MMR: Mass Market Retailers, January 11, 2021

NEWS LIFETIME ACHIEVEMENT AWARD Gerchenson Hailed for Achievements NILES Ill The family ties that built Alva Amco Pharmacal Cos span more than a century and four generations At the heart of both the family and the company has been Jeff Gerchenson who worked for the over the counter drug producer for over 50 years leading its growth for decades and cementing its status as a highly regarded supplier of drug chains and other mass retailers In recognition of his life and contribution to the industry he has been honored with Mass Market Retailers Lifetime Achievement Award Alva Amco which is known for popular brands like Diurex and Fungicure was acquired last fall by Kobayashi Healthcare International Inc at which time Gerchenson retired as company chairman Alva Amco traces its roots to Gerchensons grandfather Henry who owned pharmacies in Chicago starting Jeff Gerchenson The companys mantra was to focus on over the counter medications in 1904 and would mix his own proprietary drugs for patients The company expanded under Gerchensons father Emile and uncle Lester who started working with a national distributor in the late 50s It got the name Alva from a small town in Oklahoma where Lester was stationed during World War II and got its full name when it merged with the Amco Pharmacal a sister company Jeff Gerchenson now 72 started working for Alva Amco parttime while in college in 1968 He initially thought he would go on to graduate school in psychology but two years later he started making sales calls full time in greater Denver He subsequently moved back to work out of Chicago where he met his wife to be Jodie At the time he recalls My father and uncle would give me directions for the day at 7 a m and then have me report on my progress at 7 p m And I would say You know Im only here on a temporary basis I could always go back to school But that temporary basis lasted over 50 years Gerchenson became chief executive officer around 2000 and he passed on the companys leadership about five years ago to his son Micah Other members of the next generation involved with the company included eldest daughter Shelbi who worked in marketing and creative development and middle daughter Kate who was director of administration I felt like I was a custodian of the business that going back to my grandfather whom I never met and my father who I worked with for such a long time it was my job to keep the faith and steward operations for the family he says At the same time Gerchenson recognized the need for professional management skills in various facets of the operation So Alva Amco reached out and brought people in from venerable companies like Alberto Culver Helene Curtis and Johnson Johnson where they had gone through training programs and were highly skilled in areas like sales and marketing R D quality control and general administration We brought these people in and the family members operated with them in a symbiotic seamless fashion with great respect for their professional skill sets he says Infusing what was a familyowned and operated business with outside expertise was a key part of Alva Amcos success and that interplay extended to the companys work with manufacturers reps and food brokers in the U S and Canada We were wise enough to understand that both on the inside and outside its a people business Gerchenson says You recognize the role that you play and you invite in people who can make a contribution and you make sure that they see the rewards of their contribution I think that helped us dramatically And I cant underscore enough the wonderful relationships that we had with our associates our suppliers our supply chain from contract manufacturers to packagers and with the trade all through the years up until today Gerchenson began his career on the street calling on independent drug stores Actually it was a great time I loved it because I got to meet a lot of great people and there was always a sense of immediate gratification when I made a sale With few national class chains in those days wholesalers and independent pharmacies were more powerful and he focused on them market to market At the same time he would visit regional chains from Los Angeles to New York and Detroit to New Orleans I had the privilege of growing up in the industry when there were tremendous personalities and merchants I encountered a lot of great names historic names in the industry Around the late 70s Gerchenson became more involved with the business inner workings including sales marketing rep and broker networks finance and operations I was a slow learner he says but I learned His growing knowledge coincided with a period of relocation and expansion for Alva Amco and in 1988 he added the title of president to his role as chief operating officer By then his dad Emile who was company chairman had a plan for his son to take over as CEO As Emile began to step back Jeff says he was not shy about taking responsibility It was seamless because I had already had a long career with the company and my dad and I got along well I really enjoyed all of it In business you can have ups and downs but we had a steady trend of ups and