Vol. 1 No. 5

Retailer Profile

In This Issue:  

Retailer Profile: Baugur’s
Jón Ásgeir Jóhannesson

GMA/FPA Profile:
Grant J. LaMontagne

Sign Up for MSM 

  Conference

Sustainability Summit

  Outlined

New Coupon Coding

  Web Discussion

IA Committee Chairs to

  Present at IAC

Deadline for Global
  Scorecard Participation

Mark Calendars Now

  For ISLD Conference

New Study Explores

  Out-of-Stocks

Brookover Appointed at 

  GMA/FPA

Member Services:

  Hotline/
  Recall Numbers

Datebook

GMA/FPA Industry Affairs Group:

Troy J. Beeler
Manager

Sales & Sales Promotion

Jonathan Downey

Coordinator

Sales & Sales Promotion
  
Jeanne Iglesias
Director
Supply Chain & Technology
 
Brian Lynch
Director
Sales & Sales Promotion
 
Stephen A. Sibert
Senior Vice President
Industry Affairs
 
Pam Stegeman
Vice President
Supply Chain & Technology

Industry Affairs

Review Team:

Tim Cooke

Business Development Director &

Member Of Board

Planet Retail, London

Jo Anne Sharlach

President & CEO

Singley Associates

‘Invasion of the New Vikings’ – Baugur Expands

   In Food and Fashion in 26 Countries

 Baugur: At a Glance

 Group Sales (Inc VAT) 2006

U.S. $16,099 mn.

 Net Sales (Ex VAT) 2006

U.S. $14,747 mn.

 Operating Countries:

26

 Number of Stores

5,796

 Key Formats

Cash and carries, department stores, clothing retailers, supermarkets, convenience stores

By Planet Retail

The story of Jón Ásgeir Jóhannesson, born in 1968, is as colourful as the numerous fashion brands his company has acquired over the past few years. 

Baugur’s retail empire emerged in 1989 when Jóhannesson, together with his father, opened the first Bonus discount grocery store in Iceland. In 1998, Bonus merged with Hagkaup, a leading Icelandic retailer with a network of grocery and department stores as well as owning the franchise rights to international fashion brands such as Miss Selfridge, Top Shop and Zara.

Bolstered by the merger and its delisting in 2003, Baugur grew both its Icelandic business and started gearing up for rapid expansion abroad, initially focussed on the UK. In 2002, it acquired fashion chain Oasis, world-famous toy store brand Hamleys and specialist food chain Julian Graves. These takeovers provided the springboard for establishing a specialist and fashion retail network. However, on its path to new shores, the Icelandic invasion of the U.K. ran into some trouble along the way.

With an eye for acquiring leading fashion brands, in 2002 Jóhannesson also attempted to take over Arcadia, the UK’s second largest fashion chain. The takeover was proceeding well, with a dynamic consortium backing Baugur’s bid. However, Baugur was forced to withdraw following a raid by Icelandic police on the company’s headquarters investigating allegations of fraud. Nevertheless, Jóhannesson managed to walk away with a profit of U.S. $75 million by selling his shares to the victor, retail tycoon Phillip Green.

This was not the first and last occasion when Baugur’s investment attempts were derailed by litigation, with both the company and Jóhannesson in person accused of embezzlement and fraud.

In 2003, a U.S. court heard how a former business partner, Jon Gerald Sullenberger, had been asked by Jóhannesson to fake a U.S. $19,260 bill for escort girls at a party he hosted on board his jointly owned 62-foot Sunseeker yacht, Thee Viking, in Miami in 2001. Allegedly, when Jóhannesson attempted to pay the bill with a company credit card, the payment failed, and Sullenberger was asked to pay for it instead. As a public company listed on the Iceland Stock Exchange, dealings of this nature would have had serious implications.

More charges relating to financial wrongdoing followed. In June 2005, Jóhannesson was charged with 40 counts of embezzlement and fraud. Over the course of the next nine months, the count was first dropped to eight and then finally dismissed by the courts. The case collapsed when the court in Iceland stated that the brunt of the charges and the motivation of the prosecution’s key witness seemed to be more a case of a personal grudge from a former business partner than anything else. This key witness happened to be Jon Sullenberger.

Unfortunately, the company’s reputation was restored too late for its acquisition of UK supermarket retailer Somerfield in 2005. These charges came at a time when Baugur was making effective advances towards the chain.  However, its hopes were dashed with Baugur being asked to withdraw from the bidding process, following the allegations. (Somerfield was eventually sold to private equity consortium, Violet Acquisitions.)

Therefore, over the course of four years, two of Baugur’s major attempts to acquire retailers were thwarted by claims made against the company. Nevertheless, Baugur consoled itself with the successful acquisition of the U.K.’s Big Food Group in December 2004, adding serious weight to its U.K. market share and bringing on board grocery chain Iceland and several other major wholesale brands.

