in acquisitions of entire regional banners, however, with Shaw's, Fiesta Mart, Food Giant, Minyard's and Victory all coming under new ownership. As the year was drawing to a close, Pathmark Stores joined the list of such chains that are still on the selling block, along with Ahold's Bi-Lo and Bruno's banners.

A Stormy 2004

The economy was tough, gas prices were high, inflation was modest, the war in Iraq caused consumer jitters and Florida was hit with four hurricanes in six weeks -- just another year in the food industry.

Retailers started the year with high expectations, with some economists anticipating sales growth of 3.5% to 4% -- slightly better than in 2003.-However, economists reported a decline in consumer confidence at year's end resulting from subdued expectations and ongoing concerns over future job growth.

An attitude of cautious spending was reflected all year at supermarkets, and the 141-day strike-lockout in Southern California that ended in March put pressure on financial results throughout the year at Albertsons, Kroger and Safeway -- prompting each to try to recoup lost sales by lowering prices at the expense of profitability.

However, added pressures from food inflation in a variety of categories made it tough for operators to pick up much momentum at the same time they were trying to be more competitive with Wal-Mart Stores and other discount formats. Rising energy costs, combined with rising commodity costs, sent prices soaring during the year on a variety of categories, including dairy, meat and poultry, rice, cereal, baked goods, frozen items and cooking oil -- increases that were generally passed along to consumers, often accompanied by sticker shock.

In May, Pathmark Stores, Carteret, N.J., gave the investment community a jolt with a reduced earnings forecast for the year, citing failed promotional campaigns stemming in part from increased commodity prices. Projected earnings per share were reduced to 28 cents to 47 cents, vs. previous projections of 53 to 60 cents.

"I've been with Pathmark 35 years, and I've never seen such steep inflation in so many key destination categories all at once," said Eileen Scott, chief executive officer, Pathmark. "Moderate inflation is good for retailers, but what we've seen recently has been more than moderate."

Weather took its toll on supermarkets in Florida during the late summer, with Hurricanes Charley, Frances, Ivan and Jeanne each hitting sections of the state between mid-August and late September. There was some physical damage to stores, but most operators simply suffered lost inventory or were forced to reduce hours and work harder to help hard-hit consumers fill their food and supply needs.

Dominating the news during the summer and fall was the presidential election, with the industry generally favoring the reelection of President Bush because of his pro-business stance, including elimination of the estate tax, repeal of country-of-origin labeling for produce and meat, and replacing mandatory workplace regulations on repetitive injuries with voluntary guidelines.

Two factors that combined to hold down consumer enthusiasm during the year were negative news from Iraq and the uncertainty over what appeared to be a close presidential contest. Even after Bush's win, however, the negative war news kept consumers in a more cautious buying mood as the year ended.

In 2004, companies began showing signs that they would back off the aggressive price promotions that had driven sales at the expense of margins, although the labor dispute in Southern California forced Kroger, Safeway and Albertsons to take a more promotional approach in that region.

During a conference call with industry analysts to discuss results for the fourth quarter and fiscal year ended Jan. 31, Dave Dillon, CEO, Kroger, said the company expected to report lower profits in the current fiscal year, but explained that the company could give no additional guidance because of uncertainties surrounding the ultimate cost of the Southern California labor dispute, the time and investment needed to rebuild the business, and the funds necessary for continued "profitable sales growth."

In June, Kroger said it had slowed the pace of its promotional investments, as Albertsons and Safeway already had done.

"We've been slower in implementing some of our plans because we want to move carefully and because we want to reduce the likelihood of over-investing by spending promotional money that doesn't really produce a long-term benefit," Dillon told investors in a conference call. "Remember, we're after profitable, sustainable sales growth, so we want it to come more gently and not suddenly."

Elliot Zwiebach and Mark Hamstra

Year of New Formats

The supermarket industry might look back at 2004 and remember the Year of the New Format. As Wal-Mart's supercenter continued breaking new ground, and specialty chains like Whole Foods turned in superb financial performances, traditional supermarket retailers scurried toward creating strategic alternatives with goals of "differentiation," many of which opened doors for the first time this year.

In some cases, these new formats went beyond a simple remodel and instead boldly set out to create new brands and company divisions. And though traditional supermarkets and food-drug combination stores still comprise the vast majority of the industry, some companies went as far as to designate entire markets to a concept and others promised that all future development would reflect formats that debuted this year. Even Wal-Mart got in on the format-tweaking act, as it looked to accommodate developers and communities by introducing alternative versions of its supercenter.

