Alberstons 75th Anniversary

A Shelby Report tribute

Albertsons Has Big Plans at 75 It all started in 1939.

When Joe Albertson opened his first grocery store in Boise, Idaho, that year, he called it “Idaho’s largest and finest food store.”

Size is measurable, but what about that “finest” claim? For one, the store had one of the first magazine racks in the country. In addition, Joe offered his customers hot, buttered popcorn, roasted nuts and double-dipped homemade ice cream cones, plus one of the first scratch bakeries. The company’s first corporate offices were in the store, so office workers were greeted with bakery aromas every morning. Come break time, it’s rumored that they would head to the store for one of those ice cream cones, doughnuts or other treats that had been tempting them.

From the beginning, Joe’s philosophy was to “give the customer the merchandise they want, at a price they can afford, complete with lots of tender, loving care.”

Today, Albertsons’ focus continues to be on the customer, and on becoming the favorite neighborhood food and drug retailer in every market where it does business.

There have been rough patches along the way—including a debt-laden acquisition in 1999 and the company being split up in 2006—but staff members and executives interviewed for this special anniversary paint a picture of a company that has a lot going for it today, in many ways because of clinging to Joe Albertson’s philosophies. Not to be overlooked, however, are the years of experience found in the Albertsons family. Many have spent decades with the company, whether continuously or leaving and then returning.

The Albertsons banner stores were reunited a little more than a year ago, and now, Albertsons is in the midst of a deal to purchase Safeway Inc. that would put it back in the upper echelons of the grocery business in terms of number of stores. Not since its American Stores purchase back in 1999 wouldAlbertsons have such a large presence in markets across the U.S. Inside, we take you on a journey through Albertsons storied history, share firsthand stories about Joe Albertson and look at what appears to be a very bright future for this 75-year-old company.

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A Shelby Special Report • AUGUST 2014

Albertsons Celebrates 75 Colorful Years

Albertsons owns nearly 1,100 stores from coast to coast. But it started with just one.

In 1939, Joe Albertson decided to go into business with L.S. Skaggs and Skaggs’ accountant Tom Cuthbert, opening a onestop shopping market called Albertsons Food Center.

Albertson was a district manger for Safeway prior to his move, and Skaggs’ family had helped build Safeway. The group went to the Boise, Idaho, area to open their 10,000-s.f. store, which was nearly eight times larger than average grocery store of the time.

In that day, being a “one-stop” retailer meant that Albertsons offered a bakery and magazines in addition to groceries.

Its first newspaper ad promised to be “Idaho’s largest and finest food store,” and that seemed to be possible after the store’s first-year profits were $9,000, very respectable for the time.

With sales steadily growing, Albertsons incorporated in 1945, breaking up the partnership. Eight years after its inception, Albertson’s Inc. had six stores in Idaho and its own poultry processing plant.

During the 1950s the company continued to expand, moving into states like Washington, Utah, Oregon and Montana.

Its private label debuted in 1959; the brand was called Janet Lee for the executive VP’s daughter.

The company went public in 1959, and Albertsons’ expansion was not slowing down.

The 1960s

The early ’60s saw Albertsons moving into Wyoming and California, as well as opening its 100th store, in 1961. During this time, the company also came up with employee incentive programs to help its team members consider Albertsons as a lifetime job.

In 1964, Joe Albertson named J.L. Berlin as chief executive while he continued his role on the executive board. Under Berlin’s guidance, the company focused on its position in California, adding eight supermarkets in northern California called Pay Less. In 1969, a partnership with Salt Lake Citybased Skaggs Drug Centers Inc., headed by Albertson’s original partner in business, was born. This venture opened six “super combination” —combo food and drug stores—in Texas that were as large as 55,000 s.f. vs. the typical store’s 30,000 s.f.

The two considered a merger but ultimately decided against it. They continued a partnership until 1977, opening stores in Texas, Florida and Louisiana.

By the end of the 1960s, Albertsons had moved into Colorado, and its operations included more than 200 stores with annual sales of approximately $400 million.

The 1970s

The Justice Department filed a civil antitrust suit against the company in 1974, alleging that Albertsons’ purchase of Mountain States Wholesale of Idaho created a monopoly in the area’s grocery business. Robert D. “Bob” Bolinder, the company’s CEO at the time, contended that there was no basis for the suit. However, in 1977 Albertsons was forced to divest Mountain States, and it was not allowed to acquire any businesses in southern Idaho or eastern Ohio for five years.

In 1976, Joe Albertson became chairman of the executive committee, and Albertsons began to build superstores rang-

ing from 35,000 to 48,000 s.f., with a focus on fresh foods.

This new focus—a timely change—drove Albertsons to either close or add fresh foods to its traditional-format stores in the ‘70s and ‘80s.

VISION

To be known as the favorite neighborhood food and drug retailer in every market where we do business, with helpful associates, competitive prices and high quality, fresh products.

MISSION

To create a shopping experience that pleases our customers; a workplace that creates opportunities and a great working environment for our associates; and a business that achieves financial success.

In 1979, the first warehouse-format stores were opened.

The company converted seven stores into Grocery Warehouse.

The 1980s

By 1983, Albertsons had had 13 years of record sales and had strengthened its reach across the nation. In the ’80s, Albertsons added stores in just three new states—Nebraska, North Dakota and South Dakota—focusing instead on increasing its presence in established markets. In 1988, its first fully merchandised distribution center opened in Portland, Ore.

The 1990s

In 1991, Albertsons announced a five-year plan to spend $2.4 billion to construct 250 new stores and renovate 175 older ones.

The year 1992 saw Albertsons acquire Jewel-Osco stores in Texas, Oklahoma, Arkansas and Florida. The company continued to grow, and sales reached about $10 billion in 1993, the year founder Joe Albertson died at the age of 86.

With approximately 800 stores in the U.S., Albertsons was the No. 4 chain in America, and in the mid-1990s, it opened a 1 million-s.f. distribution center in Plant City, Fla. In 1996, a D.C. was opened in Houston, bringing the number of Gary Michael and Richard King Albertsons Centers to 12.

Also in 1996, Richard L. “Dick” King was promoted to president and COO and the company introduced its “Quick Fixin’ Ideas,” which put recipes and their ingredients in one section of the store; prepackaged entrees also were offered. This was a competitive move, as was the company’s focus on improving customer service and checkout speeds.

In the mid- to late ’90s, Albertsons history is a mix of accomplishments and challenges, beginning with class-action lawsuits in 1996 and ’97 charging that Albertsons routinely allowed employees to work “off the clock,” a charge that could have cost the company an estimated $200 million. Eight of the claims were combined for one suit, and in 1999, Albertsons settled by putting $22 million in a fund for future potential payments to claimants meeting criteria for eligibility.

On the accomplishment side, in January 1998 Albertsons purchased Seessel Holdings Inc., the Memphis, Tenn.-based subsidiary of Bruno’s Inc., operating 10 stores. Albertsons also purchased Seessel’s central bakery and commissary that

supplied the stores. Chairman and CEO Gary Michael called the deal “a significant market entry opportunity for Albertsons....This transaction accelerates our entry into that marketplace by several years.” He added that the acquisition provided a foundation for Albertsons to grow in Memphis and surrounding areas.

