Inside This Issue - Opinion
New faces taking center stage
September 6th, 2010
by David Pinto, Editor
Two-thousand-and-ten is two-thirds over. And while the mass retailing community has thus far not done the year justice with its performance, it has created news in the form of some meaningful — and, in some cases, startling — personnel changes.
Herewith, the six most significant:
• The appointment of Bill Simon to the position of president and chief executive officer of Walmart’s U.S. operations. Any change at Walmart is significant, but the events surrounding Simon’s elevation promise to usher in a new era at America’s most important retailer.
What makes this change especially noteworthy is that Simon’s predecessor, Eduardo Castro-Wright, was, until recently, mentioned as a candidate to succeed Mike Duke as Walmart’s CEO. His exile tells the world four things: First, the retailer does make mistakes. Second, those mistakes, when they occur, can be recognized and rectified. Third, Walmart is deep in leadership and management talent, a situation that was not readily apparent a decade ago. Fourth, in promoting Bill Simon the company was sending a message: Simon is destined to play a major role, if not the major roll, in Bentonville in the years ahead.
• The changing of the guard at CVS Caremark. Tom Ryan, the drug chain’s remarkable CEO, plans to relinquish that position in less than a year, though he will apparently retain the chairman’s title. Replacing him will be Larry Merlo, who was named corporate president and chief operating officer in May, an executive who has risen to every occasion during his 20-year tenure at CVS and has excelled in his three and a half years as president of CVS/pharmacy.
Still, the mass retailing industry is awash with tales of companies that declined in the aftermath of a changing of the guard. The Eckerd drug chain of the 1990s failed to survive Stew Turley’s departure, while Walgreens lost much of its momentum after Dan Jorndt stepped aside eight years ago. American Stores never recovered after Sam Skaggs turned over the company to Vic Lund in 1993, and Rite Aid was not the same drug chain after founder Alex Grass departed. There are others.
The belief here, however, is that CVS, like Walmart, is deep enough in talented and experienced leaders to effectively manage Ryan’s impending departure, which has been carefully orchestrated, and that that ending will have no lasting impact on the drug chain that has emerged as one of America’s truly dominant health care retailers.
• The departure of Rite Aid’s CEO. After seven years at the head of America’s No. 3 drug chain, Mary Sammons has stepped aside in favor of John Standley. Though she will remain chairman for the next two years, the drug chain has quickly become Standley’s own. Though no one is questioning Standley’s ability to run a retail company, Sammons’ presence in the chain drug industry, where she was both hugely popular and innovatively productive, will surely be missed.
Sammons’ departure, combined with the void created by the retirement, last year, of Jim Mastrian, the other Rite Aid executive to leave an indelible imprint on the chain drug industry, has had one initial result: Competitors and suppliers are taking the drug chain less seriously these days, as Standley, newly hired merchant Tony Montini and other staffers seek to make their presence felt. But like it or not, you don’t easily replace industry personalities like Sammons and Mastrian, in terms of both what they accomplished at Rite Aid and what they represented to the chain drug community. Time will tell whether the new people at Rite Aid, and those that Sammons and Mastrian left behind, will emerge to exert a presence and impact of their own.
• The appointment of Craig Jelinek as president and chief operating officer of Costco. If there is one irreplaceable executive in the mass retailing community, that executive is Costco CEO Jim Sinegal. That’s common knowledge both within Costco and throughout the mass retailing community. Still, the appointment of Jelinek, clearly the logical choice, as president sends an important and necessary message to the retailing world: Costco is lots more than a one-man operation.
Indeed, America’s very best retailer is the very best because it is run and managed by a cadre of capable people who lead an organization dedicated to serving the customer. Indeed, in naming Jelinek, and putting him in place at a time when Costco is enjoying the greatest success it has known in its 26-year history, Sinegal has demonstrated once again those qualities of leadership and management that have brought Costco to the pinnacle of U.S. retailing: an ability to assess talent and an acute sense of timing, whether assessing a growth opportunity, introducing a new initiative, assigning new job responsibilities, or identifying and promoting the person most qualified to do the job. There is every reason to believe that, in choosing Jelinek as president, Sinegal has made one of his most brilliant decisions.
• The promotion of Joe Magnacca to the presidency of Duane Reade. The significance here lies in the fact that Duane Reade is now part of Walgreens. By promoting Magnacca, Walgreens has clearly signaled that Duane Reade will not become merely another regional drug chain destined for absorption in the aftermath of a purchase, as was Happy Harry’s unhappy fate after Walgreens acquired it in 2006. In promoting Magnacca, Walgreens was announcing that the innovations Duane Reade has brought to U.S. chain drug retailing over the past year, and the executive most responsible for those innovations, will play a major role at Walgreens going forward.
• The reorganization at Delhaize America. This realignment at the Hannaford, Food Lion and Sweet Bay grocery chains owned by Belgian retailer Delhaize, designed in part to introduce some synergies to what had previously been three separate operations, is perhaps equally notable for bringing two women to the very forefront of food retailing in America. In the realignment, Meg Ham was named president of Hannaford, while Cathy Green was given a similar position at Food Lion. (At the same time, Ron Hodge was named CEO of Delhaize America, with responsibility for all three food chains.)
Particularly noteworthy here is the promotion of Green, who is one of the truly capable executives currently at large in the U.S. grocery industry. In recognizing her ability and accomplishments, Hodge and Delhaize CEO Pierre-Olivier Beckers have clearly given the best job at Food Lion to the person most qualified to handle it.