Indianapolis-based Marsh Supermarkets kicked off the year by opening its first two "Lifestyle" stores, one late last year in Noblesville, Ind., and a second in Fort Wayne in January. "Our vision for the future is reflected in these stores," said Don Marsh, CEO of the units, which abandoned traditional store aisles for a "double racetrack" design that merchandised products according to ways shoppers thought of them around a central perishables section. The stores incorporated personalized point-of-sale technologies and other new twists.

Observers said the Lifestyle concept marked an evolutionary step in store design in the United States because it valued the consumer experience above the traditional guidance of logistical concerns, particularly the ease of direct-store delivery, in its merchandising. By creating the store around the way a consumer shops, Marsh sees the Lifestyle store providing an edge in winning consumer loyalty. Marsh also introduced a new banner, Arthur's Fresh Market, which targets markets with attractive demographics with a smaller specialty store focusing on perishables.

In Charlotte, N.C., Food Lion in May opened the first Bloom store, which incorporated similar ideas to Marsh in merchandising products by how they're used. Also like Marsh, Bloom, which currently operates in five locations, incorporated technology including touchscreens and price scanners. Food Lion officials said the Bloom brand was designed to address the notion of convenience for time-starved consumers.

Wal-Mart Stores, Bentonville, Ark., introduced a creative solution to its ever more frequent clashes with developers, community groups and cities when it opened a 99,000-square-foot supercenter in Tampa, Fla., known as "Urban 99." The stores gave some analysts confidence that Wal-Mart's aggressive expansion could reach large cities and built-out areas of the Northeast effectively. Wal-Mart also said it would open a 98,000-square-foot version of its supercenter, known as "Rural 98."

Traditional supermarket operators spent much of 2004 tinkering with their own versions of stores focused on creating more compelling store vehicles, with the majority staking out either upscale-leaning "fresh boxes" and/or price-driven formats.

Kroger, Cincinnati, by year-end was operating multiple formats ranging from Food 4 Less value stores in the West and in Chicago, to rollouts of hybrid supercenters under the Fry's Marketplace, Smith's Marketplace and Kroger Marketplace names. The Marketplace stores incorporate expanded general merchandise selections based on the Fred Meyer concept in the Pacific Northwest. Kroger also applied its "Fresh Fare" concepts to certain stores in Washington, Michigan and Colorado.

Pleasanton, Calif.-based Safeway made progress on its store makeovers, which focus almost exclusively on differentiating its offering behind an enhanced perishables image, natural foods and perimeter departments specializing in prepared foods. In 2004, Safeway's new prototype emerged from testing stages in Northern California to Safeway divisions in Washington-Baltimore and Philadelphia. These rollouts set the stage for a nationwide branding effort in 2005, Safeway officials said recently.

Albertsons, Boise, Idaho, made investments behind an extreme-value format known as Super Saver, which is being rolled out under a separate division called Extreme Inc. These stores, which debuted in converted Albertsons locations in Texas and Louisiana over the summer, are "full-variety, limited selection " stores that operate on a reduced budget and would draw value-conscious shoppers. Albertsons at the same time was investing in a fancier concept when it purchased the 11-unit Bristol Farms gourmet chain in California.

For A&P, Montvale, N.J., format change was nothing less than a matter of survival. It recently discussed plans to convert all 649 of its U.S. stores to either its Food Basics value platform or the Fresh Market perishables format. A&P had rolled out around 25 of the former and four of the latter by year-end.

JON SPRINGER

Labor Showdown

It was a year of contentious labor negotiations around the country, with most of the attention focused on health care costs.

The year began with Albertsons, Kroger and Safeway engaged in the midst of what turned out to be the longest labor dispute in industry history -- a 141-day standoff in Southern California involving 59,000 members of seven United Food and Commercial Workers Union locals.

The three chains spent the rest of 2004, alone or in tandem, trying to avoid a repeat of that situation, and although negotiations in most areas were difficult, no further labor unrest occurred, even though the situation in Denver remained volatile as the year was ending.

In November, voting on a contract offer in Denver involving 17,500 employees of the three chains was halted by executives of the UFCW international because of what the union said were concerns about the potential impact on other bargaining units if the proposal was ratified, although observers said the union wanted to avoid a situation where members might reject the offer and the union would have to support another strike.

Although a federal mediator was brought in, negotiations were put on hold in early December while tempers cooled.

