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Under new owners and new management, Tops Markets works to regain momentum

BY Jim Frederick

ROCHESTER, N.Y. With its purchase this week by a new, deep-pockets owner and the return of a popular and energetic chief executive, Tops Markets may finally be emerging from a painful era of cutbacks and financial scandal as it works to regain momentum in western New York State and Pennsylvania.

Morgan Stanley Private Equity announced early this week it had finalized its purchase of the 71-store supermarket and food/drug combo-store chain from Royal Ahold, for a price of $310 million. Morgan Stanley executives praised Tops as “a well regarded grocer with attractive long-term performance, strong employee relationships and a loyal customer base,” and announced plans to reinvest in the company with an aggressive store-remodeling effort and the hiring of dozens of headquarters staff to beef up merchandising, marketing, information technology and other areas critical to improving customer satisfaction. Morgan Stanley also revealed plans to eventually consolidate those central-office functions in the Buffalo, N.Y. area.

In another key move, Morgan Stanley lured Frank Curci back to Tops as chief executive officer, four years after Curci left Ahold USA amid a series of financial scandals that roiled the management ranks and spurred a company-wide retrenchment. Although Curci himself was not implicated, he accepted oversight responsibility for the problems at Tops and agreed to leave Ahold.

His return appears to be a welcome development among Tops’ employees and managers, according to a report in The Buffalo News. David Smoot, managing director of Morgan Stanley Private Equity, praised Curci for his “vast knowledge of the supermarket industry and his familiarity with the Tops organization.

“We look forward to having Frank as a member of the Board and we are confident he will lead a smooth and successful transition,” Smoot added.

The sale by Ahold of its Tops division caps a long period of retrenchment for the chain, long known as a leader in supermarket and pharmacy retailing in upstate and western New York, Pennsylvania and northeast Ohio. Over the past three years, Tops has shrunk from a peak store count of more than 150 supermarkets to its current total of 71 company-owned stores and five franchised units. It has also severed its ties with the northeast Ohio region by selling its 46 stores in Cleveland and nearby markets to Giant Eagle, Rego’s Fresh Market, and other local operators. Since mid-2005, the chain has also exited eastern New York State with sales of stores to Price Chopper, C&S Wholesale Grocers and other rivals.

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Issues Summit targets retailer-supplier relationship

BY Antoinette Alexander

NEW YORK Key executives from several leading suppliers and retailers gathered here on Tuesday to attend Drug Store News’ Ninth Annual Industry Issues Summit.

The lively supplier-retailer panel discussions—which centered on industry issues and challenges among retailers and suppliers and how to overcome those challenges—were held in Manhattan’s Flatotel.

The event, which attracted more than 100 attendees, kicked off with a keynote presentation by Peter Hoyt, executive director and founder of the In-Store Marketing Institute. His presentation centered on the progress to-date of the ongoing Pioneering Research for an In-Store Metric project and some initial top-line findings.

The P.R.I.S.M. Project is an initiative to establish a global metric for evaluating the in-store environment as a marketing medium. It allows in-store traffic to be measured by product category, such as in the cereal aisle of a food retailer or in the hair care aisle of a drug store.

Top-line findings have, for example, unearthed some potentially untapped opportunities with regard to adjacencies, but Hoyt said the P.R.I.S.M. Consortium is still wading through the plethora of data. “How we are going to harness it so it will be of greatest use to everybody is still being determined,” he added.

Following Hoyt’s presentation, panelists gathered to discuss, among other things, the challenges and opportunities facing retailers and suppliers and how the two groups can better work together to drive traffic, boost sales, enhance shopper loyalty and enhance the overall shopping experience.

Retail panelists included Chuck Fehlig, vice president of health and OTC for Wal-Mart; Todd Vasos, executive vice president of marketing for Longs Drug Stores; David D’Arezzo, senior vice president and chief marketing officer for Duane Reade; Dan Funk, vice president of GM and HBC for center store at Supervalu; Jerry Kuske, executive vice president and chief marketing officer for Katz Group; Bryan Shirtliff, senior vice president of category management for Rite Aid; and Charles Burnett, senior vice president of Costco.