Also in January, Albertsons signed an agreement to acquire Buttrey Food and Drug Stores Co. of Great Falls, Mont., a supermarket and pharmacy retailer with 43 stores in Montana, North Dakota and Wyoming. Michael said this acquisition gave Albertsons entree into smaller towns in states where it already operated.

In April, Albertsons closed on its purchase of Smitty’s Super Markets Inc., gaining 10 Smitty’s combination stores and two fuel centers/convenience stores in the Springfield and Joplin, Mo., areas. Albertsons kept the Smitty’s banner on these stores.

At the stockholders meeting in May, Gary Michael, chairman and CEO, outlined a $4.4 billion capital expenditure program for the next five years, exclusive of acquisitions, that would include about 380 new stores in new and existing markets and 290 remodels of existing stores as well as a new distribution center and store-level technology.

In July, Albertsons agreed to acquire 14 operating stores and one under construction from Bruno’s Inc. in connection with Bruno’s bankruptcy filing. The stores were in Nashville and Chattanooga, Tenn., where Albertsons did not have stores.

In August, Albertsons signed an $11.7 billion deal to acquire Salt Lake City’s American Stores Co., which operated 288 combo stores, 514 supermarkets and 783 standalone drugstores under the Acme, Jewel, Jewel-Osco and Lucky banners. The merger would put Albertsons in urban markets such as Chicago and Philadelphia and give it its first standalone drug stores.

At the May shareholders meeting in 1999, with the American Stores merger still pending, Michael said Albertsons would spend $11 billion in the following five years to open 750 new combo stores, 500 stand-alone drug stores and 600 fuel centers. The company celebrated its 60th anniversary.

For the FTC to approve the American Stores deal, Albertsons had to divest 145 stores and four store sites in overlapping markets in California, Nevada and New Mexico. The divestitures included 105 Albertsons banner stores and 40 from American Stores, primarily under the Lucky banner.

The deal was completed June 23.

Around this time, King resigned, and in March 2000, Peter L. Lynch, a former senior executive at American Stores, became president and COO. The first year after the merger, Albertsons’ profits were $765 million on revenues of $36.76 billion.

See page 38

One of the most fundamental principles we work under is how do we make our operators successful? It’s about the operators in this business and about making them the star of the show. When they are given those tools and that support, they don’t have to worry about the things that are outside of their realm. Then they can focus on the customer.

When they focus on the customer, the customer knows it, and when the customer knows it they want to come back and shop with us again.

This is a great company we’re working for, founded by a true innovator, an entrepreneur, and the spirit of what he brought to the company back then continues to be central to what we do this many years later.”

— Andy Scoggin, EVP-Human Resources & Public Affairs

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KEY DATES IN ALBERTSONS HISTORY •1939: Joe Albertson opens first Albertsons Food Center in Boise, Idaho.

•1959: Albertsons goes public and launches its private label.

•1961: Albertsons opens its 100th store.

•1970: The company announces a partnership with Skaggs Drugs Centers Inc., which gives rise to the first food-and-drug combination stores.

•1976: Joe Albertson “hand-picks” Warren McCain to be his successor as CEO. The company begins opening superstores and installs its first electric price scanner.

•1979: First warehouse stores open.

•1991: Albertsons announces its five-year expansion plan to construct and renovate more than 400 stores. Gary Michael, who joined Albertsons in 1966 in accounting, is named chairman and CEO. He had served as vice chairman, since 1984, prior to his promotion. He succeeds McCain, who becomes chairman of the executive committee.

•1993: Founder Joe Albertson dies at the age of 86.

See more key dates on page 40

From page 36

The new century

Also in 2004, Albertsons acquired the Shaw’s and Star Market chains, gaining a presence in New England. The annual revenues for the company were predicted to overtake $42 billion around this time.

On May 30, 2006, Eden Prairie, Minn.based Supervalu held a special meeting concerning the possible acquisition of certain Albertsons properties from Albertson’s Inc. During the meeting, it was apparent that Supervalu was in favor of the transaction, and 92.6 percent of the total shares voting were in favor of the deal. A whopping 98 percent of voting Albertsons shareholders also approved. This high percentage was all that was needed for the two parties to proceed to close the

In January 2001, Albertsons eliminated its regional structure, moving to a divisional model, with 19 divisions. Execution of marketing and merchandising programs would reside at the division level, “closer to the customer,” Albertsons said. “This new structure will leverage Albertsons’ nationwide presence while executing its customer-focused strategies neighborhood by neighborhood.”

The 19 divisions included a Drugstore Division, and a centralized Pharmacy Operations group supported all pharmacies across the divisions.

Larry Johnston In April of 2001, Lawrence R. Johnston joined Albertsons as chairman and CEO. He was the first top executive at the company who was brought in from transaction.

“Among the highlights of this transformational acquisition outside its executive ranks. He oversaw a restructuring that is the opportunity to bring a collection of the nation’s most during which 165 stores were closed in just a little more than prestigious supermarket banners into the Supervalu family, a year. creating a network of approximately 2,500 grocery stores Johnston added the title of president when Lynch resigned and nearly 900 in-store pharmacies,” Jeff Noddle, Supervalu’s in 2003. chairman and CEO at the time, said in a press release. “We Johnston immediately made huge changes to the company, believe that fiscal 2007 is a year in which we will begin to see beginning with cutting an estimated 1,300 corporate and adstrength in the New Supervalu as our model reflects the powministrative jobs and selling its 80 Osco outlets in the New See page 40 England area. Soon after, Albertsons completely exited the New England market, as well as the Memphis and Nashville, Tenn., and Houston and San Antonio, Texas, areas. Capital Make sure you take care of your raised from the sales was used to upgrade existing stores. people and let them grow as much as they A four-and-a-half-month strike in Southern California possibly can and your success will that impacted Albertsons, Kroger and Safeway cost Albertcome along with their success.” sons $90 million in profits and $700 million in revenues by the time the strike ended in February 2004. It was the longest grocery strike in America’s history.

—Dave Ober, Treasurer

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From page 38

•1994: As of May, 55-year-old Albertsons operates 678 stores in 19 western, midwestern and southern states.

•1996: Albertsons opens eight new stores on Jan. 10, setting a new record for number of openings in a single day; an additional 15 open before the end of the month.

In February, Richard L. “Dick” King, a 28year company veteran, is named president and COO. King succeeds John B. Carley, who started his career dipping ice cream at the original Albertsons store in 1950.

• 1997: Albertsons purchases three stores from Randall’s Food & Drug Inc. in the Texas towns of College Station, Round Rock and Pasadena, replacing two smaller Albertsons stores.

• 1998: Acquisitions were frequent this year, including Seessel’s, Buttrey, Smitty’s, Bruno’s (Tennessee stores) and Miner’s.

See more key dates on page 49

The piece of advice I remember is Gary Michael, former CEO of ours, once said that essentially, we sell the same stuff in the same box for the same price, so the difference in our business is all about the people.

And I firmly believe that. So I can hire for technical skills; it’s way easier to hire for character and then fill in the gaps with the technical skills than do it the other way around.”

—Mark Bates, CIO From page 38

er of our new retail organization and the benefit of a more profitable retail business mix. I am excited that the Supervalu shareholders share my enthusiasm for the value of this combination.”

