COVER STORY: On the road again
As nature uses fire as a tool to regenerate the land and reset the cycle of succession, so Fleming Cos.' spectacular flameout last year has brought forth a rebirth of the wholesale grocery industry that has actually helped many its players reinvent themselves and thrive in a new era of improved productivity and greater accountability.
"Two very important things are simultaneously happening," says Bill Bishop, president of Barrington, Ill.-based Willlard Bishop Consulting. "Although the traditional independent market for food wholesalers is shrinking, at the same time, the market for wholesaling is increasing as self-distributing retail organizations are finding that it's more cost-effective to outsource that piece to a bigger and more progressive distributor.
Pointing to the first-of-its-kind asset exchange inked last September between Eden Prairie, Minn.-based Supervalu and C&S Wholesale Grocers of Brattleboro, Vt., as well as other developments occurring around the country in the wake of Fleming's demise, Bishop believes the now-defunct wholesaler's departure signals a historic industry breakpoint that closes the curtain on one era while ushering in another.
A discernable element of "the new order of wholesaling -- whether it has to do with Supervalu's activity-based pricing or the stripped-down model offered by C&S -- is the vastly improved efficiencies in the delivered cost of product across the board," Bishop says. In the not-too-distant past, he continues, "A lot of retail services were sort of 'pretend activities' that ultimately raised retailers' end costs." Further, according to Bishop, a standard operating procedure among some wholesalers was "to basically buy business by paying retailers big upfront fees, then turning around and overcharging those same retailers on a day-to-day basis."
Bishop's candid characterization evokes bitter memories for Jim McCaffrey, a former longtime Fleming-Philadelphia division customer who defected to Supervalu a few years prior to Fleming's collapse. "My contention has always been that the traditional wholesaler/retailer relationship was based on a lie that goods were delivered at a 2 percent fee when, in reality, warehouse costs exceed 5 percent," McCaffrey says.
As a result "the wholesaler was forced to seek profits in other ways," he says, and a mistrustful relationship was set in motion that bred conflict between the retailer and wholesaler, as well as between the vendor and the wholesaler.
"Obviously the landscape of wholesaling has changed with the void created by Fleming, and the resulting lack of competition in some regions is, frankly, a little scary. Nevertheless, I believe that positive changes are taking place," says McCaffrey, who currently operates two stores in Princeton and West Windsor, N.J., and a temporary 10,000-square-foot makeshift market housed in a tent in the parking lot of his original Yardley, Pa. location, which burned down earlier this year.
Continued progress
Among the many positive changes under way in the present environment, McCaffrey says, are programs such as Supervalu's activity-based pricing mechanism, which eliminates guesswork and mistrust "by giving retailers reality costing while preventing arguments and providing opportunities to save money by dealing more cost-effectively."
McCaffrey remains hopeful that continued progress will be made with enhanced clout for wholesalers, "which still don't get a fair shake with cost from vendors. While Wal-Mart is able to extract lower vendor costs because of its volume, it's only handling the top five SKUs in any given category. The vendor can't make money on the top five. The wholesaler, on the other hand, is carrying the depth of the product line and isn't getting any cost benefit to do so."
For the duration the wholesale distribution business has prided itself on "the idea that the stronger your customer base, the stronger your wholesale and corporate store business would be, as well," says Burt Flickinger III, managing director for Strategic Resources Group in New York.
"But the publicly available records of lawsuits -- most notably against Fleming and a few others --find more and more financial fraud involving wholesalers in what's historically been a nonlitigious industry," Flickinger notes. "And the increase in litigation on the part of the retail customers against their wholesalers shows a Wall Street mentality directing the business, rather than a Main Street mentality."
To be sure, the harsh lessons revealed by Fleming's flawed and fatal business model, coupled with the increasingly competitive climate, have forced the remaining U.S. grocery distributors to put on their thinking caps, sharpen their pencils, and tighten their belts to meet their goals of perpetuation and growth.
