PORTLAND, Ore. -- Unified Western Grocers, Los Angeles, hopes to grow volume 6.2% to $3.35 billion in fiscal 2001, Dirk T. Davis, president of the company's Pacific Northwest division, said here. Sales for the fiscal year ended in late September were approximately $3.15 billion, Davis said during a talk to the sixth annual Food Industry Leadership Conference sponsored by Portland State University.
"But $3.3 billion isn't enough," he said. "There are still holes we need to fill, and there are strong wholesalers in Spokane and Seattle, Wash., Salt Lake City, and Amarillo, Texas, that are surviving. But can they compete for future indepedents as single wholesalers?
"We need to allow other cooperatives to join with us later, and maybe at some future time we will be able to include those areas when we look a map of where we operate," he said. The retailer-owned cooperatives in the areas Davis listed are URM, Spokane; Associated Grocers, Seattle; Associated Food Stores, Salt Lake, and Affiliated Foods, Amarillo. Unified officials have said previously they have had casual discussions with all four companies about possible joint ventures but hope to complete the integration of Certified and UG before formally pursuing additional merger activity.
According to Davis, the ultimate goal of the merger "is to operate as a virtual chain, offering consistent programs throughout all three regions, because with the strengths the chains have, independents and wholesale groups must operate as much like a chain as possible."
Among the programs Unified has developed to achieve its goal, Davis said, are a pallet program featuring a dead net cost of goods, a mandatory display program, temporary price reductions, an early performance payment program and a buy-and-hold promotional program.
Since the merger was finalized in September 1999, Davis said, Unified has completed consolidation of two northern California distribution centers into one facility in Stockton; consolidated the operations of the former Portland data center to its main office in Commerce, Calif.; integrated separate purchasing and marketing operations in northern California into a single operation; and integrated administrative functions of the two companies.
Unified is running slightly behind its synergy goals, Davis noted, achieving savings of $3.4 million in fiscal 2000, compared with an anticipated $3.8 million. He said the company has made slight modifications in its goals for the next two years, seeking synergies of $18.5 million in 2001, compared with $18.9 million in its original projections, and $21 million in 2002, compared with projections of $22 million.
Davis said Unified's southern California division accounted for 46% of 2000 sales, or $14.6 billion; the northern California division for 29%, or $924 million; and the Pacific Northwest for 24%, or $768 million.
Unified's independent customers account for 22% of the southern California market, 26% of the northern California market and 23% of the Oregon market, Davis pointed out.
"To maintain the regional flavor of Unified, we have appointed retail advisory committees in each region, where local retailers provide input, because we are a cooperative and it's their company."
In a separate conference presentation, Mary Sammons, president and chief operating officer of Rite Aid Corp., Camp Hill, Pa. -- and the former president and chief executive officer of Fred Meyer Stores, a division of Fred Meyer Inc. here -- said companies that acquire other companies must bring the new employees into the acquiring company's culture and make sure they feel valued.
"People will make a difference in the ability of any company to succeed," Sammons said, noting that an improved attitude on the part of its associates has helped the drug store chain improve month-to-month same-store sales results since June. "Our associates didn't feel good a year ago, but they feel good now," Sammons said, "and the numbers show that what we're doing is working. People feel good working for Rite Aid, and they feel good about their futures."
In another talk, Bob Wendover, president of Leadership Resources, Aurora, Colo., said operators must look out for their employees' welfare if they hope to retain them, citing several examples, including the following:
Cub Foods, Chicago, which works with Western Michigan University to employ high school students while mentoring them about opportunities in the food industry.
Grand Union, Wayne, N.J., and other New Jersey-area chains, which teach checkstand operations and a variety of other skills to vocational high school students.
Minyard's, Coppell, Texas, which has developed a buddy system for new employees during their first two weeks, to help them feel more comfortable adjusting to a new job.
Brown & Cole, Bellingham, Wash., which has a leadership and development program for its employees that helps the chain promote from within and enables employees to take part in store decisions.