FLEMING PLAN: MELD CENTERS, BUILD SALES, CUT OVERHEAD

OKLAHOMA CITY -- Fleming Cos. here set out on a new course last week.Only a week after naming Mark S. Hansen chairman and chief executive officer, the company disclosed a new strategic plan to correct the problems that have stymied sales growth over the past few years and forced the ouster earlier this year of Robert E. Stauth as chairman and CEO.The strategies Fleming will pursue were developed by

OKLAHOMA CITY -- Fleming Cos. here set out on a new course last week.

Only a week after naming Mark S. Hansen chairman and chief executive officer, the company disclosed a new strategic plan to correct the problems that have stymied sales growth over the past few years and forced the ouster earlier this year of Robert E. Stauth as chairman and CEO.

The strategies Fleming will pursue were developed by management and by Bain & Co., the Boston-based consultants Fleming hired eight months ago, although Hansen told SN he intends to play a major role in additional decisions going forward.

He said the restructuring of the company will be completed within 24 months.

According to Hansen, Fleming's new strategy is focused almost exclusively on customers. "We're repositioning for growth by creating a more efficient operation that leverages Fleming's strengths and delivers reliable and responsive service for our customers," he explained.

"In addition, we intend to take steps to pursue a targeted growth strategy and to reduce overhead expenses."

Fleming said its new strategic initiatives include the following:

Consolidating wholesale operations to improve efficiency by shutting down seven product-supply centers and reassigning retail distribution to eight other facilities.

Implementing sales and marketing programs and investing capital in targeted markets to assist existing customers while pursuing new business development more aggressively.

Concentrating on investments in the distributor's top-performing corporate-owned chains while selling others.

Examining staff functions at all levels of the organization in an effort to reduce overhead expenses. Hansen said he plans to spend a lot of time visiting with Fleming customers "because I'm a retailer, with 25 years' experience, and I've always spent 30% to 40% of my time in the stores.

"You can't figure out how to help people unless you understand their environment, and you can learn a lot from walking the store with an owner and asking questions of the people who do the job -- and, mainly, from just listening."

Looking at Fleming's strategic plan, Bill Dowd, president and chief operating officer, said the company's first priority is to optimize its wholesale operations by "seamlessly transferring our current customers' business to the product supply centers that are best positioned to serve them."

According to Dowd, the centers Fleming will sell or close over the next six months are located in Huntingdon, Pa.; Laurens, Iowa; Johnson City, Tenn.; Sikeston, Mo.; El Paso and Houston, Texas; and Portland, Ore.

"We simply must create a lower-cost system for our customers," Dowd said.

Once all seven have been closed, Fleming will operate 34 product-supply centers, including the eight facilities that will supply the needs of former customers of the seven closed warehouses.

Another part of Fleming's strategic plan involves "an aggressive new-business development program" that will leverage the power of Fleming's refocused wholesale operations to earn a greater share of business from existing customers and to attract new customers, Hansen said.

He said Fleming has picked up about $500 million in new business this past year, while losing several larger customers -- like Randall's Food Markets, Houston, and Furr's Supermarkets, Albuquerque, N.M. -- to self-distribution.

According to Hansen, the core of Fleming's business going forward will be "significantly less large-chain business and more focus on the needs of entrepreneurial operators."

He said capital investments "will be increased dramatically over the next five years to support the growth of our wholesale operations in targeted markets" -- jumping nearly 50% or more, from $129 million last year to $190 million to $205 million this year, a level he said will be maintained through 2003.

Fleming also plans to concentrate on developing growth among its top-performing company-owned chains, including Baker's, Lincoln, Neb.; Rainbow Foods, Minneapolis; and SuperSaver/Sentry Foods, Waukesha, Wis., Dowd said.

Retail groups and stores that do not meet the company's performance standards will be divested, Hansen added.