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Shelley steps up

Walmart Canada's new CEO, Shelley Broader, has spent most of her career south of the border in supermarkets. Now she's in charge of Walmart's biggest Canadian expansion ever

ShelleyBroader-0212

Walmart Canada’s new president and CEO, Shelley Broader, is sitting across from me in one of the company’s typically small and less than fashionable boardrooms–budget chairs, budget table–telling me about the recent Christmas vacation she, her husband and two children, 10 and 13 years old, took to Quebec.

She mentions the food, the theatre they attended and Montreal itself. “I got to see Rocket Richard’s sweater!” Broader, an American, exclaims, breaking into a very wide and very bright smile that is very much her trademark feature.

I hope she found the trip relaxing because now, in the middle of January, it appears 2012 is going to be rather busy for her.

First, she is still new to the top Walmart Canada job, having taken over as CEO, in September, from David Cheesewright, a British retail vet who’s been shuffled upstairs with more global responsibility. Second, Broader must begin to defend Walmart’s turf from rival discounter Target, which is set to open as many as 135 stores in this country, starting next March.

But here’s the thing: What’s going to keep Broader really busy is the ambitious schedule Walmart Canada has mapped out for itself: 73 store projects this year, including new openings and in-box conversions of existing discount stores to Supercentres. That’s the most in the company’s nearly two decades in Canada and 33 more than last year.

“This is going to be our biggest expansion year ever in Canada,” Broader says, rolling out some numbers: $750 million in capital spending; 4.6 million square feet of added floor space; and by next January, 380 total Walmart stores, up from 333 last year.

Of the 73 projects this year, 39 will be conversions of Zellers stores. About half of the 73 are to become Supercentres, a format that adds a full line of groceries, including fresh, to the standard Walmart general merchandise mix.

“Food is the fastest growing part of our business and we’re finding that consumers are really receptive to the product offering we have in fresh,” Broader says.

Walmart is also breaking into new territory–in more ways than one.

Its first three Supercentres in Quebec opened last spring and more will be added this year. Walmart also just opened a mini Supercentre in Toronto, called Urban 90, that will allow it to add stores in big-city neighbourhoods where space is hard to come by. And to solidify its food credentials further, Walmart is deepening assortment in private label.

To observers, Walmart could not have chosen a better person than Broader to lead the Canadian division as it moves further into food and tangles with Target.

Broader is a seasoned retail executive known for her ability to spot talent and motivate employees. In the U.S., where her retail career has taken her from store manager to CEO, she ran the craft chain Michaels as well as a Sam’s Club division for Walmart.

But Broader has spent most of her retail career in grocery. She’s a foodie, observers say, and expects supermarket staff to be knowledgeable about food as well.

Prior to Michaels she performed–in spectacular fashion–the feat of bringing back to life a Florida grocery chain that others had written off as basically kaput. That chain, Kash n’ Karry, was reinvented under the name Sweetbay Supermarket by Broader in the mid 2000s. Shortly after, she was named Retail Executive of the Year by Grocery Headquarters magazine.

“She’s dynamite,” says Kevin Coupe, who writes about the grocery industry in the U.S. for MorningNewsBeat.com, and is familiar with Broader’s career.

Broader’s strengths clearly lie on the food side of the business, he says. “If I were a food retailer in Canada who had not been too worried about Walmart to this point, I might begin to get worried now.”

When Shelley Broader was named president and CEO of Walmart, last fall, a short line in her bio mentioned she had spent part of her career in the financial sector before moving to the grocery industry? Hmm…from stocks to stocking bread…how did that happen? As it turns out, Shelley Broader’s rise to the top of Walmart makes for quite a remarkable story.

Born in 1964, Shelley Broader grew up the youngest of four children in Spokane, Wash., to a schoolteacher mom and a dad who sold farm equipment before he died in a traffic accident, when Shelley was 13.

At high school, she ran hurdles and decided to pursue a career in broadcast journalism. She attended Washington State University in part because it houses the Edward R. Murrow College of Communication, named after the pioneering newscaster, famous for his live reporting during the London Blitz.

Upon graduation, Broader headed out to work at small networks, only to realize she did not have a real interest in a career in TV journalism. So it was home to Spokane where her mom dispensed what would in Broader’s case prove to be prescient advice: “She told me that life finds you, not the other way around.”

With that in mind, Broader decided to move to Boston. “I wanted to have an adventure and live in a big city,” she says, and so she bunked with a friend for two weeks, then found an apartment and a job selling mutual funds to traders, with a company called Mass Financial Services.