Only three days later, on June 2, Supervalu announced that the deal was complete and that it had acquired more than 1,100 stores. They included Acme Markets, Bristol Farms, Jewel, Shaw’s Supermarkets, Star Markets and the related in-store pharmacies under the Osco Drug

and Sav-on banners as well as the Albertsons banner stores in the Intermountain West, Northwest and Southern California regions. The purchase was made for $17.4 billion and tripled Supervalu’s retail operations. Before, Supervalu was 53 percent retail; now, its retail percentage shot up to 80 percent. The deal also made Supervalu the third-largest supermarket chain, by revenues, in the U.S. Supervalu planned to invest $1 billion in its Albertsons store base, remodeling 350 and constructing more than 85 new locations.

New York-based Cerberus Capital Management, a private equity firm, and its partners bought 655 stores, reportedly interested mostly in the real estate opportunity. Soon after the agreement was completed, Cerberus, as part of the consortium, formed Albertson’s LLC.

The birth of Albertson’s LLC

Cerberus and its deal partners—Kimco Realty Corp., Klaff Realty, Lubert-Adler Partners and Schottenstein Stores Corp.—purchased the lessprofitable Albertsons stores around the country. They also purchased the distribution centers and offices where their stores were located: Dallas/ Fort Worth, Florida, Northern California, Rocky Mountain and Southwestern. Robert “Bob” Miller was named CEO of Albertson’s LLC, which

We have over 100,000 associates. They all care about what we’re doing and they all have good ideas.

They’re all very bright, very capable, throughout the organization. When you talk to customers, when you talk to our team, our store associates, our people are our single biggest weapon in running a great business and competing. Our store-level people are terrific, they make the difference, and you know what? If you greet people with a smile, you’re excited about what you’re doing, you tell them about some great special or some great recipe or help them find something, that’s the connection. And you can’t digitize that, you can’t put that on the web…Our people and our relationships and giving great service is really going to be the great difference maker. And we have outstanding locations.”

—Justin Dye, COO, New Albertson’s Inc. (NAI) kept its headquarters in Boise, Idaho, despite not having any stores there. Miller had begun his career at Albertsons at age 16, spending 30 years there before becoming chairman and CEO of Fred Meyer. When Fred Meyer merged with Kroger, Miller joined Kroger for a short time before becoming chairman of Rite Aid in late 1999. He served as CEO of the drug chain until June 2003 and remained chairman after that.

Albertson’s LLC quickly announced the closing of 125 stores that basically had no chance of becoming profitable. These were located in Florida, Northern California, Texas, Louisiana, Oklahoma and Colorado.

Most of the shutters took place in northern California (37 stores), Texas and Colorado (16), with Florida getting the least of the bad news with only two closings. These terminations were finished in August of that year.

The closings left only two of Albertsons’ Hispanic format stores, Super Saver, open, in Utah.

According to the Rocky Mountain News, Albertsons looked at these closures as a way to start over. “Now we’ll look at building the business back up and focus on the (more profitable) stores that are remaining,” Wayne Denningham, president of the Rocky Mountain Division at the time, told the Denver-based paper.

Through 2007, Albertsons continued to close stores in Texas and Colorado and completely eliminated its hold in Oklahoma and got rid of its loyalty card program in the Rocky Mountain division stores. In 2008, it sold all of its Express fuel centers of San Antonio, Texas-based Valero Energy Corp. and entered an agreement with Publix, which bought 49 of its Florida locations.

In 2009, Albertsons continued to close stores and distribution centers in Colorado and Florida, getting down to a total of 249 stores.

AUGUST 2014 • A Shelby Special Report

“We’re constantly evaluating all of our store bases and various businesses. When we have to make a tough decision about whether or not a store is going to be profitable, we pour resources into it, and if we can’t make it profitable, we have to make the tough decision to close it,” Albertsons spokesperson Christine Wilcox told The Shelby Report at the time. “But we’re very pleased with both Dallas/Ft. Worth and Southwest (divisions). There’s been a lot of changes in Florida this year.”

The sale to Publix left Albertson’s LLC with 35 locations in Florida.

Among the closings, Albertsons opened a location in Mandeville, La., on Sept. 2 under the auspices of its Dallas/Ft. Worth (DFW) division. The Mandeville store opened in a former A&P. The DFW division, run by Division President William Emmons, had 100 stores, the Southwest 114, at the time. Albertsons was reinvesting money in the two divisions, Wilcox said, targeting about 20 percent of the stores in each division for remodeling.

Albertsons stores reunited

In early 2013, Albertson’s LLC brought the banner full circle, purchasing back from Supervalu the “premier” Albertsons locations it had purchased back in 2006.

“In 2006, we acquired a set of stores that lacked investment and were in tough shape, but with our great associates taking care of our customers every day we have grown into a solid regional supermarket chain with growing sales,” Miller said. “I believe we can be successful again.”

In addition to the Albertsons stores, Albertson’s LLC purchased stores and related pharmacies under the Acme, Jewel-Osco, Shaw’s and Star Market banners. Albertsons bought 877 stores in total, which gave the company 1,069 stores and 12 distribution centers.

With a purchase of that magnitude, Albertsons changed its organizational structure, with Bob Butler, EVP of operations, being named COO, with responsibility for all Albertsons banner stores, which are operated by Albertson’s LLC. A new Northwest division office

Early on, somebody told me don’t worry about the next job, the next promotion; just work hard and focus on the task today and everything else will take care of itself. Boy, those words still ring true today.”

—Bob Butler, COO

in Portland, Ore., was formed, managing operations for stores in northern Idaho, Oregon and Washington. Heading up the division is Dennis Bassler, who started his career at Albertsons in 1981.

Other Albertsons division leaders appointed at the time included: • Wayne Denningham, president, Southern California Division.

Previously president of the Southern Division, Denningham started his career at Albertsons in 1977.

• Susan Morris, president, Intermountain Division. Morris, formerly VP of marketing and merchandising for the Southwest Division, began her career with Albertsons in Denver in 1985.

• Mike Withers, president, Southern Division. Withers moved up from VP of marketing and merchandising in the Southern Division. He began his career at Albertsons in 1976.

• Shane Dorcheus continues as president of the Southwest Division; he joined Albertsons in 1980.

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You have to be fluid because flexible is too rigid. You have to be able to flow into the situation and flow through it because you can’t always anticipate what’s going to happen. The one thing you can anticipate is that there will be change. I think we have really built a culture that thrives on change and on that entrepreneurial spirit that Joe really had of let’s go see what’s out there and what we can build.”

—Christine Wilcox, VP-Communications & Public Affairs

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Joe Albertson’s Spirit Lives on in Company

In 1929, Joe Albertson was a college student who had spent two years studying business. When the Great Depression sent the country into a tailspin, Joe decided he would leave school and enter the grocery business, figuring that in good times or bad, people had to eat.

Joe spent 10 years working his way up at Safeway, knowing that ultimately he would open his own store. In July 1939, he did just that. With $5,000 of his own money and a $7,500 loan from his wife’s aunt, Albertsons Store #101, at 16th and State Streets in Boise, Idaho, opened with new services that customers hadn’t seen in a grocery store before, like a scratch bakery, an automatic doughnut machine and one of the first magazine racks in the country. He also sold big, double-dip ice cream cones, fresh popcorn and roasted nuts, all of which were hits with shoppers.