Period of adjustment
Yet the wholesale business' gradual shift toward more bottom-line-oriented dealings with retailers has also surfaced as a prickly subject for some longtime Supervalu-supplied retailers -- as well as for some of its recently acquired customers, which have had difficulty adjusting to the distributor's more rigid approach and Supervalu's resulting efforts to standardize its systems and controls.
The same can be said of the growing pains C&S is currently suffering after its acquisition of Fleming's national retail wholesaling assets, which resulted in a territory swap that found the New England wholesaler taking over all of Supervalu's accounts there in exchange for Fleming's former Midwest operations.
While its transition in New England has gone fairly smoothly, "C&S has experienced some hiccups on the West Coast in bringing its new base of California customers on board its technology platform and other areas," Bishop notes. "But it's all to be expected as the shakeup continues," he says, adding that the temporary setbacks are still preferable to the inferior service levels independents endured before and during Fleming's nosedive.
Though Flickinger was "surprised by the Supervalu/C&S asset exchange," which finds C&S thrust into the new role of supplying a variety of smaller independents outside of the wholesaler's core competency with chains, "the deal seems really beneficial for Supervalu in its legacy Midwest market."
High marks
Jason Whitmer, research analyst for Cleveland, Ohio-based FTN Midwest Research, says the swap has gone "better than I would have expected," in view of Supervalu's efficient integration of C&S's assets without opening any new facilities. "Supervalu has taken the new accounts right into its own warehouses," which has resulted in dramatic increases in capacity utilization, productivity, and throughput, he says.
Further, on both sides of Supervalu's retail-and-distribution coin, "they have had great momentum and are showing much better performance this year vs. last," Whitmer says. "I just think they get it when so many people -- particularly on the food retail side of things -- don't." He also gives high marks to Supervalu's service-based logistics platform, Advantage Logistics, which has been pumping up the volume through new warehouse management deals signed with the likes of Kroger and Atkins Nutritionals.
Dynamic force
For these and other reasons, Whitmer notes, "Supervalu has been doing better blocking and tackling than anybody in the business, as a result of its more creative efforts of finding ways to grow and become better in a nongrowth business."
While Flickinger says Supervalu has "generally remained true to its founding principles of supporting both corporate and independent stores on a national basis," the current trends are coming full circle for the relatively smaller regional firms and voluntary grocery cooperatives. "Independents often tend to do better with co-ops as compared with the alternatives involving wholesalers with a Wall Street mentality," says Flickinger, who is both passionate and knowledgeable about the food distribution business, which he learned under the masterful tutelage of his pioneering grandfather and father.
Aside from the customer-focused member/retailer support, Flickinger also believes both co-ops and the smaller regional wholesalers "are well positioned to meet the growing yet underserved demand for multicultural-specific formats, particularly those that cater to Latino, African-American, and Asian markets. With the exception of White Rose, Associated Grocers of Florida/Miami, and Grocers Supply of Texas, most of the other wholesalers have a far-too-inadequate supply of fresh and shelf-stable products to supply to stores catering to those consumer constituencies."
Commenting on the recent gains realized by regional grocery co-ops, Christopher Michael, c.e.o. of Robesonia, Pa.-based Associated Wholesalers, Inc. (AWI), says, "As the big distributors continue to become bigger, the consolidation is actually favoring the cooperative food distributor, because, as you look around the country, almost all the co-ops have grown dramatically over the last five years and are well positioned to continue to grow in their particular regions as a dynamic force in the distribution end of the business."
Gary Phillips, president and c.e.o. of Associated Wholesale Grocers (AWG) of Kansas City, Mo. agrees, affirming that his co-op has benefited greatly "by taking full advantage of the tremendous opportunities presented during the past year. The cooperative approach to supplying goods and services has proven to be a very efficient and effective tool in allowing our retailers to win in a very competitive environment."
