C&S Goes Bicoastal

Discussion
Sep 05, 2003
Ron Margulis

By Ron Margulis


I spent the last week of the summer break with my family exploring Vermont. One of the places we really enjoyed was Brattleboro in the Southwest corner of the state. Brattleboro is a beautiful New England town of about 15,000 that has attracted a significant Bohemian population, and that’s Bohemian as in hippy, not European. It is also, as most will know, the home of C&S Wholesale Grocers, the new owners of several former Fleming distribution centers.


I mentioned C&S to several people we encountered, including our waiter at lunch, the clerk at the used bookstore and the host at the B&B we stayed at and all had nothing but positive things to say about the company. It is the leading employer in the area, with nearly 1,500 people working at the headquarters and DC. It supplies several local supermarkets, both chains and independents. And, its corporate generosity has grown dramatically as its sales have grown from $600 million in 1986 to $11 billion today.


C&S has been able to post such strong sales growth by convincing chains like Pathmark, Shaw’s, Giant Foods and A&P that they can distribute food more efficiently than the retailers. The volumes that they now manage improve resource utilization both on the road and at the distribution center. The company and its customers also benefit by amalgamating purchases.


During its phase of strong sales growth, some business practices at C&S have been questioned, particularly with regard to off-invoice deductions and other vendor-related activities. Unlike others in the industry, it has never been a question of legality but rather one of collaboration, or lack thereof, within the supply chain.


Now, C&S has begun serving Fleming customers in California and Hawaii, some 450 Foodland, IGA, Food 4 Less and other bannered supermarkets and superettes. If it follows the same business model that has made it successful to date, C&S will now have to gain the business of larger chains like Raley’s, Scolari’s and Stater Bros.


Moderator’s Comment: Will the C&S model work on the West Coast as well as it has in the East?


We wouldn’t bet against C&S based on its past performance, but they’ll have competition for this business.


Supervalu’s chief, Jeff Noddle, seemed confident when he told analysts at Goldman Sachs Annual Global Retailing Conference that the wholesaler has had discussions
with Albertsons and Safeway about handling some of their distribution needs. As you may know, Supervalu is already working with Kroger in the Phoenix and Detroit markets.

[George
Anderson – Moderator
]

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