The following year he was able to open two more stores in neighboring Nampa and Caldwell.

Though Joe Albertson passed away in 1993 at the age of 86, his colorful personality and his impact on the company have not faded. They live on in Albertsons staff members’ and executives’ stories about their encounters with him and in the way they conduct business to this day.

To a person, they mention Joe’s simple philosophy of supermarketing: Give customers the products they want, at a fair price, with lots of care.

He was, in a grand understatement, one of a kind.

On the occasion of the company’s 75th anniversary, several Albertsons staff members sat down and spoke on camera about the company and Joe Albertson.

AUGUST 2014 • A Shelby Special Report

Bob Miller, CEO:

In 1979, I was here in Boise as a trainee. I got to travel to Southern Cal with Joe and Warren (McCain). In those days I had a big appetite…We went to dinner and I had a big steak and a baked potato, rolls, and I ate everything in front of me.

I was full and ready to call it quits. Joe had gotten a big steak and took about three bites, stuck his fork in it, put it over on my plate and said, “Eat that, boy, we’re not going to waste it.”

So I was really full that night when I went to bed, let me tell you.

••• I moved to Boise as a regional vice president in 1985 (and) became executive VP in 1988. My office was two doors down from Joe’s. A lot of times you’re on the road, working and traveling, but if I was in the office, he would come sit down and say, “What’s going on, Bob?” He’d sit there and listen for a while, kind of act like he was interested. Then he’d get up and say, “Just keep treatin’ her good, Bob, and we’ll be OK.” In those days, all the shopping was done by the woman, so we referred to our shoppers as “her”…treat her the way she wants to be treated; give her lots of tender loving care.

Bob Butler, COO:

I still think Joe’s foundations are with us. We believe in community; we realize that our stores serve many thousands of customers in the community, and they rely upon us. We try to give back; everybody certainly needs something today and we have to be selective, but we totally believe in that. It’s a big part of us, and we want to carry on that tradition.

Craig Moss, VP-Meat:

Back in 1977 I was transferred to Emmett (Idaho); it was store #104, Joe’s fourth store. And if you go back in Joe’s history, he was in Emmett with Safeway at one time. One day I was cutting meat as the meat manager, and this elderly gentleman came in. He had on a flannel shirt, coveralls and an old

hat, and he walked into the meat cutting room and said, “Sonny, can I have a cup of coffee?” I said, “Sure.” He introduced himself after asking for the cup of coffee. “Hi, I’m Joe.” He says, “I just want you to know that these people in Emmett are my friends and our customers and…

I want you to treat them with respect and serve them the best you can.”

After that, we got to talking fishing because that’s where he was going. So periodically he would come in and talk fishing instead of business.

Carol Wood, Senior Contact Administrator, 44-year Albertsons employee:

I started in March 1970...It was always really interesting when I worked directly with him to have him talk about the old days. At his first stores, still at Safeway, it was a time when people would bring their own little tin buckets in with them to get lard, and during the summer it was always melted by the heat and it kept in a big whiskey keg barrel. So they would bring their bucket in and he would whip it into the lard that was liquid, grab a burlap bag they had there, whip it around and hand it back to them.

Dave Ober, Treasurer:

It’s kind of funny, I guess, the things you remember, but (Joe) had a Jeep Wagoneer and that is what he drove to work.

I’m sure he had other cars, but I think it just kind of speaks to the type of person he was.

The other thing I always remember is he always greeted everyone. And I can tell you that he passed that along to almost everyone. Because whether it was Gary Michael or Craig Olson or whoever, everyone always had a hello for you; how are you doing? And it showed that they really cared about you as an individual.

•••

When you look at the things that Joe expounded on—tender loving care, taking care of the customer, giving the customer the products they want at a price they’re willing to pay—all those things today are more relevant than they were 75 years ago when the whole thing started.

John Strong, VP-Procurement/Sourcing:

The first time I met Mr. Albertson was when we used to come to Boise for a vice presidents’ meeting…in the late ’80s.

Doug Sumter, who was the grocery sales manager at the time in Idaho, picked me up at the airport and he said, “You know, we’ve got to look sharp tomorrow morning for the meeting, so we’re going to go down to Nick’s and get our shoes shined.”

Nick’s was a shoeshine parlor/shoe store down on Main Street in Boise. We parked in the back, and Doug said, “There’s Joe’s Cadillac.” And I’ll be darned; we walked in and there was Joe sitting right there in the seat having his shoes shined. Doug walked up to him and said, “I want to introduce you to somebody.” And he said, “Sure.” Doug says, “Mr. Albertson, this is John Strong; he’s our procurement manager in Salt Lake.” And he said, “Oh, I’ve heard of John. You’re doing a good job down there. You making me any money?”

Mark Bates, CIO:

I started in 1976, 37 years ago, here at the general office in Boise…when I was 18. I didn’t get to work around Joe very much in my career; I was going to college full time. But I was in the computer room, it was a Saturday or Sunday, and I had my feet up on the console, reading my school books, getting my work done, and I looked up and Mr. Albertson was standing at the glass window in the hall and giving me one of these (come here gestures) and I went, “Oh, there’s nothing going to be good about this conversation.” So I went over there to see Mr. Albertson out in the hall. Our computer room was right by an outside door, and the geese and the ducks hung around the sidewalks a lot. When I got out into the hall—I didn’t know

AdvAntAge SAleS & MArketing Along with our clientS would like to congrAtulAte

AlbertSon’S on their 75th AnniverSAry

GlenOaks Farms

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Drinkable Yogurt

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Mr. Albertson and he didn’t know me at that point in time—he pointed over to a duck on the sidewalk, and it was wintertime, and he said, “You know, if I was out there without my shoes on, my feet would be that color, too.” I said, “Yes, sir, so would mine.”

••• Joe said a lot of things about value and product and mostly about service, and for those of us that are not directly servicing the customer, my whole job is to make those people successful. We have 7 million customer visits in our company today, and the face of Albertsons is not anybody in this office; it’s really about the people in the field. Everything we do has to be toward making them successful and delivering on Joe’s philosophy.

Mike Massimino, SVP-Marketing & Merchandising:

I was a new store director, just transferred into Cedar City, Utah. I had been there probably three or four weeks, and it was when they had first gotten their first airplane. Wally Jordan brought Joe and a few other of his cohorts with him and they flew into Cedar City and came to my store. I had to go pick them up in a pickup truck— which was really interesting—and brought them to my store. Joe was tired, and he pulled out the little bagging rack that sits in front of the checkstand and sat down. I was trying to take care of every one of the big bosses, you know, and I saw him sitting there. So I ran

up to say, “Joe, what can I get for you?” and he said in his gruff voice, “Don’t worry about me, I’m not buying anything. Go take care of your customers.”

That’s always lived with me—take care of your customers.

Pat Dennis, VP-Center Store:

I started with Albertsons in 1981 in Denver, Colo., as a bottle room sorter.

Then I proceeded up to being a courtesy clerk.

Back in the early ’80s, Joe would still try to get to all the grand openings, so I had the pleasure of meeting him at a grand opening in Denver. I was the GM manager, and he came over to my department and asked me what I did, and I said, “I oversee the health and beauty care and GM products.” He said, “Good, because I know nothing about that business,” and he walked away. Then I looked at the store director and said, “Is he serious?”

