CARMEL, Ind. -- For the first time in its 30-year history, O'Malia Food Markets here is shopping for a wholesaler.
The company has whittled its choices to three companies -- its longtime distributor, Roundy's, Pewaukee, Wis.; Fleming Cos., Oklahoma City; and Supervalu, Minneapolis -- and is expected to pick one by the end of this month, Daniel O'Malia, president of the seven-store chain, told SN.
The retailer, which started the bidding process a year and a half ago, has no problem with Roundy's, O'Malia noted. It is just trying to ensure that it is getting the best and most cost-effective wholesale service it can find.
"We tend to be loyal people who do not like to deep-six a relationship with someone, but we thought it would be good business practice to start bidding this," O'Malia explained. "It seems sort of crazy not to see what is out there. We just want to see if there is anyone out there who can do better."
O'Malia Food Markets, with stores in Indianapolis and its northern suburbs, averages about $54 million in annual business. "Roundy's has the biggest chunk of that but less than half," O'Malia said. O'Malia and his executive committee began with a pool of six or seven Midwestern wholesalers and then quickly narrowed the list to Roundy's, Fleming and Supervalu because of the programs they provided. Since then, the parties have met several times, O'Malia executives have visited nearby warehouses and the committee has developed a list of services that may be included in a future contract.
"We have been taking the time to get to know the companies and see what programs they have and see what we want," O'Malia said. "We're bringing all of the pieces of the puzzle together. Some of the companies were unfamiliar to us. But we got to know them a lot better, and we got to know Roundy's a lot better. It has been a complex, eye-opening process."
Though getting a better price on groceries may be part of the outcome, services and product variety are the key areas being weighed, according to O'Malia. "It's not just who has the cheapest groceries. That is just a small part of the equation. It's who has the most variety of products, whose trucks get there faster, who can help do the most accurate store sample tests and which group of people can you work with best. It's all of those things."
O'Malia said he is scheduled to meet with the wholesalers later this month to iron out final details of each offer, and a contract will be drawn once a decision is made.
The chain has never had a written agreement with a wholesaler before and does not have one with Roundy's, O'Malia said. He added that he would like a written agreement because the company may ask the wholesaler to help finance future remodels or new stores.
O'Malia Food Markets also is likely to continue to use secondary distributors for the immediate future, O'Malia said. "We may bid the backup business later, but right now they fill a particular niche for us," he explained. "They carry some products or sizes that Roundy's does not carry. They also do some regional products."
Roundy's and Supervalu declined to comment on negotiations with O'Malia Food Markets. Shane Boyd, a Fleming spokesman, said, "We feel that it would be a good match. We feel good about what we can do for them."