Despite claims to the contrary, in May 2007, a Reykjavik court found Jóhannesson guilty of false accounting relating to a credit invoice for U.S. $589,890 for which he was given a three-month suspended prison sentence.  

Baugur’s collection of fashion brands is not simply a strategy to attain market leadership and create global synergies in an important retail sector. Jóhannesson’s personal interest in high fashion drives his pursuit of lucrative investments in the industry.

With Baugur well established and growing, Jóhannesson has now joined the ranks of other philanthropist entrepreneurs who are leading the way to help Africa out of poverty. Similar to the likes of U2 frontman Bono and his campaign for the reduction of poverty in Africa, Jóhannesson recently joined Scottish billionaire Sir Tom Hunter on a mission to Rwanda to look into development projects. Baugur has pledged to donate U.S. $1.98 million a year to charitable causes.

This year, Baugur has been associated with numerous buyouts, particularly linked to U.K. retailers, namely Woolworths and Debenhams. In some cases, this has only been strategic investments, while in others – such as department store chain House of Fraser – the initial shareholding led to a takeover of the company. Recently, Baugur has announced further international ambitions, declaring an interest in growth markets such as India and Russia, while also acquiring an 8 percent stake in U.S. department store chain Saks.

Baugur’s course is set – the invasion of the new Vikings, armed with cash and backed by an army of investment, consultancy and asset management companies, has made a major impact in the U.K., and will be witnessed elsewhere too. This time, they won’t create havoc, but fashionable clothes and food. How times have changed.

List of Key Baugur Acquisitions

        Source: Planet Retail Ltd

Industry Affairs News

Sales and Sales Promotion
Not too Late to Sign Up for Exciting MSM Conference
Sign up today to join the more than 100 manufacturers, more than two dozen retailers, numerous industry thought leaders, academics and more at the Merchandising, Sales and Marketing (MSM) Conference Sept. 30 to Oct. 2 in Colorado Springs.

Hear Kroger Vice President Ken Feno and Accenture’s Jim Coleman address a general session on “Winning With Analytics” or how to take data from the collecting/storage functions of the past and harness it to build high performance product positioning and competitive advantage.

Giant Eagle’s Brian Ferrier and Booz Allen Hamilton’s Paul Leinwand present a session examining opportunities to drive sales by reducing complexity for shoppers at the shelf.

Among the many not-to-be-missed sessions are keynotes by Duncan MacNaughton (executive vice president of merchandising and marketing at SUPERVALU INC) and a joint address from Wal-Mart Canada Corp. executives Les Mann (vice president and general merchandise manager of food and consumables) and Don Swann (vice president of operations and special projects).

Learn what retail trends the next five years will bring from supermarket guru Phil Lempert, Bryan Gildenberg (chief knowledge officer, Management Ventures Inc.), Bryan Roberts (head of research, Planet Retail Ltd.) and Dan Stanek (executive vice president of TNS Retail Forward).

Join in the opportunities to gain valuable insights from a world-class program and to experience unparalleled networking opportunities. Sign up today for the MSM conference at the MSM Web site.
Contact: Brian Lynch or Cindy Baker
 
 

Environmental Sustainability
Environmental Sustainability Summit Based on Three Principals
GMA/FPA’s Environmental Sustainability Summit Jan. 17-18 has three principal goals, according to Senior Vice President for Industry Affairs Stephen Sibert. They are:

• Leadership: Demonstrate that the food and consumer packaged goods industry are leaders on sustainability.

• Partnership: Provide the industry opportunities for partnership with non-government organizations, industry suppliers and academia.

• Toolbox: Give companies a set of guidelines and metrics for building their own environmental sustainability programs.

The first-of-its-kind meeting will be held at The Ritz-Carlton in Washington, D.C. with group-rate reservations available until Dec. 27. The first day will feature a blue-ribbon panel of member company CEOs who are pioneers in the sustainability field. The panel will be hosted by Peter Seligmann, chairman of Conservation International. Additional speaker and program announcements will follow in the Review in coming months.

Also watch for an upcoming issue of the Review that will outline the extensive GMA/FPA environmental sustainability initiative, including programs, players and timetables.
Contact: Stephen Sibert and Liz Cookson

Sales and Sales Promotion
New Coupon Coding to be Topic of Web Discussion
Join the webinar discussion Oct. 9 on the upcoming new coupon coding and how companies can implement the GS1 DataBar symbol. Joint Industry Coupon Committee Co-Chairs Don King (associate director, advertising services, The Procter & Gamble Company) and Alan Williams (vice president, applications development, Ahold Information Services, Ahold USA Inc.) lead the discussion.

