Wal-Mart Vet to Take Over as Supervalu CEO
Supervalu
has named Craig Herkert, currently president and chief
executive officer of Wal-Mart’s Americas’ operations, as its new CEO. Mr. Herkert replaces
current CEO Jeff Noddle, who will become executive chairman of Supervalu
during the transition.
Mr. Herkert,
who has headed up Wal-Mart’s operations in Canada, Puerto Rico and parts
of Central and South America since 2004, has no set start date with Supervalu.
"As
we approach the end of year three of our company’s transformation and as
I begin planning for retirement, the time is right to lay the groundwork
for continuity of leadership,"
said Mr. Noddle. "Craig Herkert is
a talented executive with extensive experience in food retailing and supply
chain management. As an integral part of Wal-Mart’s senior leadership team,
he has demonstrated an ability to create shareholder value and achieve business
results."
"The
board was looking for a candidate who has both deep retail experience and
shares the values that Jeff Noddle and the current executive team have deeply engrained
in the Supervalu culture," said Lawrence Del Santo, lead director
of the Supervalu’s board. "His recent experience leading diverse formats
in some of Wal-Mart’s fastest growing markets, combined with his previous
experience working at Jewel-Osco, Acme Markets and Albertsons, make Craig
the ideal executive to lead the company forward."
Robert
Summers, an analyst with Pali Research, told Reuters,
that Supervalu’s move
"suggests that the trajectory of the business is still very problematic,
but then on the flip side it creates an opportunity for a fresh look at things."
Discussion Questions:
What does Supervalu’s hire of Craig Herkert say about where the company
is at the moment and where it would like to be in the future? Will
it become a different company under Mr. Herkert than it has been under
Jeff Noddle?
One of Supervalu’s biggest problems is retail operations. They just never figured out how to run corporate stores. Sure, in Minneapolis they are successful, as is Target, but that’s mostly due to hometown loyalty rather than skillful marketing.
Supervalu has been closing retail locations by the bushel now for the past several years. Then buying the problematic Albertsons stores hasn’t worked out well. When a mediocre retailer buys mediocre stores at a premium price, we all know how that turns out. We will probably see a big shake up with the departure of most of the senior management. It’s only natural that a new CEO will want to surround himself with the people he feels the most comfortable with.
David Livingston is correct in that Supervalu has had difficulty developing and implementing retail operating models with viability. Herkert’s experience seems to indicate a deeper level of retail operations domain expertise than may have been present in the executive suite.
With all due respect to WM and its competencies, retail format does not seem to be one of the strengths. Adapting to and building new formats and concepts which were coherent with individual country cultures has NOT been a WM strength. On the other hand, operating stores profitably IS a WM strength, and one we can assume Mr. Herkert is well versed in.
Having said that, even accounting for the demographic niche WM occupies, I am seldom impressed by WM’s actual retail operational execution. Vendor friends of mine bemoan WM’s ability to execute promotions, implement plan-o-grams and sustain presentation standards. Secret shopper reports constantly place WM in the mid to low tier for in-store execution. While this appears to meet the expectation of the WM shopper (and thus be a viable business proposition), one wonders what help it will be to SV. Already SV’s brands are noted for poor execution, inconsistent presentations, and in general, lower mid tier ratings for customer satisfaction.
While WM does many things well, and WM executives tend to be very high quality, it is hard to see immediately the impact Mr. Herkert will have on SV. On the other hand, bringing in a new CEO isn’t always about revolutionary change.
A new CEO doesn’t solve all the problems, but a solution for operational problems is a good place to start. Without efficient (meaning timely and economical) operations for a retailer, none of the other problems can truly be solved.
Pick your retail channel. Most retailers are merchants. They focus on the store, the displays and the price. Very few retailers really focus on efficient operations. There is no doubt that operationally Wal-Mart is the best in the world. Nobody approaches their ability to turn inventory and that single measure sets them apart.
Perhaps Wal-Mart isn’t great with format or promotions, but a company like Supervalu ought to be able to find some talent to help solve those needs.
Will this be a different company? It better be! What is their alternative?
Jeff’s ready to head out, plain and simple. As a friend of a family member (Allan, his older brother), I got a feel for preferences, and that would include an element of pleasure before bidness. Go have fun, Jeff. Your extremely positive legacy will never be questioned. WalKert will probably do a great job.