Paul Rowan, EVP & General Counsel:

Other people have said this same thing, but Joe said you’ve got two ears and you’ve got one mouth. Use your ears twice as much as you talk. So, listen, in other words, more than you talk and you’ll learn a lot more.

I always thought that was something to take to heart and live by.

•••

Joe was just such a personable man, a gracious man, a man that lived integrity; didn’t just speak integrity, but it was his true character. I had a unique position because I was at the College of Idaho, which later became named Albertson College for a period of time. I went to school there and served on the board for a number of years, so I got to see the tremendous things that he and his family, frankly, did for the college. That was just the tip of the iceberg; he did so many different things for the community, for the school, for a lot of people that folks will never know about. There’s lots of stories you’ll hear about things that Joe did to help others. And he would only do that if he could do it anonymously. That was his character.

Peggy Jones, VP-Human Resources:

I called Joe “Mr. A.” When I started I couldn’t call him Joe because he was like my grandfather…When I started, the office was literally next to the first store, and before Mr. A would come to the office, he’d walk through the store and visit with customers. He found out what was on their mind.

••• One day the stock market went down over 25 percent and the stock went down 25 percent. Gary Michael was in his office, at the time he was in charge of our Southern Division, and Warren McCain, the CEO, called and said, “Gary, I am just sick, what are we going to do? The stock price is down 25 percent; Mr. Albertson lost X amount of dollars today. He’s just got to be heartbroken. How am I going to face him? Tell him we’ll work hard and get the stock price back up…”

Mr. Albertson walked into Gary’s office about that time and Gary said, “Warren, he just walked in my office, let me put you on speaker.” So Warren starts, “Oh, Joe, I’m so sorry. Tough day today, we’re going to work really hard to get this back.” Mr. Albertson said, “Warren, what are you talking about? I know it’s a tough day, but the worst thing about today is my best huntin’ dog died this morning. I don’t care about the stock price. It was my huntin’ dog that made it a bad day.” The business wasn’t everything to him.

There were other things in life that you need to make sure were important.

He said, “You guys will get the stock price back; I don’t worry about it. I just don’t know where I’m going to get me another huntin’ dog like that one.”

Rick Bunnell, SVP-Distribution/Supply Chain:

Joe’s philosophy in my book was pretty simple, and that’s focus on the customer. On the supply chain side of business, if we continue to focus on our customer, and again, ensure we have good, efficient operations, provide fresh, quality products down to our stores and to our division office, I think we’ll be successful on our side of the business.

Rick Navarro, CAO:

Going back to Joe and Warren McCain and Gary Michael, too: We always thought whatever you do today, do something you wouldn’t mind reading in the paper tomorrow. That was always good advice that helped you treat people right and do the right thing.

You know, culture is really big at our company and we have a great culture. Sometimes you don’t realize it until you don’t have it. I left for a few years from Albertsons and then came back with LLC. You come back and you work with people that you see every day, that you can trust—everything doesn’t have to be in writing, our word is good. If we say we’re going to do something, that’s what it’s going to be. And we do that with ourselves, with our employees, with our customers and everybody in the community.

Sue McMillan, Assistant General Counsel & Group VP:

I think we keep it simple for the customer. We understand what a customer really wants—the mantra of Joe Albertson. But what goes into making that possible is incredibly complicated. I have so much respect for our entire team that they are able to get product out to a consumer and make it fresh, make it affordable, make it look easy, when it is anything but. It’s definitely a feeling of family and of being involved in something that works and that gives you purpose and that you can see progress with.

I think that’s especially true now with the company.

Walt Czarniecki, VP/Controller:

As far as Joe’s philosophy with customers, working in the general office we look at the stores, the division offices and the distribution centers as our customers, and whatever we can do every day to help them succeed is our goal.

In the early years we always saw Joe Albertson in the office.

He’d be walking around the hallways, he’d spend some time in his office and was always pleasant to talk to and always had a “hi” for everyone he saw in the general office, so that’s one thing I’ll remember. There’s not a long list of companies who have flourished for 75 years like Albertsons has.

AUGUST 2014 • A Shelby Special Report

45

The Year 2006: A Turning Point in Company History

Bob Miller, CEO

Albertsons had been on a growth spurt throughout much of the 1990s, but nothing compared to its acquisition of American Stores Co. that was completed near the end of the decade, in June 1999.

Albertsons had 983 stores, American, 1,580, creating a chain that eventually would operate more than 2,400 stores after a round of divestitures. Albertsons had $16 billion in sales; American Stores, nearly $20 billion. Together, the companies had more than 200,000 employees.

Completing the $9.5 million deal was not the biggest challenge, as Albertsons Chairman and CEO Gary Michael said at the time; the integration process was.

By December of 1999, a Wall Street Journal article claimed that Albertsons had been caught off guard by higher-thanexpected merger costs, resulting in its net income falling by 40 percent in the year’s third quarter.

In the ensuing years, the difficulties would continue. Michael would retire, to be replaced by an outsider, former General Electric executive Larry Johnston, who would oversee dozens of closings of unprofitable stores in an attempt to get the company back on solid financial footing.

By 2006, Albertson’s Inc. had made the decision to sell. Supervalu purchased more than 1,100 of Albertsons’ “premier retail properties,” including Acme Markets, Bristol Farms, Jewel, Shaw’s Supermarkets and Star Markets as well as Albertsons banner stores in the Intermountain West, Northwest and Southern California. A consortium led by Cerberus Capital Management purchased the Albertsons stores Supervalu did not pick up; these were located in Northern California, Colorado, Utah, Nebraska, South Dakota, Arizona, New Mexico, Texas, Louisiana, Arkansas, Oklahoma and Florida and totaled 655. Drug store retailer CVS purchased 700 stand-alone Osco and Sav-On drugstores from Supervalu once its deal with Albertsons was completed.

Hard choices required

Albertson’s LLC, parent company of the consortiumowned stores, called in a retail and company veteran to head up the turnaround.

Bob Miller had started his career with Albertsons in 1961 at 16 years of age. A high school athlete, he needed a job where he could work nights, and Albertsons hired him. He started as a bottle sorter, organizing the soft drink bottles that were returned to the store for a deposit.

“Every night I would walk into the biggest mess you’ve ever seen in your life. And I got to clean it up,” Miller says. “But the good news was that I worked the hours I wanted.”

He was promoted after a few months to box boy. He spent 30 years with Albertsons before moving on to high-level positions at Fred Meyer and then Kroger when it purchased Fred Meyer. He then went to Rite Aid. He was chairman of the board for the drug chain when he was asked to return to Albertsons.

It was a good thing he had experience cleaning up messes.

“When we started in 2006, we bought the stores that nobody else wanted—the non-core stores, stores that had not had money spent on them in a long time. They’d been for sale for a long time, the morale was very poor; they turned off about half the lights in the stores to save money,” Miller

When you have a turnaround situation, you have to make the thing work through people.”

Cheers

Congratulations Albertsons on your 75th Anniversary

—Bob Miller

46

A Shelby Special Report • AUGUST 2014

says. “The employees really didn’t have a lot of reasons to have good morale because there wasn’t much going on there to encourage them.

“It was disappointing because we had to close 125 stores the first day,” he continued. “They were just losing so much money that there was no chance that they would be successful.”

