MECHANICSVILLE, Va. -- Nearly all of Richfood Holdings' 1,000 independent stores are expected to procure their nonfood from Wakefern Food Corp., Elizabeth, N.J., under an agreement between the two companies.
According to Don Bennett, Richfood chairman and chief executive officer, about 70 stores have agreed to be supplied by Wakefern, a retailer-owned cooperative, which is the wholesale buying arm of ShopRite supermarkets in New Jersey, New York, Pennsylvania, Connecticut and Delaware.
"Wakefern will eventually supply 80% to 85% of our retailers' nonfood needs," Bennett told SN, adding that most retailers will sign onto the program before the end of the year.
Wakefern officials had no comment on the new supply arrangement.
For the past several years, Richfood retailers have relied on outside suppliers and rack jobbers, among them Fleming Cos. and Millbrook Distribution Services, for the bulk of their nonfood.
Under the arrangement with Wakefern, Richfood and its Super Rite Corp. division, based in Harrisburg, Pa., will backhaul nonfood from Wakefern's general merchandise warehouse in South Brunswick, N.J., to respective depots, where the products will be married with retailers' grocery orders.
Richfood and Super Rite drivers began picking up nonfood at Wakefern in a limited test in late January and February. Bennett said the program will get fully under way this month.
Nonfood orders will be
placed directly through Richfood and Super Rite. Billing will be centralized under a new system, said Bennett.
"Wakefern has one of the most modern updated totally paperless nonfood warehouses in the country, which will result in tremendous savings to our retailers," he said.
Richfood's new thrust, which is supervised by Ron Turner, the wholesaler's newly appointed vice president of nonfood, is being made to give retailers a better competitive position in the nonfood marketplace, said John Stokely, Richfood's president.
"From the standpoint of our overall profit structure it [the agreement] is not significant. But in terms of having a strong program to strengthen our retail base, it's significant," he added.
Stokely said Richfood considered getting back in nonfood wholesaling but has decided against it because of "overcapacity in the network.
"Whenever there is overcapacity, you can form strategic alliances where all parties will benefit. Wakefern has too much [nonfood] capacity. We felt why make a big investment when you could partner with somebody," he said.
Richfood will continue, however, to purchase limited nonfood direct in film, batteries, lightbulbs, aluminum foil bakeware, automobile supplies and Rubbermaid products.
Bennett said he is hopeful that retailers with fully racked general merchandise and health and beauty care sections will sign onto the supply program and begin maintaining nonfood sections themselves.
He gave a presentation to 80 IGA retailers Feb. 27. "They understood very quickly, after reviewing the savings realized by a drop ship approach compared to full service, that they should be ordering and maintaining their nonfood departments," Bennett said.
Richfood has no plans to service nonfood departments, but its field service force is available to help retailers merchandise and category-manage nonfood, Bennett said.