SEATTLE -- Associated Grocers here said last week it will transfer its nonfood purchasing to Unified Western Grocers, Los Angeles.
AG said combining its purchases of general merchandise and health and beauty aids with Unified is expected to result in stronger, more cost-effective buying opportunities for both companies.
Unified executives have said in the past that they hope to unite several Western cooperatives in a series of joint ventures or, ultimately, possible mergers, including AG of Seattle; URM, Spokane, Wash.; Associated Food Stores, Salt Lake City; and Affiliated Foods, Amarillo, Texas.
Unified was created in September 1999 when Certified Grocers of Los Angeles and United Grocers, Portland, Ore., merged.
Al Plamann, president and chief executive officer of Unified, said in a speech last year, "We won't bite off any more large acquisitions until we've finished stabilizing this (UG) merger. But once we've done that, this format offers benefits to other Western retailer-owned companies. So whether we do another merger or, more likely, some kind of affiliation, we should be able to utilize our strength to help other retailer-owned companies."
According to AG, the new agreement calls for Unified to handle procurement and warehousing of all general merchandise and health and beauty aids through a distribution center and buying office in Milwaukee, Ore. The added volume is expected to improve Unified's efficiency in the Pacific Northwest, the company said.
AG said it will close and sell its Kent, Wash., distribution facility that handles nonfoods.
"We weren't purchasing as effectively as we could in health and beauty aids and general merchandise," Gene Steffes, executive vice president and chief operating officer of AG, said.
"Teaming up with a larger players was key," Steffes added. "As a result of this new arrangement, AG retail store customers will gain access to an improved product selection and costing."
Official rollout of the agreement is scheduled to begin this month, with the rollout expected to be completed by mid-October, Steffes said. "We're making the change to reduce operating costs and to find the lowest cost opportunities for our retail member customers and stores."
Charles J. Pilliter, executive vice president, sales and marketing, Unified, said the move makes sense for his company as part of its focus on a strategic plan that includes refining business processes, growing retail and wholesale sales and pursuing strategic growth initiatives through the formation of alliances.
Unified is a retailer-owned cooperative serving 1,200 supermarket operators in California, Oregon, Washington, Nevada, Arizona, Hawaii and several countries along the Pacific Rim.
AG is a wholesale cooperative with approximately 340 members in Washington, Oregon, Alaska, Hawaii, Guam and the Pacific Rim.