It was in Beantown that Broader also met her future husband, on a blind date. He was from Albany in upstate New York and soon Broader moved there as well, landing a job with First Albany Corp., an investment banker.

At First Albany, Broader put together debt financing deals. One of her clients was Hannaford Brothers, a supermarket operator founded in Maine in 1883 that by now had stores all over New England and parts of New York. Hannaford seemed like a great company with wonderful people and “a lot of my other clients weren’t really very fun. So I called [Hannaford] on the phone and I said, ‘Remember me? I’d like to work for you.’ ”

In the interview that followed, Broader remembers the Hannaford people warned her off a retail career. “They told me, ‘It’s a gritty business, you’re used to banking, I don’t think this is for you.’ They did everything they could to talk me out of it. And I finally said, ‘Give up, I want to come work for you!’ ”

At Hannaford, new hires had to spend six months in one of the company’s supermarkets. Broader’s first job was cashier. With much laughter, she remembers one of her first days ringing through milk and eggs. Looking up, she saw a man she recognized. A few weeks earlier, at her investment firm, Broader had put together an $18-million debt financing deal for a petroleum company. This man was one of the oil executives with that company. Now, he was clearly perplexed why his banker was toiling away as a cashier. “He said, ‘Shelley, what happened?’ ”

It was an awkward moment that would prove pivotal to Broader’s career. “I realized there and then that I was now a retailer,” she says.

And in the months ahead, the transition from bonds to broccoli would prove surprisingly easy. Retailing, says Broader, was an absolute thrill. “I couldn’t wait to go to work every morning. It wasn’t like a job, it was so much fun. I’d open up the [delivery] truck and say what did they send me today. You could build cool displays and have a material impact on sales.”

That was in 1991, and over the next 12 years Broader would move up the ladder at Hannaford. Then, in 2003 the company’s new parent, Belgium’s Delhaize Group, sent her to Florida to take over a moribund chain it acquired. Kash n’ Karry was a well-established grocer out of Tampa Bay with excellent locations. But it had been neglected amid ownership changes and the stores were outdated next to vibrant competitors such as Publix and the shiny new Walmart Supercentres.

Delhaize wasn’t even certain they wanted to keep Kash n’ Karry at all. “They were rudderless, just bouncing around at the time,” recalls Mark Albright, retail reporter for the Tampa Bay Times who covered Broader’s arrival in town that June.

While others saw Kash n’ Karry as a dud, Broader saw potential in the booming Florida market. She built a new team and got down to researching what opportunity existed for a new grocery chain. The keyword was “new” because rather than tinker with Kash n’ Karry, Broader decided to launch a new grocer altogether, called Sweetbay Supermarket.

“It was a very rare business move, sort of like an internal takeover,” she recalls. “We positioned it as though a new company were buying Kash n’ Karry and changing the stores one at a time.”

Sweetbay stores were all about new and exciting foods: organic, natural, fresh meat and produce. Over several years some 100 Kash n’ Karrys were converted and Sweetbay also moved into new markets such as Naples and Fort Myers.

The rebranded stores did remarkably well, says Mike Vail, who worked under Broader during the conversion and is now Sweetbay’s president. “Shelley’s real genius there was to make the stores and the marketing for them a celebration of food. No one else was really talking about food anymore at that time.”

“Shelley’s a foodie herself,” adds Coupe at MorningNewsBeat. He remembers that at Sweetbay she added a question to the company’s job form asking applicants to name their favourite meals and restaurant. “If you said McDonald’s you didn’t get hired,” he says.

By 2008, every single Kash n’ Karry had been converted to Sweetbay, and Broader had been recruited to run Michaels and then, a year later, was off to Walmart. Her first job for the Bentonville, Ark., giant was senior vice-president of the south division of Sam’s Club. In 2010 she headed north to Walmart Canada as chief merchandise officer.

Each recent president of Walmart Canada has brought a certain special skill-set to the job. Mario Pilozzi, who introduced Walmart’s Supercentre format to Canada, in 2006, was a merchandiser in the truest sense of the word, having spent more than four decades in Canadian retail. His successor, David Cheesewright, brought with him retailing efficiencies learned in the competitive UK grocery market.

Broader is viewed as someone whose main talent is finding great staff and getting the most out of their abilities. “A co-ordinator of experts” is what she likes to call herself. Coupe gets more to the point: “She’s a natural leader, a real ‘people’ person.”

A few years ago Coupe wrote a book called The Big Picture: Essential Business Lessons from the Movies. In it, he referred to Broader’s use of Star Wars phrases when talking to employees. “If she finds an employee who is going in the wrong direction, she’ll joke with him that he is ‘going to the dark side.’ The employee would get that right away,” he says.