Then it was time to focus on what was left.

“We just started to work to build a team and run good grocery stores,” Miller says. “That means treating people right, getting the associates excited, cleaning the stores, buying better quality products, lowering prices. We did all that stuff and much more, and the stores started to perform. It’s all because the associates were happier working for us and with us, and they were taking care of the customer…

“When you have a turnaround situation, you have to make the thing work through people.”

Miller was clear in his message when he approached people to be part of the revival of Albertson’s LLC. “Bob Miller told us—he was very open and honest—‘Hey, we’re all taking a risk here. We’re picking up some very difficult stores that have been neglected for a long time. But I hired a lot of these people years and years ago, and I know these people, I know their families. You’re taking a risk to join my team, but I believe we can save tens of thousands of jobs and we can have a good time while we’re doing it.’ That was a pretty good way to make an offer to come work for him,” said Andy Scoggin, EVP of human resources and public affairs, who initially had joined Albertsons in 1993 as a labor relations attorney. And he has been glad he made the decision to return.

“We still like coming in and working together every day, planning for the future, working hard together, understanding what it is we need to achieve, and we communicate very openly,” Scoggin says. “Everybody goes in everybody’s offices on a daily basis to talk about what’s going on. We don’t have walls in between the different groups.”

Treasurer Dave Ober first joined Albertsons in 1973 in the accounts payable department and has been with the company off and on since then. He also came back in 2006.

“Candidly, things were about as low as they could possibly get from the standpoint of the stores. A lot of (the comeback) was going back in and getting back to a lot of our basic principles as a company, and that included cleaning up the stores, going through looking at our pricing and our service levels.”

Thirty-two-year company veteran Kathy Brady, VP-deli and bakery, said, “In 2006, the company was pretty much at its lowest point—sales were declining, profits were declining.

By bringing back the people who truly understood the Albertsons culture, ‘the Albertsons way,’ and had seen it become very, very successful over the years, we had some quick wins immediately, which made the people that were still with us very proud of the company and want to work even harder to make the company successful.”

Christine Wilcox, VP of communications and public affairs, joined Albertsons in July of 1998, three weeks before the merger with American Stores was announced. She didn’t know a lot about the company at first, but in working on merger-centered publications in 1998-99, she read a lot of the history of the company and learned a lot about Joe—his philosophies and how he went to market.

“It was so refreshing in 2006 to come back and see us enact-

salUTes

ing a lot of those things and really embracing his original philosophy and making it simple again,” Wilcox said. “This isn’t rocket science—it’s about selling groceries and about taking care of customers.”

Bob Miller’s history with the company also gave her confidence.

“He knew those stores, those neighborhoods. It was really invigorating to step back into a company that had for so long been floundering and going in an uncertain direction and then to all of a sudden have a strong leader standing in front of us and saying, ‘we don’t know what we’re going to be able to accomplish here, but we’re going to give it our best shot.’”

Chief Information Officer Mark Bates, a 37-year company veteran, agrees that it was a return to the company’s root philosophies that brought Albertson’s LLC back from the brink.

“In 2006, we just did the basics. People say, ‘How could you possibly turn this thing around as fast as you did in 2006?’ The evidence for us was in the customer service index scores. We went from maybe a 50 in a customer index of how satisfied they were to 70 in a very, very short period of time. People ask how did you make that happen, because that’s a major success? Sales and earnings are important, of course, but it’s really about what the customer perceives at the end of the day.

“And we just did the basics. We turned on the lights in the stores. You say that’s kind of fundamental; it is, but we were in such a cost-saving mode prior to that time that our stores were dark and they were not inviting places. We put a store director back in every one of our stores. We gave the associates new uniforms. That might be a little thing, but it was a visual difference, and it’s a difference to both the associate and the customer that things were going to be different. And they

New yo Praise for Bob reTaIle Miller’s leadership Rick Navarro, CAO:

The ye

Bob Miller has taught us so much. He treats everybody well.

It all starts with our employees and our customers and our vendors—the whole “community” that we have. That’s just been a very important part of all our lives and mine, in particular.

Bob called me in about February of 2006 and we got together and built a team in Boise. It was a lot of fun. Very interesting… everybody that we called wanted to come back and work for Bob. So it was pretty easy to get very talented people, really the best in the industry, we think, to help us. We just started blocking and tackling and getting everything back to the basics. This is not rocket science, it’s not about hitting home runs—it’s about hitting a million singles every day, and that’s what we tried to go back to and get our people focused on.

Justin Ewing, VP-Corporate Development:

CoNgraTUlaTIoNs To NaTUre’s MarkeTplaCe CoNgraTUlaTIoNs To Happy 75th Anniversary! oN 20 greaT years!

NaTUre’s MarkeTplaCe oN 20 greaT years!

Thank you for your many years of partnership from your friends at UNFI. Thank you for your many years of partnership UNFI is the premier distributor of natural, organic, specialty, and ethnic products. from your friends at UNFI.

I came over from Cerberus Capital in 2006 and I joined (Albertsons) as the VP of corporate development. It was very obvious when I joined the company that it was all one big team; treating people right was very important even though we were making a lot of very difficult decisions in the early days. The fundamental thing is that it’s not “I” or “you,” it’s the whole team. We all live and fail with the team.

Amy Kirby, VP-Marketing & Merchandising:

Bob Butler…actually hired me when I was 22 years old as a graphic designer. He was definitely a mentor for me; he provided me so much empowerment to be a part of things and to grow myself personally and in my career to afford me the luxury of being promoted as marketing director. He gave me that shot, he believed in me; he still has my back every day and I’m so appreciative of his leadership.

John Strong, VP-Procurement & Sourcing:

Joe started a great culture with this company, and Bob (Miller) revived it back in 2006. And I think it’s very, very important that we never lose sight of that again and we keep that going. It’s about taking care of customers; it’s about working hard; it’s about treating associates and vendors with respect.

AUGUST 2014 • A Shelby Special Report

Treating people right—that’s probably the best advice I’ve gotten in numerous ways at numerous times. And I continue to tell people if you’re going to be successful in life, you have to treat people like you want to be treated.”

—Bob Miller, CEO were different at that point in time.”

Added Mike Massimino, SVP of marketing and merchandising, who joined the company in 1975: “In 2006 we went back to…the ’80s and ’90s, when we really did do what was necessary to take care of the customer. We offered them the goods, we fixed the assortment, we fixed service, we brought fresh products back into the mix and really we just did what we knew how to do and what we knew was right. The best advice is taking care of the customer. That comes all the way from Joe, his love for the customer and for giving them good service has stuck with me since the beginning.”

EVP and General Counsel Paul Rowan had joined Albertsons in April 1988, and he had the opportunity to join Supervalu when Albertsons was split up. But Bob Miller’s “entrepreneurial spirit” caused him to want to stay.

“I was ready for a change, I knew the company needed to change, and it was a very, very simple philosophy with Bob and what we did in 2006 in terms of setting ourselves up to be successful,” Rowan says. “We didn’t know at the time whether it would work because we were in some ways starting from a hole, but it was very, very simple, just getting back to basics.

Get back to basics in terms of running the stores, back to basics in the office. Let’s not overcomplicate things, let’s simplify things. Sure, let’s cut costs, but not save our way to prosperity.

