New CEO for Sobeys

On January 12 Empire announced that Michael Medline had been appointed President and Chief Executive Officer of Empire and its wholly owned subsidiary Sobeys. He will replace Marc Poulin who departed in July of 2016. This is an interesting choice to lead one of Canada’s largest food distributors.

 

Mr. Medline has a background in retail however it is not in the food industry. As the former CEO of Canadian Tire, he understands the Canadian market and his work with Canadian Tire dealers will be an asset working with franchise stores. Food is not general merchandise as many retailers have discovered, so there will be some learning required.

 

There is no doubt he will have to hit the ground running to address some of the issues that have been having real negative impact on Sobeys’ results.

 

He will need to set the overall strategy for the business and ensure the people at all levels are in line with the overall direction. Sobeys Better Food for All started with a bang and a lot of promotion including Jamie Oliver on TV and solid point-of-sale at store level. It has been a challenge to deliver sales under this umbrella and the current Sobeys’ retail pricing. Do they stay on this path or do they try to carve out a different niche in the market?

 

Western Canada was such a huge opportunity for Sobeys when they made the Safeway purchase but it has proved to be a bigger challenge than ever imagined. The retail network still needs a lot of work, which requires capital and they are still trying to re-engage Safeway shoppers who departed because of inventory issues, their disappointment with the Compliments brand and everyday pricing. Will the retail network in western Canada be re-energized or do they look for someone to take it off their hands?

 

The previous leadership was moving to more national programs, which does deliver lower operating costs in the long term. One of Sobeys’ strengths was their regional network and if they can use that strength to deliver sales and margin with the right products in the right market, they can differentiate the offering. Will Sobeys remain the only national retailer with strong regional presence or move to the same structure as Loblaw and Walmart?

 

These are all important questions for the new leadership at Sobeys to answer. Producers in Canada need a strong Sobeys to ensure the company can move products and compete

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Friday, January 13, 2017
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