On Oct. 9, dial toll-free 1.877.864.7187 for the 90-minute session beginning at 11 a.m. (EDT). Participant code: *7466119*. The Web discussion is hosted by GMA/FPA, FMI and GS1.
Contact: Troy Beeler

Committee Chairs to Present at Industry Affairs Council Meeting
The 2008 work plans for all the IA committees will be presented at the upcoming Industry Affairs Council’s (IAC) meeting Oct. 30-31 at Chicago’s Fairmont Hotel, according to Senior Vice President of Industry Affairs Stephen Sibert.

The meeting kicks off with a reception and dinner Oct. 30th, with work sessions on Oct. 31 from 8 a.m. to 3 p.m.

IAC Chair Rick Wolford (chairman, president and CEO, Del Monte Foods Company) will lead the reports by the following committee chairs:

• Direct Store Delivery: Co-Chairs Ann Dozier (vice president, strategic industry initiatives, The Coca-Cola Company) and Dale Brockwell (_______, Kraft Foods Inc.).

• Industry Development Team: Thomas Joyce (_____, The Hershey Company).

• Information Systems: Marc Brown (vice president and CIO, Del Monte Foods Company).

• Joint Industry Coupon Committee: Co-Chairs: Donald King (associate director, advertising services, The Procter & Gamble Company) and Alan Williams (vice president, applications development, Ahold Information Services, Ahold USA Inc.).

• Joint Industry Unsaleables Leadership Team: Co-Chairs: Laura Trappe (manager of unsaleables/liquidations, Unilever) and George Thrower (reclamation coordinator, Harris Teeter Inc.).

• Logistics Committee: Craig Hall (COO, Celebration Foods, Carvel Corporation).

• Sales Committee: Grant LaMontagne (vice president, sales, The Clorox Company).

• Sales Agency Committees: Ben Fischer (president, sales agency, CROSSMARK).

Contact: Diana Randazzo

Supply Chain and Technology
Participate in Global Scorecard Survey by Sept. 30
Join the industry effort to measure and improve collective supply chain performance: Complete the GCI global scorecard by Sept. 30 and assist the industry in determining how it is implementing global standards, the processes these standards support, and the effectiveness of these processes. Last year, 893 scorecards were submitted from companies with combined revenues of more than $976 billion. Visit www.globalscorecard.net and click on the GC1 compliance survey logo.
Contact: Jeanne Iglesias

Mark Calendars for ISLD Conference Mar. 31-Apr. 2
The annual Information Systems, Logistics and Distribution Conference will be held at the Westin Mission Hills Resort and Spa in Rancho Mirage (Palm Springs), Calif., Mar. 31-Apr. 2. According to event coordinator Jeanne Iglesias, the conference theme is: ISLD Examines Technology as the Enabler to World-Class Supply Chain Collaboration.
Contact: Jeanne Iglesias

New GMA/FPA Study Offers Guide to Cutting Out-of-Stocks
Retailers and their manufacturer trading partners – especially direct-store-delivery manufacturers – can sustain out-of-stocks reductions well below the current industry average of 8.3 percent, according to a new comprehensive guide to out-of-stocks (OOS) in the food and consumer packaged goods industry.

Delineating between store OOS and shelf OOS, the just-released report outlines three basic approaches to measuring OOS, examines seven root causes for OOS, and provides a flexible approach and workable plan on ways to cut OOS in your company.

Also detailed is the relationship of volume/velocity to out-of-stock rates, noting that higher volume items have proportionally larger OOS sales losses. Currently, according to the report, in the average large grocery store on an average day, 75 percent or more of items do not sell at all, and on the busiest day, 65 percent or more of items do not sell at all. The classic 80/20 rule applies for item sales – 20 percent of a store’s SKUs comprise 80 percent of total store sales on an average week.

The guide will be available shortly on the GMA/FPA Web site.
Contact: Pam Stegeman
 
 

Association Personnel
Brookover Appointed Membership/Meetings VP
Patrick Brookover was named vice president for membership and meeting services for GMA/FPA last month. A veteran of many years in association management positions – most recently with the American Council for Engineering Companies – Brookover’s responsibilities include membership recruitment, engagement and retention, plus marketing and sales of events and sponsorships.
 

Jill Johnson, formerly of the IA staff, has been moved to Brookover’s department, where she is assigned to both general and associate membership functions.

GMA/FPA Leadership Profile

GMA/FPA Leadership Profile: Grant J. LaMontagne

Current Position

Vice President, Sales, The Clorox Company. LaMontagne is responsible for Clorox’s company-wide customer organization and approximately $5 billion in annual sales.

Industry Leadership

GMA Sales Committee chair since October 2004, and
newly-appointed to CIES’s U.S. Advisory Board.

