Chairman and chief executive officer, Albertsons
Born: 1949, in New York.
Education: Stetson University, BBA, 1972.
Career: General Electric (GE), 1972, management trainee; 1972–1978, retail-sales management in GE Appliances (GEA); 1979–1983, marketing manager; 1983–1989, merchandising manager for Washington, D.C., then Cleveland, Ohio, regions, then manager of GEA's Eastern Sales and Distribution, president of International GE Puerto Rico, general manager of Domestic Sales Operations; 1989–1997, vice president of sales and distribution for GEA and corporate vice president; 1997–1999, president and CEO of GE Medical Systems, Europe; 1999–2000, president and CEO of GEA and corporate senior vice president; Albertsons, 2001–, chairman and CEO.
Address: Albertsons, 250 East Parkcenter Boulevard, Boise, Idaho 83706; http://www.albertsons.com.
■ The 2001 hiring of Lawrence Johnston by the Albertsons grocery and drugstore chain was a notable example of outside recruitment for top leadership in a company perceived as needing change. Having spent his entire career at General Electric, Johnston brought the management philosophy of the driving force behind GE, the CEO Jack Welch, to the grocery sector. Johnston immediately outlined a five-part plan for remaking the organization that included closing low-performing stores, increasing the utilization of technology, and reducing waste in the supply chain. Johnston was a perpetual optimist and a technophile who enjoyed a high profile, driving a bright yellow Hummer H2 around Boise, Idaho, the location of Albertsons' headquarters.
After growing up in upstate New York, Johnston decided to follow in the footsteps of his older brother Jerry and attended college at Stetson University in Deland, Florida. In 1972 he graduated with a degree in business administration and was recruited by General Electric to enter the company's management training program. The day after graduation Johnston drove from Florida to Charlotte, North Carolina, to begin what would become a 28-year career with General Electric.
Upon completing the training program, Johnston spent several years in various field locations as a retail and contract sales manager for GE Appliances (GEA). He moved to Appliance Park in Louisville, Kentucky, where he held several marketing-management positions in the Contract, Private Label, and International Market segments. He became the merchandising manager for the Washington, D.C., region in 1984 and later the manager of the Cleveland, Ohio, region. Returning to Appliance Park, he served as general manager of GEA's Eastern Sales and Distributions Operations, then as president of International General Electric Puerto Rico, and then as general manager of Domestic Sales Operations.
In 1989 Johnston was elected to GE's board of directors, appointed a corporate vice president, and also named vice president of sales and distribution for GEA. His career then took an international turn when he was named president and CEO of GE Medical Systems, Europe, headquartered in Paris, France, in February 1997. The Medical Systems subsidiary generated approximately $1 billion in revenues across Europe, the Middle East, and Africa through sales of medical products and employed over four thousand associates. Johnston was chairman of GE's European Corporate Executive Council from 1998 to 1999. In 1999 he was elected a senior vice president of the company and also named president and CEO of GEA, a $5.6 billion global business with over 21,000 associates.
In April 2001 Johnston was tapped to head Albertsons, one of the world's largest food and drug retailers, with revenues of over $35 billion and more than 200,000 associates. Although lacking in experience in the food and drug business, Johnston had substantial marketing experience, which was seen as a key factor in his selection. At the time of his appointment Johnston stated that he saw the position as an opportunity to run his own company and looked forward to the challenges that the job would offer.
The position indeed proved to hold many challenges. Albertsons' business was deeply depressed; the recent acquisition of American Stores had doubled its store count but had also led to financial issues. Revenues were flat, profits were falling, and the stock price was off. Johnston immediately closed 165 stores and let go of 20 percent of both corporate and divisional staff. He pulled Albertsons out of many major markets, including the Houston, San Antonio, Memphis, Nashville, and New Orleans areas, following the GE edict that if a company could not be number one or two in a given market, it should not stay.
Johnston poured the saved capital into the remaining stores, emphasizing the development of dual-branded supermarket and drugstore retail outlets. He then laid off over 35,000 store-level associates and significantly limited increases in salaries and benefits. Yet continued keen competition from retailers such as Wal-Mart and a significant labor dispute in the southern California market prevented Johnston's measures from resulting in the profitability he sought.
Johnston utilized the consultant Ed F. Foreman, a motivational speaker, throughout his career at GE and subsequently had executives from Albertsons attend three-day seminars entitled "Successful Life Course." Foreman's philosophy emphasized attitude realignment and utilized both physical and mental exercises to achieve the positive attitude needed to reach corporate goals. Foreman's motivational approaches had been highly successful in Johnston's restructuring of GE Medical Systems, and the speaker would play a key role in Johnston's attempts to reach his stated goal for Albertsons: to someday become the world's biggest food and drug retailer.
A significant aspect of Johnston's vision was the Albertsons "Store of the Future," which combined his love of technology and his desire to outplay Wal-Mart in the grocery market. Albertsons' forward-looking stores featured Internet list building and the use of handheld devices to access those lists during face-to-face visits. The handheld devices presented promotions based on previous shopping patterns and could signal the customer when prescriptions or film processing were ready for pickup. The device also sped up checkout and payment. Critics said that such devices were digital overkill, but Johnston was convinced that technology-assisted shopping would be the future of grocery and drug retail.
Johnston's steps in streamlining Albertsons' organization and dragging the company into the 21st century had yet to have an effect on the company's bottom line as of 2004. However analysts felt that the restructuring and investment in technology were necessary to make up for the company's years of stagnation, and positive financial results were expected to arrive in the near future.
See also entry on Albertson's Inc. in International Directory of Company Histories .
Burke, Monte, "The Guru in the Vegetable Bin," Forbes , March 3, 2003, pp. 56–58.
Duvall, Mel, and Kim S. Nash, "Albertsons: A Shot at the Crown," Baseline , February 5, 2004, http://www.baselinemag.com/article2/0,1397,1522244,00.asp .
Foster, Julie, and Monica Roman, "Up the Food Chain," BusinessWeek , May 7, 2001, p. 54.
—Michelle L. Johnson