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A&P takes key step toward completing financial restructuring

BY Antoinette Alexander

MONTVALE, N.J. — Bankrupt grocer A&P has announced that the Locals of the United Food and Commercial Workers International Union have ratified modifications to the collective bargaining agreements with the company — a key step toward completing the company’s financial restructuring.

“This agreement with our labor unions marks a significant milestone in our turnaround efforts,” stated Sam Martin, A&P’s president and CEO. “I want to thank our associates for their steadfast commitment to serving our customers throughout this process. As we position the company to emerge from Chapter 11 early next year with a much stronger financial and operating foundation, we intend to continue making operational and service improvements to further enhance the value and in-store experience we provide to our customers.”

The agreement with A&P’s labor unions is consistent with and contemplated by the previously announced joint financing commitment from The Yucaipa Cos., Mount Kellett and investment funds managed by Goldman Sachs Asset Management. The bankruptcy court granted approval of the investment agreement on Nov. 14, contingent upon successful resolution of the company’s negotiations with its labor unions.

A&P and its subsidiaries filed Chapter 11 in December 2010.

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With Grant Pill assuming new responsibilities at CVS, 2011 shapes up to be big year for company

BY Antoinette Alexander

WHAT IT MEANS AND WHY IT’S IMPORTANT — The year 2011 has shaped up to be quite the year for CVS Caremark, with Larry Merlo taking the helm following the retirement of Tom Ryan, longtime CVS/pharmacy executive Mike Bloom resigning and Judy Sansone assuming responsibility for the merchandising organization at CVS/pharmacy. Well, the year isn’t over yet, and Grant Pill — who is regarded as a bright, young merchant — now has responsibility for one of the most critical areas of CVS’ business.

(THE NEWS: CVS Caremark’s Jim Trappani steps down. For the full story, click here)

Pill has taken on the role of VP merchandising for OTC healthcare and store brands. In light of Pill’s new responsibilities, industry members can expect to see some innovation out of this group.

Meanwhile, Jim Trappani, VP merchandising for health care and multicultural, has decided to step down, and there’s been no official announcement as of yet as to where Trappani will land next. Could he land at a major dollar store chain like many other drug executives?

In recent years, there’s been an influx of drug executives flocking to the dollar store channel. It’s only been about a month since Bloom — Trappani’s former boss at CVS — left CVS to take the president and COO position at Family Dollar Stores. Meanwhile, several industry veterans have landed at Dollar General, such as Rick Dreiling, who serves as chairman and CEO, and former Longs Drug Store executives Todd Vasos and John Flanigan. Given the trend, it wouldn¹t be unimaginable for Trappani to follow suit, but for now, the industry will have to wait and see.

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Paper cards retain value in digital age

BY Barbara White-Sax

Texting and social media have not killed the traditional greeting card business. “Facebook has caused most people to acknowledge more birthdays than ever before, but they aren’t sending fewer cards as a result,” said Susan January, president of the Greeting Card Association and VP of Leanin’ Tree Cards.

“The actual paper card still holds significant emotional value — especially for highly personal, emotional card-sending occasions, such as condolences/sympathy, weddings, new babies and milestone birthdays and anniversaries,” January said. In fact, industry statistics show that 90% of U.S. households purchase at least one card a year.

Enhancements, such as chips that allow cards to play a song or record a message, continue to provide freshness to the category. Yet while sales of greeting cards in drug stores are projected to be steady for the next few years, rising postal costs and manufacturing costs are forcing suppliers to find ways to keep a lid on retail pricing.

Suzanne Haines, VP marketing for Designer Greetings, said the company’s 50%-off program “can transform under-performing full-price greeting card departments into high-traffic departments.” “Stores that need a major point of differentiation have used the program to drive traffic and create a card department destination,” she said. “The strategy increases traffic and category sales while reducing on-hand inventory dollars.” Designer Greetings also offers a double-value program, which allows retailers to price higher-end cards between 99 cents and $1.99.

Manufacturers are quick to point out that the category can’t exist solely on value-priced merchandise. “Lowest price is not necessarily the only thing people value when shopping for products that help nurture their relationships,” said Sabrina Wiewel, Hallmark’s general manager for the drug channel.

Dave Phipps, a spokesman for Avanti Press, said the company has been driving higher profits with premium collections priced at $3.99. The average price point of Avanti cards is $2.99.

The company’s Motion line, which features lenticular 3-D effects, and its Standouts line, featuring dimensional photographic interiors, have been very successful.

 

 

The article above is part of the DSN Category Review Series. For the complete Greeting Cards Buy-In Report, click here.

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