GMA IAR - Febraury 2008

The leading retailer in Australia has a name familiar to most Americans and an eye toward playing a similar pioneering role within the retail industry. But that is where the commonalities between Woolworths Ltd. and the original five-and-dime store operator in the U.S. end. Woolworths — which operates supermarkets, liquor stores, variety stores and electronic stores, with a dominant position in Australia and New Zealand — is entering an exciting phase in its history, looking to expand into new sectors and markets.

CEO and Group Managing Director,

Michael Luscombe

At the helm of this expansion is Michael Luscombe, who was appointed CEO in October 2006 following the retirement of Roger Corbett. The long-serving Luscombe has been at the retail chain for close to 30 years, serving in a variety of roles — working his way up from trainee through store management, merchandising, marketing and supply chain management, eventually rising to become head of the group’s supermarket division.

Luscombe has taken on an up-and-coming business. The company recently emerged as the winner in its fight with archrival Coles Group, and is enhancing the private label range within its existing core supermarket division, particularly at the premium end of the market, to boost profits and differentiate itself from rivals. During the past couple of years, Woolworths also has moved into new sectors, including hotels and gaming. Later this year, a Woolworths credit card is due to be launched as part of the group’s strategy to break further into financial services with mortgages and insurance products. The company is also known to be interested in entering the country’s regulated pharmaceutical sector, possibly through acquisition.

Woolworths is rolling out its

private-label ranges

Despite the highly concentrated nature of the Australian market, Luscombe still sees opportunities for the company to expand its domestic business. "There are plenty of retail businesses that are adjacent to our existing businesses that are opportunities for us to look at,” he said. “We have fantastic growth plans for our domestic market and there are still many, many opportunities in goods and services that we presently sell.”

Acquisitions, both at home and abroad, look to be a key part of Woolworths’ future agenda. “Of course, as well as that [organic growth] we maintain a constant vigilance on opportunities for acquisitions,” Luscombe said. “We have been very successful in acquiring businesses both strategic and bolt-on, and we continue to look for those opportunities.”

Woolworths is looking to complement its existing supermarkets in New Zealand with another acquisition.

In New Zealand, where it has operated since the 1980s, Woolworths is locked in a battle to acquire control of The Warehouse, which would boost its presence in the country and close the gap with market leader Foodstuffs. "Our foray into New Zealand is probably the first big learning experience in managing a business in another economy, although it's very close to our own economy here," explained Luscombe.

More challenging would be a venture into Asia. The company has already forged a relationship with Tata in India to supply the Croma electronics chain. Tata has revealed that the agreement could be extended to include other formats Woolworths operates in Australia.

However, Woolworths is unlikely to be rushed into the wrong deal. "We're not going to place Woolworths at risk by overextending in a particular area," Luscombe said. Indeed, if its acquisition aspirations fail to materialize, the retailer is planning to offer a massive share buyback this year.

Members of the Woolworths board of directors are confident that Luscombe is the right person to be at the helm during this critical period in the company’s history. They expressed particular satisfaction that he is a classic example of the Woolworths style, appointed from within, with significant retail experience across a wide spectrum of roles and areas, according to Chairman James Strong. “He is a very experienced retailer who knows the culture of our organization,” he said.

Industry Affairs News

Sales and Sales Promotion

Sales Committee Holds Meeting in Scottsdale

Members of the Sales Committee

tour Scottsdale Fresh & Easy

The GMA Sales Committee met Feb. 12-13 in Scottsdale, Ariz. At the meeting, hosted at Dial Corporation headquarters by Sales Committee Vice Chairman and Dial Senior Vice President of Sales Tracy VanBibber, the committee was briefed on one of its key projects for the year, the “2008 Customer and Channel Management Survey.” The survey, conducted biannually by McKinsey & Company, is expected to be completed by late spring. A session on the report findings

will be offered at the Executive Conference in June. The meeting concluded with a guided tour of the Scottsdale location of Fresh and Easy. Click here for a copy of the “2005 Customer and Channel Management Survey.”

Contact: Brain Lynch

Joint Industry Unsaleables Committee Kicks Off 2008 in Tampa

The Joint Industry Unsaleables Leadership Team that is co-managed by GMA and FMI met Jan. 30-31 in Tampa, Fla. The meeting agenda focused on the 2008 committee business plan. Project teams were formed around several committee initiatives, including the 2008 Joint Industry Unsaleables Management Conference. The 2008 conference will take place Sept. 22-23 at the Renaissance Vinoy in St. Petersburg, Fla.

