Fresh off of the acquisition of Associated Grocers, Seattle, Unified Grocers had a record year in 2008, with more than $4.1 billion in sales. And, while President and Chief Executive Officer Al Plamann says that difficult economic challenges still lie ahead, the Los Angeles-based company has held steady even as the recession drags on.
Retailer-owned Unified, the largest wholesale grocery distributor in the Western United States, reported similar volume sales and slightly lower dollar sales during the first half of fiscal 2009, a trend Plamann attributed to several factors.
“First, we have a fairly large group of upscale retailers who have felt the pinch of the economy on their top lines,” he told SN. “Secondly, there has been a large increase in purchases of private-label brands. That’s a lower-priced case. So, you may be moving the same number of cases but at a lower price ... Third, protein prices have had an impact on the top line. We’re selling more beef, but at a significantly lower price [than last year, due to commodity price volatility in 2008]. So, we’re moving pretty close to the same amount of product, but through three of our fiscal quarters, we’ve seen a reduction of about 4% in our sales line.”
Unified is working to mitigate the effects of the recession on the retailers it serves in several ways. They are urging vendors to bring more promotional monies to the market, and have encouraged retailers to view the recession as a time when they can have a real impact on consumer perception of their stores.
“They can tell shoppers that they are very interested in their needs by having the right kind of price on the shelf,” Plamann said.
Plamann has also urged Unified’s retailers to build up cash reserves, arguing that downturns often present good opportunities for acquisitions. And, earlier this year, Unified expanded its revolving credit facility by $25 million, in case members need a loan while the credit market remains tight.
“We haven’t seen a big increase [in requests for loans], but at least we have the dry powder to do that,” Plamann said.
— Matthew Enis