Dive Brief:
- Albertsons Cos., which two weeks ago announced the acquisition of more than 2,500 Rite Aid stores, yesterday named Jim Donald as its president and chief operating officer, according to a press release.
- Donald will be responsible for Albertsons’ existing store base of over 2,300 units. Following the completion of the Rite Aid deal, he will be oversee the integration of the two chains. He replaces Wayne Denningham, who retired earlier this year. John Standley, Rite Aid's CEO, will be chief executive of the new company, while Bob Miller, Albertsons' current CEO, will be chairman.
- Donald was formerly chief executive officer of Starbucks, Haggen Food and Pharmacy, and the Extended Stay America hotel chain. He has held senior management positions with Albertson’s, Safeway (now part of Albertsons), Pathmark and Walmart. He served on Rite Aid’s Board of Directors from 2008 to 2013.
Dive Insight:
An executive with Jim Donald’s list of positions and accomplishments – not to mention his familiarity with the companies he will now lead – is a rare find.
Albertsons will soon combine Safeway and Rite Aid, as well as the smaller Haggen, and Donald has had executive experience with all four chains. He was also present at the start of Walmart’s food operations in the early 1990s and steered Pathmark through bankruptcy in the mid-90s. His tenure at Starbucks gives him a unique perspective on the top company in one of the food industry’s hottest segments.
Donald was selected as one of the “Top 25 CEO’s in the World,” in 2006 by the Best Practice Institute, and one of the 25 most influential travel industry executives in 2013. Early in his career, he earned a reputation for turning around financially problematic companies. The only question about Donald’s suitability for the job is whether the 64-year-old has lost any of the fire that drove his past accomplishments.
Albertsons has a long track record in pharmacy through Sav-on Pharmacy and Osco Pharmacy. Many of the leading executives of drug chains – such as Walgreens, CVS and Rite Aid – have been pharmacists, and Donald does not have that qualification, although he did become familiar with Rite Aid during his five-year stint on that company’s board. It is expected that others in the organization will bring the pharmacy expertise.
The appointment doesn't come without challenges, however. Albertsons is saddled with significant debt, and could be creating a company without a distinct identity, observers warn. Donald has also had a few rocky stints. He quickly grew Starbucks' footprint during his six-year term with the company, but was criticized for moving too fast and was asked to step down in 2008.
With the Rite Aid merger, Albertsons will become a distant fourth player in the pharmacy business with its 4,300 pharmacies trailing CVS with over 9,000 pharmacies, Walgreens with over 8,000 pharmacies and Walmart with over 6,000. But pharmacy is a highly complementary business to its supermarkets, so market share may matter less to Albertsons than it would in other retail segments. However, it is worth noting that the fourth player in grocery buying half of the fourth player in drugstores is not necessarily a formula for success. Walgreens is buying the remaining 2,000 Rite Aid stores. It will take someone like Jim Donald to pull it off.