Filling the void
Last August AWG purchased six former Fleming distribution facilities, closing three and continuing to operate two in Southaven, Miss. and Nashville, Tenn. The company recently reopened the third facility, in Memphis, Tenn., as a general merchandise and specialty foods distribution center. To date, Phillips says AWG has added over 500 retail locations to its list of customers through this transaction.
"We're very pleased with this year's results, and we're excited about the future. The strategic moves have positioned us to provide independent retailers with the tools they need to compete," says Phillips, noting that AWG, which supplies independents in 19 Midwest states, achieved record sales of $3.7 billion on a consolidated basis, up 18.5 percent from the prior year, on a 52-week basis ending Dec. 27. The co-op's operating income of $64.7 million showed an $8.9 million increase, or a 16 percent improvement, from the previous year while returning a record $257 million to its membership, says Phillips, adding that his firm projects sales of $4.7 billion -- a $980 million increase -- next year, with a full year of recorded sales from the newly acquired divisions.
Referring to other advantages offered by co-ops, AWI's Michael says: "We can both be efficient in terms of EDLP requirements while at the same time helping provide independents with services and tools to differentiate, by being specialized in key areas to help them grow their businesses."
Michael's organization was one of several regional distributors that promptly hit the solicitation trail in hopes of filling the void and gaining incremental business when Fleming announced it was shuttering its Northeast operations. "As we began to court some of Fleming's former customers, we were really taken aback by the amount of support those retailers desperately needed but weren't getting," recalls Michael, whose firm picked some new accounts in the process.
Ready to roll
The Carteret, N.J.-based White Rose division of the DiGiorgio Corp., one of the largest independent food distributors in the metropolitan New York area, emerged as the candidate that gained the biggest share of grocery supply duties of Fleming's largest Mid-Atlantic buying group, Retail Marketing Group (RMG). Comprising approximately 20 Thriftway and Shop 'n Bag stores in the Delaware Valley, many of which had previously had an equity tie-in with Fleming, RMG was created in late 2000 by a self-directed group of storeowners not only to gain a more direct pipeline with vendors, but also to address Fleming's shameful service levels and poor execution.
Along the East Coast and in many other markets, "Fleming's service issues became so questionable in the last nine to 18 months prior to its bankruptcy that many retailers -- out of necessity -- began using alternate wholesalers as secondary suppliers," says White Rose's s.v.p., Jack Zumba. "So when the time finally came, we were ready to roll, since we already knew the retailers and their locations. Our immediate priority was expanding product lines and putting more trucks in."
Zumba continues: "At one point someone used the expression that working with Fleming's former customers was like dealing with battered children, and it was true. During negotiations we were asked to put many of our assurances in writing, one of which included a request for direct access to a single top-level White Rose executive to resolve a dispute if need be. But that was like breathing for us, and we obviously had no problem accommodating this very reasonable request."
Recalling the initial integration stage, Zumba notes: "We were simply amazed to find that these retailers were being hurt by the very basics with out-of-stocks, product mix, and delivery schedules. How they survived is beyond me, and it's a great testimony to their tenacity and commitment."
White Rose, like the majority of regional wholesalers throughout the country, has "revisited every aspect of how we deal with our retailers," Zumba says. "We have bisected and dissected each and every one of our programs, to make sure our customers are up to date with technology, perishables, formats, and so on."
Bullish outlook
In spite of the formidable challenges confronting independents, Zumba's outlook is bullish: "Independents aren't dying, but will instead thrive and become stronger if they pay attention. Too many had blind trust, and we're encouraging our retailers to challenge everything we do and hold us accountable. We further encourage them to only utilize the services they need and to not be afraid to speak up about doing things their organization can do better or cheaper on its own."
Other regional distributor firms that have also reported healthy gains in recent months include Cheshire, Conn.-based Bozzuto's Inc., which finished 2003 with 177 new accounts, and has gained 19 new ones since the beginning of this year, throughout Maine, New Hampshire, Connecticut, New York, and Pennsylvania.
