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Unified Grocers, Los Angeles, is in the process of integrating the approximately 325 retail members of the Associated Grocers grocery cooperative, Seattle, whose assets it acquired last October. “My overall assessment is that [the integration] is going quite well,” said Al Plamann, president and chief executive officer of Unified Grocers.
By acquiring Associated for close to $70 million, Unified added nearly $1 billion in sales volume, boosting its overall annual sales to about $4 billion. The deal eliminated a competitor to the north and gave Unified coverage from the Canadian border to the Mexican border in the far West. For good measure, Unified shortened its name from Unified Western Grocers last year before closing the Associated deal.
Plamann, a former oil executive who joined Unified (then Certified Grocers of California) in 1990 and became CEO in 1994, acknowledged that Unified is doing a better job with the integration of Associated than it did in 1999 when it acquired United Grocers of Portland, Ore. “We learned from that experience,” he told SN.
It took Unified three and a half years to integrate United Grocers, Plamann said, but he expects Associated to be fully integrated within two years.
Plamann instructed his transition team to make everything “transparent and not harmful at retail.” For example, Unified is giving Associated’s retailers until Oct. 1 — a full year from the completion of the acquisition — to learn Unified’s ordering system.
In addition, Unified is incorporating practices used at Associated, including some marketing programs, that it deems superior to what is used at Unified — a “best of the best” policy, he said.
Another difference between the Associated and United deals is that with the latter, Unified acquired liabilities that burdened it with debt for some time, noted Lou Amen, owner of Super A Foods, Los Angeles, and chairman of the Unified board for the past 15 years. By contrast, with Associated “we strictly bought the inventory assets and didn’t pay that much for it,” said Amen.
Plamann noted that Unified has already experienced unexpected synergies in procurement and operations from the acquisition of Associated that should enable it to beat its targeted three-year savings from synergies of $15 million to $20 million.
Unified has commissioned consulting firm Chainalytics, Atlanta, to study its distribution system to determine how best to employ its distribution centers in the Pacific Northwest, including the one in Seattle used by Associated. “In October we will have a recommendation for our board,” said Plamann.
In addition to the Associated retailers, Unified has added several other stores to its membership ranks this year, including more than a dozen El Super stores in the Los Angeles area. Some of its members are expanding eastward into markets in Las Vegas, Arizona, New Mexico and even Texas, giving Unified leverage to recruit new members in those markets.
As a new IGA distributor, Unified has heard from 20 to 30 stores interested in adopting the IGA banner. “We’ll start announcing IGA rollouts next month,” said Plamann.
— MICHAEL GARRY