Those skills will come in handy as Walmart grows across the country and requires ever-more staff. Her experience as a grocer will also come into play because food is increasingly an important part of Walmart’s business here.

The Canadian division is the country’s sixth largest food retailer, with estimated food sales of $5.2 billion in 2011. In a presentation to analysts last June, Cheesewright noted that overall sales in food, consumables, health and wellness and baby were up just one to two per cent in Canada in the last year, but that Walmart was responsible for three-quarters of the growth that did take place.

Cheesewright could have added that Walmart’s Supercentre format still isn’t in every market in Canada yet. It’s still new in Quebec, for instance.

Noting the foods she encountered on her vacation to Quebec, Broader says that as Walmart enters new markets it will rely on one particular department at its head office in Mississauga, Ont., to get its food mix right. That department is called the Store of the Community and its job is to make sure products in each store conform to regional preferences. In Quebec, that mix certainly includes a heavy helping of local foods from the province and different varieties of cheese.

In Toronto, meanwhile, Store of the Community helps cater each Walmart to the ethnic tastes surrounding it. At a store in suburban Scarborough, for example, Walmart has partnered with a Chinese bakery and also features a butcher and a fish market.

“We’re partnering with outside suppliers and letting them help us within the confines of the store; we’re learning from them and they’re learning from us,” says Andrew Pelletier, Walmart’s vice-president of corporate affairs.

Scarborough is also home of the first mini Supercentre. Dubbed Urban 90 because it is 90,000 square feet in size, the format can be built on half the land of a typical Walmart Supercentre. That’ll allow the retailer to open stores in denser areas of Vancouver, Toronto and Montreal.

Inside the first Urban 90, which opened in January, the grocery department takes up the whole middle of the store with a selection, Walmart officials say, that has been carefully put together to maintain the typically wide assortment of a Supercentre.

“You can absolutely get what you need. You may not even be able to pick out the SKUs that aren’t available in an Urban 90 because the store was very scientifically and very efficiently assorted,” Broader explains.

A recent trip to the first Urban 90 did indeed reveal decent selection with carefully parsed facings. For instance, Pam Original spray had three facings at Urban 90 versus six at a 200,000 square foot Supercentre down the road. And Aunt Jemima Original Pancake Mix had two facings at Urban 90 and six at the bigger store. Meanwhile, Urban 90 carried nine varieties of loose apples, just one fewer than the larger Supercentre.

Walmart is also ramping up private label. Broader says the company’s Our Finest line of appetizers and desserts did well over Christmastime and, therefore, “we now have credibility in food that allows us to put private label on fresh product.” No wonder, then, that this spring the company is launching Your Fresh Market: an in-store line of bakery and deli private-label products.

“Compared to a few years ago, there is much more emphasis on food at Walmart,” says Ed Strapagiel, executive vice-president at Toronto retail consultancy KubasPrimedia. Walmart, he notes, will have a chance to make further inroads this year ahead of Target because, in an interesting twist, Walmart intends to open its 39 former Zellers stores this year, whereas Target won’t have its first Zellers stores converted until early 2013.

Target may not have wanted the sites Walmart took from it, “but what Walmart is doing is getting their sites up as fast as possible,” Strapagiel says.

As usual, price remains a key part of Walmart’s strategy. In January it rolled back prices on some 7,000 items. Among them: Primo pasta, rolled back to a dollar, from $1.88; and Quaker Instant Oatmeal, reduced to $2.47, from $3.37.

That same month the retailer launched its Walmart Canada Income Tracker. To be issued monthly, the tracker charts Canadians income, financial obligations and how much money the average person has for savings or discretionary purchases.

For instance, in the first half of 2011, Canadian households saw incomes grow at a faster rate than key financial obligations versus 2010, resulting in positive spending power. But in the second half, rising household expenses (mainly transportation, food and utility costs) eroded spending power.

“This allows us to have deep insights into the spending power and economic challenges our customers are facing,” Pelletier says.

Walmart also continues to look at making stores more sustainable. Starting this summer it will light up parking lots with LED lights. And later this month, Broader and a panel of other top CEOs will act as judges for Walmart’s Green Student Challenge. The new contest encourages students to come up with business ideas rooted in sustainability. Five finalists will present their ideas Feb. 29 in Toronto, with the winner awarded $30,000 plus another $30,000 to their school.

“We are focused on newness and innovation and who better than college students to work with us to develop these ideas,” Broader says. “It’s going to be an exciting event.”

Perhaps an exciting year as well for Walmart’s new CEO.

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