Finance Guy Takes Helm of Dominick’s
First off, this is not a swipe at Brian Baer, the recently named president of Safeway’s Dominick’s Finer Foods division in the Chicago market. Mr. Baer may be a brilliant retail executive and the perfect fit to return the chain to its previous glory. That said, it struck me as odd that while it’s common in retail conversations to hear that we need to get back to being merchants again, companies quite often seem to turn to non-merchants to run their businesses.
Mr. Baer, in this case, has been the chief financial officer of Dominick’s since 2008 and has been acting president of the company since late last year. He joined Safeway in 2001 and has held a number of financial positions in that time. Before joining the grocer, Mr. Baer worked at Marriott’s Food & Beverage and Retail business as well as at The Carlyle Group and Price-Waterhouse Coopers.
"Brian has proven himself ideally-suited for the leadership role at Dominick’s," said Steve Burd, chairman, president, and chief executive officer of Safeway, in a press release. "He has demonstrated himself to be a well-rounded executive who will serve this operating division well going forward.
Discussion Questions
Discussion Questions: Is the professional background (finance, IT, marketing, operations, etc.) of top executives a good indicator of how they will approach running a retail business once they are put in charge? Is there a particular type of training that you think is most needed to run a large retail chain?
Despite my own background, I don’t think being a merchant is a mandatory background for a retail CEO. However, I do think it’s critical that the executive in charge has a chance to develop a comfort level with the thought process, even if he or she comes from the world of finance, store management or logistics. (Lee Scott at Walmart, for example, was an expert in supply chain management.) Most importantly, the CEO needs to put a strong merchant in charge as #2 in the absence of his own skill set, and trust the team around him or her to get the job done.
We’ve got to stop defining each other by these Newtonian ‘roles’ — stereotyping people by certain job categories instead of how they think.
When it comes to deciding what kind of leadership thinking is needed, we need to determine where on the universal ‘S-curve’ lifecycle the organization is. If it’s a company trying to get established, one type of leadership is needed. If it’s trying to escape demise by re-inventing itself, another type is needed. Organizations typically hire CEOs based on the stage they’ve just been through rather than the one that’s coming.
Then there’s the ‘alignment’ of leadership energy. The entire universe is a living dynamic system with certain dimensions moving forward and back as circumstances require it. That’s how leadership teams should work too. Just because you’re the CEO doesn’t mean you “lead” all the time, no matter what. There are times where others need to move forward and the CEO back. It’s about flow, energy, alignment — not about job categories. This takes a great deal of mature confidence on everyone’s part. It’s also the only way we’ll survive.
In my humble opinion, sales, marketing, and merchandising take creativity, hands-on experience in the field, and the most successful retailers are usually those founded or being led by people with these skills. Witness Costco, Wegmans, Publix etc.
That being said a Financial executive can succeed with the right team around him or her and the willingness to let the merchants in the company have freedom to do their jobs.
To successfully run a retail company you have to be smart about nuances, be fiercely competitive and, most of all, you have to love being in a 7-day, people business.
Anybody put in a leadership position leans on his/her own strengths and comfort levels. So professional background is a fairly likely indicator of approach in running any business. It’s been my experience that when financial people run a business, they’re more likely to be slaves to Wall Street, and less likely to take the risks that lead to innovation and differentiation. There are financial people who don’t fit this mold, of course, and they can make excellent leaders.
There’s an excellent story on business leadership, focusing on Steve Jobs, on page 18 of the Feb. 27 issue of Time. The author flat out calls Jobs a jerk, but with some unique qualities that business leaders can/should embrace. Jobs is quoted: “My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit, because that was what allowed you to make great products. But the products, not the profits, were the motivation. It’s a subtle difference, but it winds up meaning everything. The people you hire, who gets promoted, what you discuss in meetings.