Also in limbo as the year ended were contracts in two Northern California regions -- the San Francisco Bay Area and the Sacramento Valley -- involving a combined total of 49,000 UFCW members working for the three chains plus Raley's and Save-Mart.

The Southern California contract, which was ratified in early March, set the template for what followed in most other markets throughout the year, with the chains for the most part able to reduce costs by establishing a second wage and benefit tier in most markets, with slower progressions, and employees having to share the cost of their health care.

Contracts settled during the year included the following:

In New England, Ahold's Stop & Shop division reached agreement with 42,000 UFCW members on contracts that delay health care coverage for new hires while maintaining existing benefits and requiring no employee contributions for first-tier workers.

In Arizona, Safeway and Kroger-owned Fry's Food Stores reached agreement with 14,000 UFCW members that adds a second tier for wages and health benefits, with new hires eligible for the same benefits as current workers at the end of six years.

In Seattle, Safeway, Albertsons and Kroger's QFC and Fred Meyer chains signed three-year agreements covering 11,000 UFCW members that do not include a second tier but do slow the progression rate for new hires and requires them to work three years before they can enroll in the health plan; it also reduces the employers' health care contributions and makes employees liable for any funding shortfalls.

In Houston, Kroger signed a new three-year contract covering 10,000 clerks and meat cutters, in talks assisted by a federal mediator, that allows the union to preserve its health and pension benefits for current workers unless contributions are needed to maintain the health care fund in the final year, while new hires will have to contribute to their insurance costs.

An agreement between Kroger and 10,000 UFCW members in eastern Tennessee, southern Kentucky and northern Alabama maintains existing health care coverage for two years, after which workers must choose between a plan that requires them to pay a weekly premium or accept a no-premium option with reduced benefits.

In New Jersey and metropolitan New York, A&P signed an agreement covering 8,500 UFCW members that creates new positions and pay scales for employees under age 18 and for those who work on a permanent part-time basis.

In Detroit, Kroger signed an agreement with 8,500 workers that does not require employees to make co-payments on health insurance.

In the Mid-Atlantic area, 8,000 members of two UFCW locals employed by Safeway and Ahold's Giant Food stores in Washington, Baltimore and northern Virginia signed contracts that allow new and current employees to receive identical benefits but not until the six-year agreements expire.

In Massachusetts, 5,800 UFCW members employed by Shaw's Supermarkets, prior to its acquisition by Albertsons, agreed to maintain its level of benefits while reducing its contribution to the union's health plan and allowing employees to contribute less per week to the plan.

Months after the union settled the 141-day strike-lockout in Southern California, 5,700 UFCW members working for Kroger's Food 4 Less division there agreed to a contract that sets up a second-tier wage scale and a slower progression to top-level pay; how

ever, union members were granted the same medical benefits as second-tier employees at Albertsons, Ralphs and Vons, rather than the lower benefits they have historically received.

In Pennsylvania and West Virginia, new contracts between Giant Eagle and 5,300 clerks and meat cutters give union members a choice of health plans and adds a second tier for new hires, who will start at a lower wage rage and progress over a longer period.

In Indianapolis, Kroger reached an agreement with 5,000 UFCW members that allows lower-paid clerks to progress to higher pay scales at a faster rate and adds a co-pay for first-tier employees, who have a more generous health care plan, but no co-pay for second-tier employees.

In Cincinnati, 5,000 UFCW members in Ohio, Kentucky and Indiana ratified a new agreement with Kroger, whose terms were not disclosed.

ELLIOT ZWIEBACH

Buying Binge

It won't be remembered in the same light as the consolidation-intensive years of the late 1990s, but 2004 did see an increase in merger activity among supermarket companies.

Although the pace of acquisitions began slowly, harbingers of what was to come began emerging in January when Delhaize America revealed that it planned to sell or close 34 Kash n' Karry stores, followed by Winn-Dixie's announcement that it planned to dispose of 156 stores.

Indeed, much of the early acquisition activity in 2004 stemmed from the purchases of those stores by operators seeking to fill in existing markets.

In February, Lakeland, Fla.-based Publix Super Markets acquired three of the Kash n' Karry stores, and soon after that was also reported to be interested in discussing acquisition opportunities with Ahold USA for its Bruno's and Bi-Lo locations. Ahold has since confirmed that it is in talks with multiple bidders for Bruno's and Bi-Lo, and that it plans to announce a buyer by the end of this year.