thankfully the downs were just small hurdles we were able to jump over and move on So I had only positive feelings about my career which culminated with my four kids being in the business As the chain drug industry took off with exponential growth we were fortunate enough to be part of it and to grow with it he adds With the industrys consolidation and maturation a lot of the regional retailers and legendary merchandisers are gone but what has replaced them are very successful operations with highly talented leadership he notes Alva Amcos specialty was building niche brands into mainstream brands through creative marketing In deciding which brands to market Gerchenson took to heart the advice of the late Cunningham Drug Stores president Ray Shapero who once told him Concentrate on drug store type products O T C proprietary meds People are always going to need those type products Gerchenson applied that philosophy in categories ranging from womens health care Diurex to foot care Fungicure to skin care and with products for nausea backache and urinary tract health The wisdom of Shaperos advice was borne out as the lines blurred between trade classes Today whether one goes to a Kroger Albertsons Safeway Dollar General Walmart Costco CVS Rite Aid or Walgreens and even shopping online with Amazon theres one constant says Gerchenson the drug wall brick and mortar or virtual and we want to be part of the drug wall Concentrating on drug store products was a consistent approach for Alva Amco and resulted in a reliable sustainable supply of profitable items for retailers which sustained the business right through to its acquisition Walmart is expanding its order fulfillment capabilities nationwide Walmart Acclaimed for Omnichannel Retailing From page 32 still to come McLay also led a major overhaul of Walmarts supply chain that focused on redesigning the flow of product from suppliers to store shelves thereby creating a digitally connected supply chain Working with its suppliers Walmart developed a metric known as on time in full OTIF that has enabled the company to better track and manage inventory flow through more accurate forecasting According to McLay it has been a major win for the company and has greatly improved in stock performance This was some of the key foundational work along with huge investments in associate pay benefits and training that McMillon referred to when he addressed analysts in 2018 It made possible a 37 increase in e commerce sales for fiscal 2020 which ended in January 2020 With the impetus provided by COVID 19 e commerce for Walmart U S soared 79 in the third quarter of fiscal 2021 while Sams Club posted a 41 rise Those growth figures in part reflect the value of Walmarts store base in enabling the retailer to offer the flexibility and convenience of omnichannel shopping As executives often point out there is a Walmart or Neighborhood Market or Sams Club within 10 miles of 90 of the U S population The company has moved aggressively to increase its use of that store base At the beginning of 2020 Walmart provided home delivery from 1600 stores which allowed it to service half the population In April it significantly enhanced its convenience offer by introducing Express Delivery which allows customers to order from more than 160000 food consumables and general merchandise items and have their purchases delivered in less than two hours By late November Express Delivery had been extended to 2800 locations covering two thirds of the country while 3700 stores were providing the option of curbside pickup Its essentially the same process for delivery as it is for a pickup order its just the associate is putting the order in a delivery drivers truck instead of the customers explained John Furner president and CEO of Walmart U S last February In same day delivery thats what a lot of customers want and we love our position there Weve got different options for delivery things like third parties associate delivery and weve also launched our own Spark Delivery network Increased reliance on its stores to fulfill commerce orders has had another benefit for customers faster delivery Well use our existing local delivery capabilities to get orders to customers faster while reducing the load on our online fulfillment centers explained Tom Ward senior vice president of customer product E commerce sales rose 37 in fiscal 2020 Last November Walmart revealed another innovation popup e commerce distribution centers eDCs in 42 of its regional distribution centers As a result facilities that had previously been devoted to supplying stores are now also fulfilling online orders The initiative was made possible by technological innovation Walmarts multichannel sourcing engine MCSE a computer application that can scan the entire Walmart fulfillment network in less than a second and assign orders to stores fulfillment centers or eDCs depending on which would be the fastest and most efficient way Clearly Walmart is determined to shape its future by constant innovation combined with maximizing the value of its existing assets to meet customers evolving needs and desires As McMillon remarked it looks like a winning formula 36 MMR January 11 2021