Contact: Troy Beeler

2008 Unsaleables Study Underway

The Joint Industry Unsaleables Committee has begun work on its 2008 research study on unsaleables costs, root causes and best practices. The study will explore unsaleables costs throughout the supply chain and provide a fact-based point of view on actionable solutions to reduce costs and positively impact the bottom line.

The committee is seeking manufacturers and retailers to participate in this study. They will join other industry leaders in contributing information leading to findings that can be used to improve trading partner relationships in the industry. To participate or learn more, contact Troy Beeler.

Supply Chain and Technology

Direct Store Delivery Committee Gears Up For "Growth"

The Direct Store Delivery Committee met Feb. 5 at Coca-Cola’s offices in Atlanta to review its latest study, “Growth Through DSD,” which is due out this spring. “Growth Through DSD” examines driving joint value creation for manufacturers and retailers using the unique advantages of DSD, including the ability to sense and respond to shopper demand signals significantly faster than other routes to market. The committee, along with its project partners, AMR Research and Clarkston Consulting, will be presenting findings from this report at the IS/LD Conference; the session will take place March 31 at 2 p.m.

Contact: Jeanne Iglesias

IS/LD Conference Promotes Collaboration

This will be the third consecutive year GMA’s Information Systems, Logistics and Distribution Conference will co-locate with FMI’s Supply Chain Conference. Joint general session presentations will be offered on Monday and Wednesday mornings for attendees of both conferences.

In addition to presentations on sustainability and recall, IS/LD will showcase technology as the enabler to world-class supply chain and collaboration. The 2008 IS/LD program provides a “deep dive” into new ways of working together sparked by the proliferation of data driving enhanced collaboration between retailers and their supplier partners. At IS/LD, you will discover:

What data suppliers and retailers are sharing and how.
How suppliers and their retail partners are utilizing the data collaboratively and internally to eliminate disruptions in the supply chain, work consistently with the same information provided to all parties, and grow sales.

Please visit the IS/LD Web site and forward program information to personnel within your organization who would benefit from attending.

Contact: Jeanne Iglesias

Industry Performance

New Chief Financial Officer Share Group Being Formed

GMA is launching a new knowledge platform for chief financial officers that will take on initiatives to benchmark, analyze and advise on the financial state of the grocery and consumer packaged goods industry as well as examine trends. The Financial Share Group will:

Connect top industry CFOs and financial professionals and engage in open and constant dialogue regarding financial realities, trends and business challenges in an ever-changing economic landscape.

Explore ways the industry should adapt to accommodate changes in the marketplace and ensure continued fiscal success.

Collect and release pertinent industry financial data and analysis in a scheduled, easy-to-access manner.

Contact Brooke Weizemann for more information.

Financial Report To Cover Rising Commodity Costs Among Other Trends

In partnership with PricewaterhouseCoopers, LLP, work on the GMA Financial Performance Report is once again in progress. As in previous years, the twelfth issue will analyze the financial state of the industry and provide an in-depth look at operational and financial performance measures. Several key issues relevant to manufacturers will be examined in this year's version ranging from commodity cost increases to sustainability, tax implications for globalization and corporate transparency. Look for the report to be released in late spring.

Contact: Brooke Weizemann

The Industry Affairs News is sponsored by:

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GMA Leadership Profile

Leadership Profile: Kraft's R. Dale Brockwell

Current Position

Customer Vice President – Supply Chain, Kraft Foods.

This position is an executive-level supply chain lead for DSD and warehouse-delivered customer engagements. It has accountability for industry leadership, innovation, initiatives, customer development, and best practice benchmarking.