"We are quite pleased by the growing number of independent retailers who have chosen to make Bozzuto's their distribution partner," says George Motel, e.v.p. of retail development. In the past 12 to 16 months, he says, Bozzuto's gains have resulted not only from Fleming's and Supervalu's departure from the Northeastern and Mid-Atlantic regions, but also from accounts previously serviced by Syracuse, N.Y.-based Penn Traffic Co.
Associated Grocers' Ocala division has also reported a 150 percent increase in business since the beginning of this year, as a result of acquiring many former Fleming accounts. Servicing some 250 central and north Florida independents, AG is now the largest among a handful of other grocery wholesaler competitors in the Sunshine State, home of the self-supplied Publix, which recently announced plans to open about 57 new stores this year and spend about $500 million on the new stores, remodels, expansions, and enhanced information technology applications.
Further, Pittsburgh-based Giant Eagle's Ohio-based wholesale division, American Seaway Foods, "has realized healthy gains from business formerly served by Fleming distribution, including supplying some banners that are not affiliated with Giant Eagle," says Rob Borella, director of communications. "We'll continue to be opportunistic in gaining this type of business. Another upside is that we can accommodate this additional activity without making significant systems changes or investments in our wholesale infrastructure."
Wake-up call
Within the independent segment, Bill Bishop envisions that the retailer/wholesaler relationship will go one of two ways: "It'll either get stronger and more intimate, or the independent will not depend on a particular wholesaler for anything except for low cost of delivered product. In either case the partners will be working with a different level of trust that will be far more worthwhile for both parties than it's been in the past."
And while it appears that much of the smoke has cleared one year after Fleming's infamous inferno, that disaster was a wake-up call to the wholesale business that it couldn't continue as usual. Now, depending on how things shake out with Penn Traffic's bankruptcy proceedings, the next round of related new business activity may already be unfolding.
"Two very important things are simultaneously happening," says Bill Bishop, president of Barrington, Ill.-based Willlard Bishop Consulting. "Although the traditional independent market for food wholesalers is shrinking, at the same time, the market for wholesaling is increasing as self-distributing retail organizations are finding that it's more cost-effective to outsource that piece to a bigger and more progressive distributor.
Pointing to the first-of-its-kind asset exchange inked last September between Eden Prairie, Minn.-based Supervalu and C&S Wholesale Grocers of Brattleboro, Vt., as well as other developments occurring around the country in the wake of Fleming's demise, Bishop believes the now-defunct wholesaler's departure signals a historic industry breakpoint that closes the curtain on one era while ushering in another.
A discernable element of "the new order of wholesaling -- whether it has to do with Supervalu's activity-based pricing or the stripped-down model offered by C&S -- is the vastly improved efficiencies in the delivered cost of product across the board," Bishop says. In the not-too-distant past, he continues, "A lot of retail services were sort of 'pretend activities' that ultimately raised retailers' end costs." Further, according to Bishop, a standard operating procedure among some wholesalers was "to basically buy business by paying retailers big upfront fees, then turning around and overcharging those same retailers on a day-to-day basis."
Bishop's candid characterization evokes bitter memories for Jim McCaffrey, a former longtime Fleming-Philadelphia division customer who defected to Supervalu a few years prior to Fleming's collapse. "My contention has always been that the traditional wholesaler/retailer relationship was based on a lie that goods were delivered at a 2 percent fee when, in reality, warehouse costs exceed 5 percent," McCaffrey says.
As a result "the wholesaler was forced to seek profits in other ways," he says, and a mistrustful relationship was set in motion that bred conflict between the retailer and wholesaler, as well as between the vendor and the wholesaler.
"Obviously the landscape of wholesaling has changed with the void created by Fleming, and the resulting lack of competition in some regions is, frankly, a little scary. Nevertheless, I believe that positive changes are taking place," says McCaffrey, who currently operates two stores in Princeton and West Windsor, N.J., and a temporary 10,000-square-foot makeshift market housed in a tent in the parking lot of his original Yardley, Pa. location, which burned down earlier this year.
