Reading the Tea Leaves
The news of Sam Martin’s departure as CEO of the Great Atlantic & Pacific Tea Co. after 42 months is a strong indication that the well-known supermarket chain remains in dire straits. Add to that development an ominous report that other A&P executives have also exited A&P in recent weeks, coupled with clues that financial backer Yucaipa Cos. is distancing itself, and the long-term viability of the venerable Northeast regional grocer looks even grimmer.
Martin – who joined A&P in July 2010 from OfficeMax after replacing Ron Marshall, who lasted just six months in the role – has presided over a turbulent period characterized by continued declining sales, the closure or sale of nearly 100 stores, and A&P’s period under Chapter 11 bankruptcy protection (from December 2010 until March 2012).
Whether Martin jumped or was pushed from the helm makes little difference; the company must now figure out the best way forward without him. Even in its present disarray, it still has many advantages to draw on in this endeavor: favorable locations in densely populated markets; high name recognition among its various banners; and capable, dedicated people in its corporate offices, warehouses and front lines.
To say the company is in need of a rapid, realistic and decisive turnaround strategy would be a mild understatement, after nearly five decades of misguided performance. However, a cursory glance at A&P’s rate of turnover in its executive ranks through the years clearly illustrates that doing so is obviously easier said than done.
A few years ago, I interviewed Martin as part of a Store of the Month profile of a Super Fresh store that had opened in the underserved Philadelphia community of Northern Liberties. At the time, Martin, who had then occupied A&P’s CEO slot for about a year, was enthusiastic about the store and the opportunities to open other locations in food deserts within the chain’s footprint. In fact, he touted the Northern Liberties store as “a model of how that can work.”
Could ramped-up investment in such stores be one possible lifeline for A&P, rather than closing down locations in these communities, as the company did this past September in Camden, N.J., citing underperformance? Good intentions don’t always equal results, but in its battle for survival, A&P might need to reconsider its options, with an eye on consistency.