Industry Leadership

GMA – Charter Member, DSD Committee

GMA – Vice Chairperson, DSD Committee

GMA – Member, Logistics Committee

GMA – IS/LD Conference Planning Committee (2007)

GCI – Member, Global Commerce Initiative DSD Group

GCI – Past Chairperson, DSD Price Committee

GS1 – B2B Lead, DSD Industry Relations Team

Kraft Steering Committee – Transora DSD Project and RFID

Career Highlights

Brockwell began his career with Nabisco 32 years ago in Richmond, Va., as an operations manager trainee. He progressed through the ranks of logistics field management in North Carolina, Tennessee, Ohio and Georgia until he became senior director of DSD operations for Nabisco in East Hanover, N.J. In this position, he assumed responsibility for all DSD activities, including forecasting, downstream product supply, fleet, facility, labor, capital, strategy, productivity and customer supply chain collaboration.

Brockwell has managed his way through acquisitions, mergers and leveraged buyouts. He has experienced the transition from a stand-alone cookie and cracker company to Kohlberg Kravis Roberts & Co., R.J. Reynolds and Philip Morris (Altria), and is now a key member of the supply chain leadership at Kraft Foods.

Personal

“I grew up in a rural no-stoplight town in southeast Virginia called Lawrenceville.

I had one uncle that was chief of police of the town, another uncle that was sheriff of the county, and my Dad was justice of the peace. It was a safe place to live! I have fun telling people I was voted “Best Athlete” in our senior class. I rarely tell them there were only 72 people in the class and the majority were girls.

“Following college I married Mary, my high school sweetheart, and we have been happily married for 31 years. She is an inactive registered nurse but a very busy homemaker and charity worker. We have three great boys: Roger graduated from the University of Georgia and is employed by a consulting company working on a project at a CPG company; Robert is a manager with a grocery retailer while continuing his education; and Ryan is a junior in high school, loving life, sports and girls. We are blessed.

“I am on the road a lot but always have found time to coach baseball, basketball and soccer with the boys. I run, lift weights and compete on several tennis teams.”

Education

University of Richmond – Bachelor of Science in Business Administration

Tennessee State University – Master’s in Business Administration

First Job

“When you grow up in the country, outdoor jobs are always the first. Cutting grass, working in the garden, pulling tobacco and getting up hay — I did them all. But working at A&P was the first real job for me and turned out to be an experience that is still relevant today. My Dad was the store manager, so I remember things like, ‘These boxes won’t sell in the backroom.’ ‘Get that driver checked in, he is busy too!’ ‘Be sure you speak to the shoppers and tell them thank you.’”

Most Memorable Event

“I spent the afternoon with Mickey Mantle during a rained-out golf charity event. He was there as a guest celebrity as a draw for the tournament. Play was stopped after two holes, and he made himself available to the group. We bought two dozen balls; he happily signed them and shot the breeze with us like we were just one of the guys in the locker room. Quite the thrill!”

How Did You Reach Where You Are Today?

“Church, family, friends and employment with a great company.

“Mom, Dad, and I are all deacons at a Baptist church. One rule that was taught early and applies every day is, “Do unto others as you would have them do unto you.” When I started with Nabisco, it was natural to respect and appreciate others for their contributions.

“Our family is deeply rooted in tradition. Mary’s parents only live a mile from mine. We have rarely missed a Christmas ‘at home’ and have been vacationing in Myrtle Beach, S.C., with approximately 20 family members for over 30 years. Mary and the boys understand the travel required in my job, and I have their constant support.

“Our friend network is extensive and is a fantastic source of fun and entertainment. We have groups we vacation with, play tennis with, coach kids with, go to church with and work with. We provide each other part of the balance needed in the demanding world we live in.

“And last but not least, the job. Nabisco and now Kraft have been unbelievably great. Starting with the people, best in the business! Personally, I have managed the business from the inside and have advanced to spending most of my time working with customers and industry groups.

“Most importantly, I am still having fun!”

Datebook

Mar. 27 - 28	Chairman's Advisory Council Meeting Hilton Cincinnati Netherlands Plaza Cincinnati, OH Contact: Diana Randazzo
Mar. 30- Apr. 2	Information Systems and Logistics Distribution (IS/LD) Conference Rancho Mirage (Palm Springs), CA Contact: Jeanne Iglesias, Liz Cookson
May 5	Industry Affairs Council Meeting Four Seasons Hotel Las Vegas Las Vegas, NV Contact: Diana Randazzo
June 6 - 8	GMA Executive Conference The Greenbrier White Sulphur Springs, WV Contact: Mary Olsen
July 9 - 10	Consumer Confidence Summit Washington, DC Contact: Stephen Sibert

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