LONG BEACH, Calif. -- Unified Western Grocers said last week it is preparing to launch a major effort to expand its customer base to include convenience stores, liquor stores, specialty stores and grocery stores throughout California and Oregon.
"We have been on only the fringe of that neighborhood market segment for many years," Chuck Pilliter, executive vice president, sales and marketing, said here. "But the new marketing effort will provide cost-effective service and significant item availability, along with one-stop purchasing."
Unified serves about 800 stores in the neighborhood market segment, Pilliter said, "which is only a small portion of the potential that exists today." That potential includes approximately 8,500 stores in southern California; 7,000 in northern California; and 1,700 in Oregon, he pointed out.
According to Pilliter, Unified will focus initially on the northern California region, where there are approximately 3,800 neighborhood grocery stores, 1,600 liquor stores, 1,100 convenience stores and 500 specialty stores.
He said Unified believes the neighborhood segment is part of $300 million in potential sales available to the member-owned cooperative, whose sales this year will reach nearly $3.1 billion.
Pilliter spoke just prior to the start of Expo 2001 here, the company's annual buyer-seller show, along with three other Unified executives:
Al Plamann, president and chief executive officer, who said the independents in Unified's membership will survive and thrive despite the competitive threat posed by the major chains.
Phil Smith, senior vice president, procurement, who discussed Unified's efforts to implement Visions 2005, the speed-to-shelf study issued two year ago by Food Distributors International.
Rod Van Bebber, senior vice president, distribution, who discussed changes the company is making in its warehouses to improve efficiencies and customer service.
According to Plamann, Unified is continuing to expand into new territories and businesses "in an efficient and effective manner that allows us to compete on an equal footing with the integrated chains."
Taking off on the Expo theme, "Winning the West," Plamann said Unified will survive. "We haven't 'won' the West yet, and there is still much work to be done. But when the day is done and the dust finally settles, it will not be the independent retail grocer who rides quietly into the sunset -- it's going to be the chains."
Unified is putting into practice some of the suggestions contained in the FDI study, Smith said, including implementing Merpro, a merchandising program that enables the company's 700 members to combine their purchasing power and performance results to compete as a virtual chain to qualify for manufacturer deals. "In the past we've been at a disadvantage because vendors said a wholesaler couldn't enforce ad or display performance," Smith said.
"But through Merpro," he added, " we've been able to prove the lift a promotion gives a product across our membership.
"In fact, during the month our Merpro ad featured Squeez-It juice from General Mills, the company told us we were the largest purchaser for that item for the month, outselling all competitors and all distribution channels."
Smith said Unified is the first wholesaler to adopt the study's "operational category management" approach, in which retail formats are clustered to evaluate category performance, thereby eliminating discrepancies in sales results caused by lumping stores that serve consumers in different demographic and economic groups together.
To improve speed-to-shelf for new items, Smith said Unified is working with several major manufacturers to develop Internet-based new-item portals that notify retailers when a new item becomes available, at which point retailers can click on the screen to download planograms, schematics, demographic data and other information from the manufacturer.
"After reviewing that information, the retailer can set a retail price, and the gross margin is automatically derived," Smith explained. "And simply by clicking, the retailer can update his point-of-sale file, update the host price file, create a tag file, notify the manufacturer and the wholesaler that he has accepted the item and request a sample."
The program also gives retailers immediate access to a list of WIC-approved items and policies, in either English or Spanish; information on which items qualify for off-invoice swells allowances and which are authorized for reclamation; a link to a government Web site for information on redemption values of recyclable items; and a list of "hot" deals.
"We're still working on the 'hot' deals aspect," Smith said, "but these are basically end-of-quarter deals where vendors want to sell product quickly.
"Using the Internet vendors can communicate what's available to retailers and make a commitment for quantities with a four- or five-hour turnaround that emulates a diverter network."
Discussing changes in Unified's warehouse operations, Van Bebber said the company began testing a pallet program last week designed to accommodate the needs of retailers who want the savings associated with full pallet purchases but who don't want to buy a full pallet's worth of inventory.
"The program allows members to enjoy the efficiency savings gained by pallet movement without buying in large pallet quantities," he noted.
Unified is testing the program with Joy liquid soap from Procter & Gamble, Van Bebber said, with P&G creating three pallets with 20 cases each instead of one pallet with 60 and shipping the smaller to Unified's dry grocery warehouse in Los Angeles, where pickers add other items to the 20-case base to fill a member's order.
The smaller pallets are created at the supplier's expense, he explained, "because it ultimately drives sales for the vendor while enabling us to ship in pallet loads without having to hand-pick the 20 items on the pallet ourselves."
Among other warehouse programs, Van Bebber said Unified has implemented Saturday service in southern California following repeated customer requests, increased its Sunday hours and reconfigured a perishables warehouse in northern California to facilitate self-distribution of meat and eliminate a third-party provider.
In addition, Unified has added 2,500 pallet positions in southern California and is in the process of adding rack positions at its Portland, Ore., warehouse to accommodate more items.