You’ve heard that 100 times probably, but it’s grow the top line while making the company as efficient as possible and get back to the basics and take care of the customer and the victo-

ries will come. In a nutshell, that’s really what we did and continue to do today.”

Rick Bunnell, SVP of distribution and supply chain, is proud of the way the company handled the tough decisions early on in the turnaround process.

“I learned about treating people correctly, being honest and having integrity with them even if you’re delivering bad news.

We treated our people right as we had to downsize. I’ll give that all back to Bob Miller…

“At the end of the day, I think even with those tough decisions we treated our associates correctly and we gained the respect from the associates that were left and the vendor community, and we were able to drive our business forward,” Bunnell says. “I think that was very critical in our success today. I couldn’t be more proud to be here as part of Bob’s team and driving this business forward.”

47

stores back. “The tremendous progress we have made is almost unbelievable. And it’s a tribute to all the people in our company and how hard they work,” he said.

“It still comes down to running really good grocery stores, with good quality products, good service, clean stores and keeping that customer happy,” Miller added. “Even though technology is doing a lot of things now, the basic business is still the same: We want to run really good stores.”

COO Bob Butler, who joined Albertsons part-time in 1972 in Stockton, Calif., said, “Technology can change, a lot of things can change, but you have to keep that focus at the store and the customer level. Give the customers one of the best options they can find, with a fair price, great service, the best quality products we can have, and people will come and shop with you. That formula works and will continue to work.”

He said Albertsons continues to work on its fresh departments, always trying to improve its quality and selection in line with customer needs.

All systems ‘grow’

More stores that were not performing would be weeded out over time, and by 2012 the company had “192 stores, really no debt, lots of profit, and we decided to start growing again and buy other assets,” Miller said.

The next year, Albertson’s LLC would purchase Texas’ United Supermarkets as well as the stores Supervalu had purchased seven years earlier from Albertson’s Inc. In the April 2014 interview, Miller said it had been one year and one month since Albertsons had gotten the Supervalu

Congratulates Albertsons on 75 Years

• Northwest 8740 SW Scoffins Street Tigard, OR 97223 TEL: (503) 924-4446 CELL: (503) 544-4673 Rob Lansing rlansing@cosalesnw.com

• Southern California 13245 Riverside Drive, Suite 540 Sherman Oaks, CA 91423 TEL: (818) 382-3100 CELL: (213) 705-6735 Steve Horowitz shorowitz@co-sales.com

• Salt Lake Office 2265 South 1300 West, Suite C West Valley City, UT 84119 TEL: (801) 886-8800 CELL: (801) 232-9031 Tally Stevens tallys@co-sales.com

• Phoenix Office 2700 N. Third Street, Suite 1000 Phoenix, AZ 85004 TEL: (602) 254-5555 CELL: (602) 320-0200 Jeff Nelson jeffn@co-sales.com

• Northern California 7133 Koll Center Parkway, Suite 200 Pleasanton, CA 94566 TEL: (925) 327-7311 CELL: (925) 984-1777 Jim French jfrench@co-salesnc.com

• Boise Office 3501 W. Elder Street, Suite 102 Boise, Idaho 83705 TEL: (208) 917-5012 CELL: (303) 549-1286 Sue McGowan suem@co-sales.com

• Denver Office 9250 E. Costilla Avenue, Suite 425 Greenwood Village, CO 80112 TEL: (303) 768-8880 CELL: (303) 549-12866 Sue McGowan suem@co-sales.com

• Orange Office City Center 1, 625 The CIty Drive, Suite #140 Orange, CA 92868 TEL: (714) 489-6095 CELL: (714) 489-6095 Tyler Griffiths tylerg@co-sales.com

48

A Shelby Special Report • AUGUST 2014

Work hard, treat people right, tell the truth, protect their integrity, and they can go a long way in this company. It’s interesting; you can start at the bottom in this company and you can get my job.”

—Bob Miller, CEO “You know, I get asked all the time what are our most important goals. It’s pretty simple. Number one is sales; number two is sales; and number three is sales. And if we keep growing sales, our company will be very successful,” Miller said.

“And it takes a lot of hard work and dedication to treat that customer right, give her what she wants, and make sure she wants to come back. If we do that, we will be very successful for many years to come.”

The people of Albertsons

“You know, we have a lot of people in our company who have been here a long time, a lot of people in our stores that have been here a long time. We have people that leave for a while and come back,” Miller says.

“I think it’s because at the core of our values is to treat people right, to make sure they want to work here, they enjoy working together, and I think that’s a strong part of why we’re successful. We have really good people who understand the business, who are dedicated and they like working here. I take great pleasure in that.”

Butler adds, “The people are what

drive me every day. I look forward to coming to work, the people that I work with, the people we meet when we’re out in the stores, the customers thanking us for what we do every day, seeing people get promoted—those are the things that drive me.”

Bob Schuler, VP of distribution accounting, remembers a meeting in 2006 when the company’s turnaround was getting off the ground and everyone was asked to tell their background.

“I had 23 years with Albertsons,” Schuler said. “There were 32 people in the room and I was No. 3 in seniority—from the bottom. So our company has always been based on loyalty. Life is about accountability, doing your job the way you expect other people to do it, treating your customers right and treating other people the way you want to be treated. It absolutely resonates today in…treat the people right, have products at a price they can afford.”

Justin Dye, COO of New Albertson’s Inc. (NAI), an entity formed around the non-Albertsons store banners AB Acquisition LLC purchased from Supervalu, is one of the newest kids on the block, having joined Albertson’s LLC as chief strategy officer in 2006.

According to Dye, “The store associates are the most important people in our system. If they take care of the customer and they love what they’re doing, sales tend to follow that. It’s a very simple recipe. It doesn’t sound fancy but it’s the absolute holy grail of the way this business works. You feel it in the stores, you feel it in the offices; we’re really excited. And there’s real emotion about restoring our business to excellence. It’s an exciting time to be here. It’s been an honor to join this team; it’s my favorite team I’ve ever been part of. I think what’s magical about what we do— and I mean that—is chemistry. Everyone does what they need to get done, we all trust each other, there’s no politics. It’s sort of us vs. the world. We’ll be sitting in the conference room or in the hallways, the bathroom, and we’ll talk about, hey what have we got to fix to continue to build this company and make it a great company?”

Ober says, “I’ve been now off and on with the company for almost 38 years. It always sounds a little bit corny to say it but Albertsons really is the people. That really is what makes Albertsons the company that it is.”

Justin Ewing, VP of corporate de-

velopment, also came to Albertsons in 2006, having worked for investor Cerberus.

“Treating people right was very important even though we were making a lot of very difficult decisions in the early days,” Ewing says.

“The fundamental thing is that it’s not ‘I’ or ‘you,’ it’s the whole team.

We all live and fail with the team.”

He said that Albertsons is “an incredible family,” noting the longevity of the staff. “When you get into the culture of it, you can see that the people have really grown up from the can stackers all the way up to CEO.”

Strength in decentralization

The Albertsons operational model is based on decentralization— putting the decision-makers closer

Happy 75tH anniversary albertsons

to the stores.