Continued progress
Among the many positive changes under way in the present environment, McCaffrey says, are programs such as Supervalu's activity-based pricing mechanism, which eliminates guesswork and mistrust "by giving retailers reality costing while preventing arguments and providing opportunities to save money by dealing more cost-effectively."
McCaffrey remains hopeful that continued progress will be made with enhanced clout for wholesalers, "which still don't get a fair shake with cost from vendors. While Wal-Mart is able to extract lower vendor costs because of its volume, it's only handling the top five SKUs in any given category. The vendor can't make money on the top five. The wholesaler, on the other hand, is carrying the depth of the product line and isn't getting any cost benefit to do so."
For the duration the wholesale distribution business has prided itself on "the idea that the stronger your customer base, the stronger your wholesale and corporate store business would be, as well," says Burt Flickinger III, managing director for Strategic Resources Group in New York.
"But the publicly available records of lawsuits -- most notably against Fleming and a few others --find more and more financial fraud involving wholesalers in what's historically been a nonlitigious industry," Flickinger notes. "And the increase in litigation on the part of the retail customers against their wholesalers shows a Wall Street mentality directing the business, rather than a Main Street mentality."
To be sure, the harsh lessons revealed by Fleming's flawed and fatal business model, coupled with the increasingly competitive climate, have forced the remaining U.S. grocery distributors to put on their thinking caps, sharpen their pencils, and tighten their belts to meet their goals of perpetuation and growth.
Period of adjustment
Yet the wholesale business' gradual shift toward more bottom-line-oriented dealings with retailers has also surfaced as a prickly subject for some longtime Supervalu-supplied retailers -- as well as for some of its recently acquired customers, which have had difficulty adjusting to the distributor's more rigid approach and Supervalu's resulting efforts to standardize its systems and controls.
The same can be said of the growing pains C&S is currently suffering after its acquisition of Fleming's national retail wholesaling assets, which resulted in a territory swap that found the New England wholesaler taking over all of Supervalu's accounts there in exchange for Fleming's former Midwest operations.
While its transition in New England has gone fairly smoothly, "C&S has experienced some hiccups on the West Coast in bringing its new base of California customers on board its technology platform and other areas," Bishop notes. "But it's all to be expected as the shakeup continues," he says, adding that the temporary setbacks are still preferable to the inferior service levels independents endured before and during Fleming's nosedive.
Though Flickinger was "surprised by the Supervalu/C&S asset exchange," which finds C&S thrust into the new role of supplying a variety of smaller independents outside of the wholesaler's core competency with chains, "the deal seems really beneficial for Supervalu in its legacy Midwest market."
High marks
Jason Whitmer, research analyst for Cleveland, Ohio-based FTN Midwest Research, says the swap has gone "better than I would have expected," in view of Supervalu's efficient integration of C&S's assets without opening any new facilities. "Supervalu has taken the new accounts right into its own warehouses," which has resulted in dramatic increases in capacity utilization, productivity, and throughput, he says.
Further, on both sides of Supervalu's retail-and-distribution coin, "they have had great momentum and are showing much better performance this year vs. last," Whitmer says. "I just think they get it when so many people -- particularly on the food retail side of things -- don't." He also gives high marks to Supervalu's service-based logistics platform, Advantage Logistics, which has been pumping up the volume through new warehouse management deals signed with the likes of Kroger and Atkins Nutritionals.
Dynamic force
For these and other reasons, Whitmer notes, "Supervalu has been doing better blocking and tackling than anybody in the business, as a result of its more creative efforts of finding ways to grow and become better in a nongrowth business."
While Flickinger says Supervalu has "generally remained true to its founding principles of supporting both corporate and independent stores on a national basis," the current trends are coming full circle for the relatively smaller regional firms and voluntary grocery cooperatives. "Independents often tend to do better with co-ops as compared with the alternatives involving wholesalers with a Wall Street mentality," says Flickinger, who is both passionate and knowledgeable about the food distribution business, which he learned under the masterful tutelage of his pioneering grandfather and father.