Then on March 26, Albertsons unveiled the largest supermarket-industry acquisition of the year when it said it would purchase Shaw's Supermarkets from London-based J. Sainsbury to gain a foothold in New England. The $2.475 billion transaction closed April 30.

"We continue to look for bolt-on acquisitions for all of our brands," said Larry Johnston, chairman, president and CEO at Albertsons' annual shareholders' meeting in June. He noted that the company had seen increased opportunities for acquisitions this year.

Three months later, Albertsons capitalized on another of those opportunities, scooping up the 11-unit upscale Bristol Farms chain in Southern California for $137 million in cash.

While fill-in acquisitions of individual stores and small groups of stores occurred throughout the year -- including Albertsons' sale of four supermarkets in New Orleans to A&P in April and the sale of three Omaha, Neb.-area stores to Kroger in September -- entire regional banners increasingly appeared on the shopping lists of the acquisitive as the year progressed.

In April, Houchens Industries, Bowling Green, Ky., agreed to acquire the 90-store Food Giant chain that generates about $400 million in sales from its operations in eight states, primarily in the Midwest. The terms of the agreement between the two employee-owned companies were not disclosed.

Grocers Supply, the Houston-based wholesaler, acquired its largest customer, Fiesta Mart, in September for undisclosed terms. The 50-store supermarket chain is a favorite among Hispanics in the Dallas, Houston and Waco, Texas, markets.

Later that month, Hannaford Bros., Scarborough, Maine, said it agreed to acquire 19 of the 20 Victory Supermarkets in Massachusetts and New Hampshire, which the Delhaize-owned chain said would expand its presence in southern New England. The $175 million acquisition closed last month.

Minyard Food Stores, the Coppell, Texas-based company with 69 stores in Texas, was acquired in November by a Texas-based investment group headed by Ron Johnson, who formerly ran Jitney Jungle Stores of America, Farm Fresh and Kash n' Karry Food Stores. Terms for the acquisition of the family-owned chain, which generated just under $1 billion in sales last year, were not disclosed.

Some industry observers said the spate of banner acquisitions indicated that sellers were under increasing financial pressure, while others said such activity was an aberration.

"There's been some recent consolidation, but I don't think it's reflective of a trend," David Schoeder, principal, The Food Partners, Washington, told SN last month. "There's going to be continuing consolidation as we realign markets, but it's not going be a radical change in most markets. It can either be divestitures of single stores or multiple stores by one seller."

Winn-Dixie's disposal of assets has contributed significantly to such piecemeal acquisition activity in 2004.

Kroger picked up six Thriftway stores in the Cincinnati market from Winn-Dixie in July, and in October two independents -- Buehler's Foods, Jasper, Ind., and E.W. James & Sons, Union City, Tenn. -- acquired groups of 16 and 10 Winn-Dixie stores, respectively, to expand their operations.

In another acquisition pact that could have ramifications for food retailers, Kmart and Sears agreed to merge in an $11 billion transaction. It was unclear how much emphasis the two general-merchandise specialists would place on expanding their minimal grocery operations as a combined entity.

Canada also saw some acquisition activity in 2004. In May, supermarket operator Metro, Montreal, acquired 15 supermarkets from Groupe Gagnon, Quebec, for undisclosed terms. Also, A&P in October agreed to acquire 24 Canadian Food Basics stores from franchisees to settle legal claims between the company and its operators.

MARK HAMSTRA

Some of the industry's top executives took on new titles and responsibilities in 2004 as part of organization restructurings. Others looked forward to their retirements.

JANUARY

Ric Jurgens added chief executive officer to his titles at Hy-Vee, West Des Moines, Iowa, on New Year's Day. He is also president and chief operating officer. Ron Pearson, who held the CEO title, remained as chairman.

At Arden Group, Los Angeles, David M. Oliver, chief financial officer, left the company and joined Supervalu, Minneapolis.

FEBRUARY

William J. Coyne, president and COO, Raley's Supermarkets, West Sacramento, Calif., added the title of CEO. Michael J. Teel, grandson of the chain's late founder, had held the title until 2002, when he resigned.

At D&W Food Centers, Grand Rapids, Mich., Doug Blease, president, added the title of CEO. He succeeded Jeff Gietzen, who remained with the company as vice chairman. Associated Grocers of New England, Manchester, N.H., named Michael Bourgoine president. He retained his title as COO. He succeeded Norman J. Turcotte, who remained CEO until his retirement later in the year.