Career Highlights

LaMontagne has essentially grown up with Clorox, joining the company as a district sales manager in New England in 1980, nearly two years after graduating from college. Over the course of his career, he has held almost every sales position at Clorox and had the opportunity to sell most of the company’s brands firsthand. As sales leader for the past three years, LaMontagne has driven primary focus on building multi-functional capabilities at the point of customer interface and driving category growth.

Personal

Grant lives with his wife of 28 years, Judy, in Moraga, CA. They have two children – Laurel, a junior at Amherst College and Ryan, a freshman at Boston College. He’s an avid downhill skier, greatly enjoys photography and collecting a variety of artworks from old masters to contemporary pieces. Feel free to talk sports with LaMontagne – he’s a loyal Patriots, Red Sox and NASCAR fan and closely follows European soccer.

Education

BS, Finance, University of Massachusetts, 1978

First Job

At the tender age of 13 (and he constantly brings this one up with his kids…) Grant looked old enough to get his first summer job – working in the tobacco fields in Western Massachusetts. Don’t ask him about the wisdom of that little fib (leisure does wear better than hard labor at 13), but that and subsequent tough, labor-intensive summer jobs did help establish a solid work ethic and a strong sense and appreciation of how the real world works.

How’d You Reach Where You Are Today?

“I bring a lot of common sense and passion to my job, and I make sure it’s infectious. I do that by talking to people, a lot, about their strengths and opportunity areas, their careers, and what they’re looking to get from their Clorox experience. True organizational growth comes from a focus on growing individuals, skills and experiences; you can’t grow the organization without growing the individuals. Developing a reputation for growing people creates real momentum and energy in the organization. Knowing that there’s opportunity for personal and professional growth – knowing that your managers are interested and invested in your growth – creates high energy in the organization. During my career at Clorox, I have strived to surround myself with bright, high-energy people while I work with them to develop the strategy and tools they need for excellent execution. The people I have in my organization are second to none in the industry, and they make the place hum.

“It’s critically important for someone at my level in an organization to keep a finger on the pulse of the industry. I need a wide and varied perspective on what’s happening, what’s changing, what’s working (and what’s not) in our environment. Some of that comes through trade associations and consultant feedback, but the bulk of it comes from conversations with people across the multi-functional Clorox organization and in customer organizations. We could have a strategy that sounds great in theory, but if it’s out of alignment with what’s really going on in the marketplace, it’s not going to be effective.

“The influx of technology has a significant and fast-changing impact on our customers and the way we do business. The need is greater than ever for leaders to understand how new opportunities may present themselves. The organization has to look within as well as outside to understand where best practice exists and how it can be integrated into the organization. Technology continues to allow us to better understand our shoppers and how, through collaboration, Clorox and our customers can work together to best meet our consumers’ needs.

“In my book, sales is a simple equation: the right people + the right strategy + excellent execution = success. The people I have in my organization are second to none in the industry. They’re bright, motivated, driven. They’re a fun, creative group, and they make every day a worthwhile endeavor. We continue to work to develop a laser focus through high-quality metrics to drive execution, and we keep our focus on the few choices that are going to make a real difference in our business.”

Member Serives

Hotline: Recall/Crisis Management Available to Members
Hotline help is at hand 24/7 to GMA/FPA member companies with recall or other urgent crisis management requests. The numbers for members to call are:
Dr. Craig Henry, 202.639.5983 or chennry@fpa-food.org

Jenny Scott, 202.639.5985 or jscott@fpa-food.org

Lloyd Hontz, 202.639.5924 or lhontz@fpa-food.org

Dr. Jeffrey Barach, 202.639.5955 or jbarach@fpa-food.org

Dr. Allen Matthys, 202.639.5960 or amatthys@fpa-food.org

Datebook

Sept. 30-

   Oct. 2           Merchandising, Sales and Marketing Conference

                        The Broadmoor

                        Colorado Springs, Colorado

                        Contact: Brian Lynch, Cindy Baker

Oct. 30-31      Industry Affiars Council Dinner and Meeting

                       The Fairmont Hotel

                       Chicago, Illinois

                       Contact: Stephen Sibert, Diana Randazzo

Jan. 17-18      

         2008      Environmental Sustainability Summit

                       Contact: Stephen Sibert, Liz Cookson

Mar. 31-
Apr. 2          Information Systems, Logistics, Distribution (ISLD)        

                    Conference
                    Rancho Mirage, California
                    Contact: Jeanne Iglesias, Liz Cookson

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@ Copyright 2007 by GMA/FPA, 1350 I Street N.W. #300, Washington, D.C. 20005. All rights reserved. Some content and copyright for specific information are provided and owned by Planet Retail, a leading provider of grocery retail intelligence— www.planetretail.net.

GMA/FPA enables its member companies to address the public policy, scientific affairs, product safety and industry issues that impact their ability to create value with and for their customers by advancing their brands and products in a fashion that responsibly improves the quality of consumer lives.