During the panel discussion, retailers and suppliers both agreed that innovation and data is key to bolstering the bottom line, and pointed to health and wellness, skin care and natural/organic as some high-growth areas going into 2008.

“Obviously it is going to be a big year for allergies on the front end. As we look beyond 2008 … the baby boomer category is going to continue to do well whether you look at diabetes, home medical equipment, incontinence or reading glasses. Those type categories will continue to grow,” Fehlig told attendees. “Long-term, I think it is going to depend on what happens with some of the prescription-to-OTC switches that are on the horizon. If those come to fruition we may not only have growth in existing categories but may have new categories.”

Added Vasos, “I think the whole natural and organic side still has a lot of legs to it; as a matter of fact, it not only has a lot of legs but is now becoming more mainstream. As that happens, the consumer is going to be looking to both manufacturers and retailers to understand what natural is all about. It is really starting to blur a little from the consumer standpoint. … When you say natural today it is not only products but the buildings that we put together, the paper that we use, the packaging and I think this has a lot of legs.”

Panelists also discussed, among other topics, the appropriate amount of time for chains when it comes to determining the success of a new product introduction as some industry observers have argued that retailers don’t give such products enough time on shelf. However, judging by the responses, it remains clear that there is no easy cookie-cutter response. There are many variables that much be taken into consideration such as whether it is a me-too item, a line extension, the ad support, the purchase cycle of the category, etc.

“I think the thing as a retailer that we can do better is everybody is about being first to market and I think we have to be more about being best to market. How do we sustain that frequency and how do we sustain that level so it is not just a one peak wonder and try to elongate that curve when a product reaches its maturity in terms of its lifecycle?” said Shirtliff.

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Medication safety effort for seniors earns Aurora national recognition

BY DSN STAFF

MILWAUKEE A new and unusual patient safety initiative, aimed at improving medication safety in the medical clinic, has won Aurora Health Care national recognition from the Institute for Safe Medication Practices.

The Institute selected Aurora’s Walworth County Patient Safety Council for a Cheers Award, which honors individuals, organizations and companies that have set a standard of excellence in the prevention of medication errors and adverse drug events.

Aurora’s WCPSC represents a new approach to the issue of medication safety. Patients and a safety expert from Midwest Airlines joined with Aurora physicians and pharmacists to improve medication safety for local senior citizens through a grant from the U.S. Agency for Healthcare Research and Quality. The WCPSC is believed to be the first model that brought patients and providers together to develop strategies for improving medication safety for seniors in their community.

“A key element of our commitment to enhance safety is the involvement of the community, which has helped us to approach our initiatives from the patient’s perspective,” stated Kathryn Leonhardt, Aurora’s patient safety officer and medical director of care management.

“From the initial design stages to the implementation of the tools, we applied a grassroots, public health approach to build this program as a community effort,” Leonhardt said. “Patients partnered with us to help design and disseminate tools and educate the community to work collaboratively with their physician to ensure the medical record accurately reflected the medications a patient is taking.”

The efforts included distribution of medication bags and lists to seniors in the county. There were ongoing presentations on improving communications between patients and their physician and care team. The initial focus was on the five Aurora Clinics in Walworth County. The effort later was extended to community groups. Through the initiative, the accuracy of medication lists in the doctor’s office improved from 69 percent to 81 percent.

Work is under way to replicate the process throughout Aurora. “Consumers Advancing Patient Safety believes that the perspective, the wisdom and the will of patients and families in partnership with providers from around the world provides the most powerful contribution to ensuring a truly authentic and sustainable transformation in patient safety,” stated Susan Sheridan, CAPS co-founder and president. “We applaud Aurora for recognizing the value of partnering with consumers in this medication safety project.”

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