Ed Albertian resigned as president and COO of C&S Wholesale Grocers, Keene, N.H. He was not replaced.

Joseph A. Pichler announced he would retire on June 24 as chairman and director of Kroger, Cincinnati, ending a 21-year career. Under a succession plan, David B. Dillon, the chain's CEO, replaced Pichler as chairman.

Bob Tiernan was named president and COO, Grocery Outlet, Berkeley, Calif. He succeeded James Patitucci, Grocery Outlet's former president and CEO, who left the company.

Jonathan Weis, vice president and secretary of Weis Markets, Sunbury, Pa., whose father Robert Weis is chairman, was promoted to vice chairman.

MARCH

Nash Finch's president and COO, Jerry Nelson, resigned from the Minneapolis-based company. He was not replaced.

Kevin Davis was named to a one-year term as chairman of Unified Western Grocers, Los Angeles. He succeeded Louis A. Amen, chairman, Super A Foods, who remained as a director.

Delhaize Group, Brussels, Belgium, named Georges Jacobs to succeed Gui de Vaucleroy as chairman of the company. De Vaucleroy retired.

Kings Super Markets, Parsippany, N.J., promoted Dan Portnoy, formerly executive vice president, to president and CEO. He succeeded Jim Meister as president. Meister remained with Kings as part-time non-executive chairman.

Former Burger King executive Bennett Nussbaum was named senior vice president and CFO of Winn-Dixie Stores, Jacksonville, Fla. He succeeded Richard McCook, who resigned.

Robert Edwards was named executive vice president and CFO at Safeway, Pleasanton, Calif. He succeeded Vasant Prabhu, who left the company.

APRIL

Bob Chapman was named president and CEO of Penn Traffic, Syracuse, N.Y. Steven G. Panagos remained as chief restructuring officer after holding the title of interim CEO.

Bill Holmes was appointed executive vice president and general manager of Giant Food, Landover, Md., as part of Ahold's integration of Giant Food with Stop & Shop. Dick Baird, who was president and CEO of Giant Food, retired.

At Bashas' in Chandler, Ariz., COO Mike Proulx added the title of president, and Jim Buhr was named CFO and senior vice president, finance. Proulx succeeded Wayne C. Manning, who retired. Buhr succeeded Darl Anderson, who left the company.

John R. Mills was promoted to president, chief administrative officer and vice chairman of the board, and G. Wayne Hall was promoted to president and COO as part of a management realignment at Affiliated Foods Southwest, Little Rock, Ark.

MAY

Ed Hill, former president and CEO of Abco Foods, Phoenix, was named executive director of the Western Association of Food Chains. He succeeded Jim Brown, who retired from the WAFC.

Robert Ingle II succeeded his father, Robert P. Ingle, the founder of Ingles Markets, Asheville, N.C., as chairman. The elder Ingle remained CEO and chairman of the executive committee of the board of directors. Etienne Snollaerts was named president and CEO at Smart & Final, Los Angeles. He succeeded Ross E. Roeder, who remained as chairman.

JUNE

Pathmark Stores, Carteret, N.J., named former Hannaford Bros. CEO James Moody Jr. as its non-executive chairman. He replaced Steven Volla, who left the company when his term expired.

National Grocers Association, Arlington, Va., appointed Vincent A. Pistilli vice president and CFO.

JULY

Philip Hampton succeeded Peter Davis as chairman and a director of J. Sainsbury, the London-based multinational retailer. Davis resigned over a $4.4 million bonus dispute with the board. Justin King remained as CEO.

Larry's Markets, Kirkland, Wash., named Barry MacKechnie to the newly created position of president.

AUGUST

Harvey Mabry, president of retailing of H.E. Butt Grocery, San Antonio, retired. His position was split in two, with Scott McClelland being named president of H-E-B Houston and Central Markets, and Suzanne Allford Wade being named president of H-E-B San Antonio Food and Drug.

Mike Bourgoine, was named president and CEO of Associated Grocers of New England, Manchester, N.H. He added the CEO title when Norman J. Turcotte retired.

Jim Meister retired as non-executive chairman of Kings Super Markets, Parsippany, N.J.

SEPTEMBER

FreshDirect, New York, named Dean Furbush CEO, and Steve Michaelson president. Furbush was COO and replaced co-founder Jason Ackerman, who continued as CFO and took on the additional role as vice chairman of the board of directors.

