Is Roundy’s Getting Out of Wholesale Biz

Discussion
Feb 25, 2005
George Anderson

By George Anderson


With the sale of two distribution centers in Lima, Ohio, and Westville, Ind. to Nash Finch, Roundy’s has come closer to putting itself out of the wholesale grocery business.


“It almost completes it,” consultant and RetailWire BrainTrust member David Livingston told the Milwaukee Journal Sentinel. “The only wholesale that they’ve got left is
in Wisconsin.”


Robert Mariano, chairman and chief executive officer of Roundy’s, said in a released statement that the sale of the two distribution centers was “consistent with our strategy
of focusing on and growing our retail operations, and to concentrate on our independent distribution business in the upper Midwest.”


With the sale, Roundy’s will now focus on distributing products to its own stores operating under the Pick ‘n Save, Copps and Rainbow Foods’ banners. It will also continue to
serve independent retailers in the Upper Midwest.


“Our remaining Wisconsin based distribution centers, including our new 1.1 million square foot facility in Oconomowoc will efficiently service our company-owned stores and independent
customers located primarily in Wisconsin, Minnesota and Illinois where we continue to expand our presence,” said Mr. Mariano.


Moderator’s Comment: Is Roundy’s headed in the right direction? What does this sale say about the state of grocery wholesaling in the U.S.?

George Anderson – Moderator

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6 Comments on "Is Roundy’s Getting Out of Wholesale Biz"


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Mark Burr
Guest
16 years 8 days ago

I wouldn’t read too much into this other than that Roundy’s is managing their business well and focusing on areas and regions where they can be profitable. To write off the grocery industry distribution to independents, or to think it says much more than a good business decision is speculation that may be misguided.

David Livingston
Guest
16 years 8 days ago
Based upon the goals of the “new” Roundy’s, they are heading in the right direction. Much of their retail is in a non-union, non Wal-Mart Supercenter environment, with no meaningful competition, except Minneapolis. Most of the wholesale customers cannot say this. With Nash Finch willing to pay a huge premium to replace its dying wholesale base, how could Roundy’s refuse? A recent report shows that Milwaukee grocery prices have risen 5.2% versus 3.8% nationally. With a 60%+ market share and growing with several more stores opening, this presents a great opportunity for Roundy’s. For the time being, they get to have their cake and eat it too. In some rural areas where Roundy’s competes with Wal-Mart Supercenters, they have been very effective in using Wal-Mart as muscle to drive out other competitors. To the best of my knowledge, Roundy’s has benefited from some good luck. Some of the good luck they created themselves through smart business practices: 1. Fleming filed for bankruptcy, destroying several independents with them. 2. A&P, just being themselves, destroyed the Kohl’s… Read more »
Sue Patzkowsky
Guest
Sue Patzkowsky
16 years 8 days ago

As Mariano stated, this move is taking them right where he wants to go – more into Corporate Retail where they can manage the categories and the stores, and away from the wholesale business.

In a market where you are the leader, you can do a lot to differentiate yourself and not just rely on price – it’s a great way to be prepared for when Wal-Mart moves into the metro areas.

Now it begs the question… is a Dominick’s purchase the next move to make with the money he is getting from Nash?

Art Williams
Guest
Art Williams
16 years 8 days ago

Grocery wholesalers have been a dying breed for quite some time and I believe this trend will continue. It so hard for them to remain relevant and not be considered just an expendable part of the overhead. Their claim to fame is the independent retailer who has been declining for years and generally has no choice but to buy from a wholesaler. When Fleming can’t make it, it raises questions for the whole category. And I would add food brokers to this list for similar reasons.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 11 months ago

It appears the acquisition plan of Dominick’s may be occurring.

Dave Wendland
Guest
15 years 11 months ago

The wholesale business is a highly competitive, low-margin business that is, at best, fickle. Add to that, manufacturers who may be examining self-distribution; I think the move is wise for Roundy’s. Focusing on their increasingly strong retail business and the potential addition of Dominick’s make this a sleeping giant of retail. It doesn’t surprise me nor do I feel it an ill-advised move for them.

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