“One of our key strengths is our decentralized model. We have the division people in charge of their local markets. But more importantly are our store directors, who have the key job in our company,” Miller says. “They have to understand their P&L, their goals, their projections. And they have to motivate their associates and run good stores. It’s the most important position in our company. And we think giving them the P&L responsibility makes them good business leaders.”

Mike Massimino, SVP of marketing and merchandising, adds, “Really, our strength is in our decentralized model and allowing most of the merchandising and marketing to be handled out in the divisions.

“Where I see opportunity for us now is to strengthen our brands,” he adds. “We have Albertsons, and Jewel, Acme and Shaw’s that have tremendous heritage, a lot of legacy. If we can leverage that and get the customers in those markets to understand that we are here and we’re here to stay in all the markets, I think that’s where our opportunity is and that’s really where I am focusing a lot of my attention, to help our divisions take advantage of that opportunity.”

Dye said, “Over time we ended up developing a really nice operating model that created a competitive advantage for us—being decentralized, putting the power and the decision-making at store level and in our divisions. Everyone at corporate really is in a support role, which is the way it should be. We went from being an underperforming 660-store chain to 192 stores that were performing quite well that had terrific sales trajectory quarter over quarter, identical sales increases that we’re very proud of.”

“We de-layered the bureaucracy” is how Mark Bates, CIO, describes it. “We made decisions quick, we put the decision-making power back in the division presidents’ hands, set them up for success and then got out of the way.”

AUGUST 2014 • A Shelby Special Report

From page 41

From page 40

•1999: Its largest deal, worth $11.7 billion, with American Stores Co. is finally approved in June after having been announced in August 1998. The resulting company, Albertson’s Inc., had more than 2,470 stores in 37 states with combined sales of about $36 billion. This deal gave Albertsons its first stand-alone drug stores and made it an almost nationwide grocer.

•2000: Peter Lynch is named president and COO, succeeding Dick King, who had stepped down in June 1999. Lynch was promoted from EVP of operations.

•2001: Gary Michael retires as chairman and CEO as of the annual meeting in June.

His successor, Lawrence R. “Larry” Johnston, a former General Electric executive, had been chosen in April. Johnston is the first non-Albertsons executive to lead the company in its history.

•2002: Albertsons pulls out of four markets—Nashville and Memphis, Tenn., and San Antonio and Houston, Texas. A total of 165 stores have been closed since Johnston became CEO.

In addition, Justin Dye became COO of the Acme, Jewel and Shaw’s/Star Market banners as well as the pharmacy operation, all operated by New Albertson’s Inc. (NAI). Dye previously was chief strategy officer for Albertson’s LLC. President of Shaw’s/Star Markets was Shane Sampson, who returned to the company after serving as SVP-operations for Giant Food. He also had served as a division president in the Intermountain and Florida divisions of Albertson’s Inc. Leading Acme Markets is Jim Perkins, who returned to Albertsons after serving as regional VP for Giant Food. He had begun his career at Albertsons in 1982.

William Emmons took the helm of Jewel-Osco, coming out of retirement. He began his career at Albertsons in 1971 and had served as president of the Southern Division for Albertson’s LLC. Albertson’s LLC and NAI are both operated by AB Acquisition Inc., led by CEO Bob Miller.

LLC still growing

In September of that year, Albertsons announced its agreement to purchase United Supermarkets, a Lubbock, Texasbased family-owned chain of 50 grocery stores; seven con-

See more key dates on page 50

I really try to instill in our leadership that if we give our employees more than dollars—trust and respect and responsibility and at the same time hold them accountable for their decisions—we see creativity come out of our associates that pays us back far more than the dollar paycheck would ever do.

If you gain a perspective from other’s people’s points of view on things to do right and things to do wrong. I’ve really enjoyed the board service I’ve done in the past where I’m giving back to the community. Albertsons, I think, is an outstanding community leader, whether it’s with our grocery stores or our distribution center locations.”

—Rick Bunnell, SVPDistribution/Supply Chain venience stores and 26 fuel centers under the United Express brand; two divisions—RC Taylor, a tobacco, candy and GM distributor, and its Praters commissary; and a subsidiary, Llano Logistics. United’s CEO, Robert Taylor, was given the president’s title, reporting to Bob Miller, CEO of Albertsons, who emphasized that United would maintain its own unique identity.

“The family and leadership team have done a tremendous job in establishing and perpetuating a remarkable service culture and commitment to fresh, quality foods throughout their stores, even as they’ve grown. They’ve also developed strong community programs that have engaged team members and given back tremendously to their Texas communities, just as More on page 50

Dole Fresh Fruit Company congratulates on their 75th anniversary. ®

© 2014. TM & ® Dole Food Company, Inc.

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www.dole.com

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A Shelby Special Report • AUGUST 2014

From page 49

•2006: Albertson’s Inc. is sold, its assets divided between Supervalu, CVS and a consortium of investors which formed Albertson’s LLC. Robert “Bob” Miller, who spent three decades with Albertsons to begin his career, is named CEO of Albertson’s LLC, which purchased stores in Northern California, Colorado, Utah, Nebraska, South Dakota, Arizona, New Mexico, Texas, Louisiana, Arkansas, Oklahoma and Florida.

•2013: Albertson’s LLC reverses the 2006 transaction and purchases Supervalu-owned Albertsons, ACME Markets, Jewel-Osco and Shaws.

With the purchase, Albertsons moves all Albertsons stores under one company and places the stores in the Midwest and East under New Albertson’s Inc. Albertsons purchases Lubbock, Texas-based United Supermarkets LLC, operating 50 stores under the United Supermarkets, Market Street and Amigos banners as well as seven convenience stores and 26 fuel centers.

•2014: Albertsons agrees to merge with Safeway Inc. in a deal that, if consummated later this year, would create the second-largest traditional grocery operator in the U.S.—and third largest overall—with more than 2,400 stores and more than a quarter of a million employees.

You can always find something more to do, and if you can’t, then help someone else. It was through helping send out annual reports one time that I became the head contact for all stockholder relations. It always led to something interesting when I was helping somebody else with just the mundane work.”

The companies say they will be able to offer lower prices and an enhanced shopping experience when combined. Robert Edwards, president and CEO of Pleasanton, Calif.-based Safeway, would become president and CEO of the combined company; Bob Miller would become executive chairman.

While the $9 billion deal was unanimously approved by the Safeway board, a class-action lawsuit has been filed on behalf of Safeway shareholders, and there is much speculation that stores will have to be divested in order for the deal to go through, perhaps by the fourth quarter of this year.

—Carol Wood, Senior Contact Administrator From page 41

our Albertsons stores do every day. Our team feels there is an exceptional opportunity to invest in and grow their brands,” Miller said. The transaction closed in December.

And in March 2014, the latest chapter in Albertsons’ storied history, the chain announced its intention to purchase Safeway and create a network of more than 2,400 stores under 16 different banners in 34 states and the District of Columbia.

I started with Albertsons in 1980 at the Salt Lake distribution center…Some of the best advice was back in the early ’80s when I became a procurement manager in Salt Lake, and at that particular time the business was run separately, distribution and retail. We had two P&Ls. So Pete Gustafson, who was VP of distribution at the time, told me, “John, you’re going to have to make a lot of tough decisions. Sometimes you might be in conflict. Just remember: Always do what’s right for retail and most of the time you’re going to make the right decision.”

—John Strong, VP-Procurement & Sourcing