Paul T. Gannon was named chief marketing officer of Albertsons, Boise, Idaho, a new position.

William Copacino was named chief administrative officer of C&S Wholesale Grocers, Keene, N.H., a newly created position.

A. Dano Davis retired as chairman of Winn-Dixie Stores, Jacksonville, Fla. H. Jay Skelton succeeded Davis.

Nicola DiFelice was named president of Albertsons' Shaw's division, West Bridgewater, Mass. She succeeded Paul T. Gannon.

OCTOBER

Stater Bros. Markets, Colton, Calif., named Don Baker president and COO. Jack Brown continued as chairman and CEO after passing on the title of president to Baker.

Peapod, Chicago, named the company's founder, Andrew Parkinson, president. Parkinson succeeded Marc van Gelder, formerly president and CEO.

Whole Foods Market, Austin, Texas, named two company veterans, A.C. Gallo and Walter Robb, co-presidents of the natural products chain under two newly created operating divisions. John Mackey retained the titles of chairman and CEO.

Debra L. Jensen was named CFO of Los Angeles-based Arden Group, parent of Gelson's Markets. Jensen succeeded David M. Oliver.

At Minneapolis-based Nash Finch, LeAnne Matthews Stewart was promoted to CFO and treasurer. She succeeded Robert B. Dimond, who resigned.

Jay A. Cummins was named president of Food 4 Less Stores, Compton, Calif., a Kroger-owned company. He succeeded Dave Hirz, who was named president of Ralphs Supermarkets, also based in Compton.

Aylwin Lewis was named president and CEO of Kmart, Troy, Mich. He replaced Julian Day.

NOVEMBER

Ron Johnson became managing partner, president and CEO of Minyard Group, a Texas-based investment group that acquired Minyard Food Stores, Coppell, Texas.

Brian Piwek was promoted to president and COO of A&P, Montvale, N.J., in a restructuring. Mitchell P. Goldstein was promoted to executive vice president, and Eric Claus remained as president and CEO of A&P Canada.

Larry D. Wahlstrom was named president of Albertsons' Jewel-Osco division, Chicago. He succeeded Pete Van Helden, who was named president and CEO of Albertsons' new California Food Division.

Bill Grize, president and CEO of Ahold USA Retail, stepped down from Ahold's corporate executive board, based in Zaandam, Netherlands, in preparation for his retirement.

CIES-The Food Business Forum, Paris, named Alan McClay CEO of the global food organization. McClay had been managing day-to-day operations at CIES since the departure of Richard Fedigan in June. Fedigan had been president and CEO of CIES.

DECEMBER

Thomas M. Coughlin, vice chairman of Wal-Mart Stores, Bentonville, Ark., announced his retirement. His duties will be assumed by other members of Wal-Mart's senior management team.

OBITUARIES

Thomas Farnham James, 88, supermarket developer for Supervalu, Nash Finch, Red Owl and Fairway Foods, among others.

Ray Rose, 80, former president, chief executive officer and chairman of King Soopers. * Roger E. Stangeland, 74, former chairman and CEO of Vons Grocery Co., and Grand Union. He also served as a chairman of Food Marketing Institute from 1993 to 1995.

Grant C. Gentry, 79, a former president of A&P, who later served as the president and CEO of Food Fair, later renamed Pantry Pride.

Richard Catanzaro, 49, director of seafood merchandising, procurement and product development, H.E. Butt Grocery.

Jack Eckerd, 91, founder of the drug store chain that bears his name.

Albert C. Gerrard, 86, a Southern California independent who operated Gerrard's Market and a director of Certified Grocers of California (predecessor company to Unified Western Grocers).

Albert E. Lees Jr., 75, a founder of Lees Supermarket, and an industry pioneer in the areas of customer loyalty programs and related technology, and a leader among independent grocers.

Irwin Alfred Schwartz, 75, a former president of P&C Food Markets.

Robert Onstead, 73, one of the founders of Randalls Food Markets.

Tony Davis, 42, loss prevention manager at Bruno's Supermarkets.

Herbert St. Goar, 88, a former CEO of food distributor Dixie Savings Stores.

Francis Willmes, founder of the General Merchandise Distributors Council. He was also a former vice president of general merchandise at Spartan Stores.

Jerry W. Davis, 64, chairman and CEO of Affiliated Foods Southwest.

Harry O' Hare, 82, founder and chairman of Johnson, O'Hare Cos., a New England-based food brokerage firm.