Wholesaler Choices

Discussion
Sep 12, 2005
George Anderson

By George Anderson

While it’s the nature of independent grocers to switch wholesale suppliers, the cases of two grocers demonstrate that finding the right trading partner can go a long way in determining
success and failure.

When Supervalu announced that it was seeking buyers for its corporately run Shop ‘n Save locations in the Pittsburgh area (see RetailWire
9/7/05 – Supervalu Puts ‘For Sale’ Sign on Shop ‘n Save
), the company said it was hoping that most of the locations would be purchased by current independents doing business
with the company.

Independents currently operate 55 stores under the Shop ‘n Save banner in and around Pittsburgh.

Among those interested in possibly pursuing a deal for the stores is Bob Duritza, whose family operates two Foodland stores and four Shop ‘n Saves supplied by Supervalu.

“We, as a family business, look at it as an opportunity to expand our store base,” said Mr Duritza. “I truly believe there will be opportunity for the independents.”

While Mr. Duritza told the Pittsburgh Business Times he sees opportunities with Supevalu, other independent store operators, such as Mark Davis, see obstacles.

Mr. Davis, who until recently operated a store under the Foodland (Supervalu) banner, has switched to Associated Wholesalers’ ShurSave for his store in Bloomfield, Pa.

“I don’t think a lot of stores can survive under Supervalu,” said Mr Davis. “There were a lot of costs associated beyond the cost of goods.”

Moderator’s Comment: How important is finding the right wholesaler for an independent grocer’s success? What is the difference between the various supplier
groups doing business in the U.S. today?

George Anderson – Moderator

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5 Comments on "Wholesaler Choices"


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Mike ODaniel
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Mike ODaniel
15 years 5 months ago

I agree with the comments regarding co-ops. Years ago, I oversaw SV, Fleming, Certified Grocers, United, Associated… you get the picture. Anywho, it sure seemed to me that the independents not only were paying less in upcharges with the co-ops, but enjoyed the year-end kicks along with better support throughout the year.

Ron Margulis
Guest
15 years 5 months ago

I agree wholeheartedly with David. Coop members are doing the best amongst independent supermarket operators, with a few notable exceptions. Wakefern, AWG, Unified Western and the various AGs around the country are going about their business supporting the retail owners in the face of any competition. They have to because there are no other customers to recruit – if the members can’t compete, the coop goes down. Voluntary wholesalers simply don’t have the mutual entrustment, as much as they say they do.

BTW, the common thread for those exceptions is a unique marketing focus (and usually several suppliers as a result). Stew Leonard’s is an example, as are Lund’s, Treasure Island and Andronico’s.

Tom Zatina
Guest
Tom Zatina
15 years 5 months ago
Here a few (perhaps all too obvious) thoughts. First of all, I believe that there are HUGE opportunities for independent retail store operators. These opportunities exist for those willing to offer products and services that are special, different and irresistible. Towards this, partnering with the right wholesaler is of vital importance. Wholesalers benefit from serving effective retailer operators, and retail operators benefit from being supplied by an effective wholesaler. In so many ways, it is truly a symbiotic relationship where damage to one affects the other and where failure to support each other weakens the whole system. In choosing a supplier, a retailer is faced with opting for a mostly pure logistics solution (most often picked by chains), or for a more full service approach that includes extensive marketing and merchandising programs as well as other ancillary business support services (most often picked by independents). To David’s point, sometimes a coop is an effective option but, increasingly, that option is harder to find. In the final analysis, it comes down to cost of goods, quality… Read more »
Mark Lilien
Guest
15 years 5 months ago

One Manhattan independent immediately destroys the weekly sale flyers dropped off by his primary wholesaler. He believes that the coupon prices would kill his profits. He has to pay for the flyers as part of the wholesaler’s agreement, so the waste occurs 52 weeks a year. He wants the wholesaler because the prices he pays, assortment, and delivery are fine. It’s not possible to run a profitable independent supermarket without at least one primary wholesaler, and many supermarkets need several supplemental wholesalers.

David Livingston
Guest
15 years 5 months ago

I’m finding that the happiest independents are those who are members of regional co-ops. It’s not always about the cost of goods, but the service levels they provide. They like being stockholders of their wholesaler and being able to get to know the management on a personal level. Sure, there is a place for the multi-billion dollar wholesalers who dance to the tune of Wall Street, but since the demise of Fleming, many realize that big is not always better.

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