Why ex–Canadian Tire CEO Michael Medline is the man to fix Sobeys

Canadian Tire jettisoned Medline after less than two years as CEO, but his experience with retail technology will be crucial for struggling Empire Co.

 
Michael Medline at the Sports Hall of Fame in 2015 (Chris Young/CP)

Michael Medline at the Sports Hall of Fame in 2015 (Chris Young/CP)

Canadian Tire may have left Michael Medline in the past, but Empire Company has decided he’s the leader for the future. On January 12, the company announced it was installing him as CEO of the parent firm, Empire, as well as its subsidiary, Sobeys.

Medline lasted less than two years as CEO of Canadian Tire before he was ousted, which might appear to make him a less-than-stellar candidate to head Empire, whose grocery division is struggling with a disastrous acquisition and tumbling profits. But Medline brings more than an outsider’s perspective to his new job. His experience and achievements at Canadian Tire may just be what Empire needs to fix itself—if he’s given the time and leeway to do it.

That starts with technology. “Every company’s focus right now is digital,” says Dave Bartolini, principal of Toronto retail advisory firm Bartolini Consulting. In a highly competitive category like grocery, customer relationship management and convenience are increasingly important. Bartolini cites Loblaw’s PC Points and Click & Collect programs, respectively, as examples of a retailer successfully using technology in these two key areas.

Following the Safeway acquisition in 2013, Empire scrapped its Ontario-specifc Club Sobeys rewards program in favour of adopting Air Miles, which Safeway was already using, across the country. Retailers are increasingly recognizing the value of customer data to guide purchasing, stocking and marketing decisions. “The grocery industry is trying to connect with their customers and gain some loyalty,” says Bartolini. Medline has form in this area—under his watch, Canadian Tire launched a loyalty program integrated into a new app, as a complement to the iconic Canadian Tire ‘Money.’ “We kept the paper money, which doesn’t give us any information to better serve our customers, and decided to give them digital offers that will excite them,” Medline explained in a 2014 interview with Canadian Business.

Under Medline, Canadian Tire also experimented with RFID readers in stores to deliver personalized deals and messages to customers’ smartphones. The company launched two concept stores filled with interactive video walls and golf club simulators. Canadian Tire also allowed customers to pay online and pick up products in-store, taking advantage of the chain’s vast network of locations.

It’s worth noting that Canadian Tire’s board did not appear to give Medline much credit for these developments, positioning them instead as the fulfillment of the strategy Wetmore had already laid out. “[Wetmore] transformed our company during his previous tenure and laid the foundation for our current performance,” chairwoman Maureen Sabia said in a release announcing his reappointment. Poulin and Medline were ousted within a week of each other, and Globe and Mail columnist Andrew Willis linked their departures as proof that “there’s little tolerance for a boss who lacks a smart strategy for an increasingly tech-driven marketplace and even less patience for a leader who fails to deliver on digital promises.”

Sally Seston, managing director of Retail Category Consultants, doesn’t buy the idea that Medline was simply following Wetmore’s plan. “Whether [Medline] was setting the strategy himself or picking the lieutenants that implemented it, we saw progression that we hadn’t seen in the past within the Canadian Tire business.” (Retail Category Consultants has worked with Canadian Tire on the gas side of the business and not with Medline).

The biggest task Medline now faces is undoubtedly completing the Safeway integration. Sobeys bought the Western Canadian chain in 2013 for $5.8 billion; it took just under $3 billion in impairment charges last year after digesting the purchase proved more difficult than anticipated. At Canadian Tire, Medline was involved with the acquisition and operations of Forzani Group, parent company of Mark’s Work Warehouse and Sport Chek. But that experience isn’t as transferable as it may seem. “As much as he had to bring them together, they’re [in] three different business, so you can have different cultures across them,” notes Seston. “Sobeys and Safeway are the same business, and you really need to find a common culture.”

That means engaging with Empire’s retail network at the store manager level, a tactic Medline has experience with—at Canadian Tire, he held the all-important dealer relations portfolio for two years, and as president clinched an 11-year agreement with the company’s store owners. “One of the reasons we’ve had so much success as a retailer is because we have local dealers who know our customers better than anyone,” Medline said in his 2014 interview. Seston says that approach will serve him well at Empire. “[Getting store owners] buy-in and tweaking your plan so that they’re really part of it gives you a better chance for success in terms of rolling it out.”

Medline’s lack of experience in the grocery business was highlighted by some analysts. “This is a stretch job, I think, for him,” Brendan Caldwell, CEO of Caldwell Investment Management, said on BNN. Seston points out that no single individual can solve a problem of that magnitude, and that building a team will be important. “The people who are most likely to be successful are good at surrounding themselves with experts that are excellent at what they do, and he certainly seems to have more of that persona,” she says.

Some of Medline’s experience with general merchandise will carry over in the new job, says Seston. “If you look at the core of the store, which is all your dry grocery, there should be no learning curve at all. It is no more difficult to understand ordering a can of beans versus a light bulb.” But Medline will have to familiarize himself with the challenges of the fresh produce around the edges of the store, and quickly—selection and stock have been particular shopper gripes since the acquisition. “Historically Safeway has had difficulty with their fresh supply chain in Western Canada,” Seston claims. Medline won’t be the one placing the lettuce and tomato orders, but he’ll need to understand enough about the process to recognize a solution when it’s presented to him.

Seston says she’s “moderately bullish” on the appointment, and thinks Medline may be able to bring some of the innovation happening elsewhere in retail to Sobeys and Safeway. “They have a chance to really make a difference and gain some market share in Canada.”


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