History has shown us that the professional background of any company’s top executives forges the culture, innovative appetite, or lack thereof, and short-term tactics. As a publicly traded company, Safeway is focused on quarterly results. It is very difficult to design and implement innovative and customer-centric programs when your CEO is focused and comfortable with the numbers. We can most likely expect ‘operational’ efficiencies, including further margin pressure, exerted on Dominick’s brand vendors and some activity with regard to staffing, both of which will positively affect Mr. Baer’s bonus structure. Top retail executives should be connected shoppers or live in the shoes of a 25 year-old single mom for 6-months.
An individual’s training and their historic positions can be indicative of their approach, but that doesn’t mean the person with a particular background can’t succeed at being a top executive in retail. It does mean that they have to be willing to go beyond their training in their approach. This can be accomplished by either doing that themselves or by adding individuals with the necessary complementary skill sets. Retail is like farming, it is not a job, it not a position; it is a way of life.
We can’t blame Brian Baer. Safeway is looking for someone who can properly manage “the [Dominick’s] operating division. I’m sure that he is more than capable of being a great manager and a great operator.
The problem is this. Dominick’s needs a great merchandiser, marketer, and retailer. Sometimes these traits can’t be learned, they are innate. I’ve only met a handful of finance managers who truly understand marketing/retailing as theater.
We need to give Baer the benefit of the doubt, but not sure this is the way to grow the chain. Bob Mariano, former President of Dominick’s and now heading up his own chain in Chicago must simply love this move by Safeway.
When you are a hammer, everything looks like a nail. If your skill set is in finance, then you tend to look for financial solutions to sales and marketing problems. What Dominick’s needs is a good old fashion can stacker. A grocer who understands what the shopper wants and is able to satisfy those needs on a regional basis. That is not to say this gentleman cannot surround himself with the brightest and sharpest grocers … as long as he listens.
I suspect that while “we need to be merchants again” is common in retail conversations, in finance conversations — which are the conversations of the people who usually make the decisions — the comment isn’t heard as often … if at all. Is background a good predictor? Yes, but not a perfect one; indeed, finance and creativity were once seen as almost mutually exclusively exclusive. The world has now learned — (often) much to its regret — that is no longer the case.
It all depends on the brand and, of course, the individual. Brands are made up of product content, service, and value proposition. Some individuals are extremely capable in one aspect of the business while others have broad interests and capabilities. Having been in the business for a long time, it used to be that the merchant (product content) was always the CEO. Now that role is being assumed by individuals with other backgrounds with, at best, mixed results.
Personally, I’m not sure if that is indicative of changing requirements for retail success or a paucity of great merchants to choose from. I lean towards the latter.
Dominick’s appears to be on their last legs and this move indicates they have given up with improving through sales and merchandising. Now it’s time to prepare Dominick’s for their next owner. Safeway has made it very clear how they will approach running this retail business now.
There were TWO individuals who built A&P from a small company to the world’s first billion dollar company. The Hartford brothers had the advantage that one of them was the ultimate numbers guy, who accounted for details of operations virtually unheard of until the advent of computers. The other brother was a marketing genius who sensed the twitches in the marketplace over the great depression and two world wars.
The company was always focused, not on margin profits (almost in a negative way,) but on return on investment (ROI.) Keeping capital investments VERY low, allowed them to achieve ROI goals with razor thin margins. One method for this was short-term leases on stores — limited capital needed — which provided the ability to turn on a dime in the turbulent markets of the first half of the twentieth century.
What is the loss of the creative marketing genius at retail today? Not so much. Self-service retailing is largely a logistics business of building neighborhood warehouse boxes, selecting from a million items in a couple hundred categories from the supply chain, and managing the human resources to keep the neighborhood boxes filled, so that shoppers can come in and SELL THEMSELVES on what is there. It’s wonderful IF you have some old timer retailers that grew up on sales floors, closely attuned to shoppers. But the ones of those that I know, lament the death of the retail they grew up in. So the numbers guys win.