Aside from the customer-focused member/retailer support, Flickinger also believes both co-ops and the smaller regional wholesalers "are well positioned to meet the growing yet underserved demand for multicultural-specific formats, particularly those that cater to Latino, African-American, and Asian markets. With the exception of White Rose, Associated Grocers of Florida/Miami, and Grocers Supply of Texas, most of the other wholesalers have a far-too-inadequate supply of fresh and shelf-stable products to supply to stores catering to those consumer constituencies."
Commenting on the recent gains realized by regional grocery co-ops, Christopher Michael, c.e.o. of Robesonia, Pa.-based Associated Wholesalers, Inc. (AWI), says, "As the big distributors continue to become bigger, the consolidation is actually favoring the cooperative food distributor, because, as you look around the country, almost all the co-ops have grown dramatically over the last five years and are well positioned to continue to grow in their particular regions as a dynamic force in the distribution end of the business."
Gary Phillips, president and c.e.o. of Associated Wholesale Grocers (AWG) of Kansas City, Mo. agrees, affirming that his co-op has benefited greatly "by taking full advantage of the tremendous opportunities presented during the past year. The cooperative approach to supplying goods and services has proven to be a very efficient and effective tool in allowing our retailers to win in a very competitive environment."
Filling the void
Last August AWG purchased six former Fleming distribution facilities, closing three and continuing to operate two in Southaven, Miss. and Nashville, Tenn. The company recently reopened the third facility, in Memphis, Tenn., as a general merchandise and specialty foods distribution center. To date, Phillips says AWG has added over 500 retail locations to its list of customers through this transaction.
"We're very pleased with this year's results, and we're excited about the future. The strategic moves have positioned us to provide independent retailers with the tools they need to compete," says Phillips, noting that AWG, which supplies independents in 19 Midwest states, achieved record sales of $3.7 billion on a consolidated basis, up 18.5 percent from the prior year, on a 52-week basis ending Dec. 27. The co-op's operating income of $64.7 million showed an $8.9 million increase, or a 16 percent improvement, from the previous year while returning a record $257 million to its membership, says Phillips, adding that his firm projects sales of $4.7 billion -- a $980 million increase -- next year, with a full year of recorded sales from the newly acquired divisions.
Referring to other advantages offered by co-ops, AWI's Michael says: "We can both be efficient in terms of EDLP requirements while at the same time helping provide independents with services and tools to differentiate, by being specialized in key areas to help them grow their businesses."
Michael's organization was one of several regional distributors that promptly hit the solicitation trail in hopes of filling the void and gaining incremental business when Fleming announced it was shuttering its Northeast operations. "As we began to court some of Fleming's former customers, we were really taken aback by the amount of support those retailers desperately needed but weren't getting," recalls Michael, whose firm picked some new accounts in the process.
Ready to roll
The Carteret, N.J.-based White Rose division of the DiGiorgio Corp., one of the largest independent food distributors in the metropolitan New York area, emerged as the candidate that gained the biggest share of grocery supply duties of Fleming's largest Mid-Atlantic buying group, Retail Marketing Group (RMG). Comprising approximately 20 Thriftway and Shop 'n Bag stores in the Delaware Valley, many of which had previously had an equity tie-in with Fleming, RMG was created in late 2000 by a self-directed group of storeowners not only to gain a more direct pipeline with vendors, but also to address Fleming's shameful service levels and poor execution.
Along the East Coast and in many other markets, "Fleming's service issues became so questionable in the last nine to 18 months prior to its bankruptcy that many retailers -- out of necessity -- began using alternate wholesalers as secondary suppliers," says White Rose's s.v.p., Jack Zumba. "So when the time finally came, we were ready to roll, since we already knew the retailers and their locations. Our immediate priority was expanding product lines and putting more trucks in."
Zumba continues: "At one point someone used the expression that working with Fleming's former customers was like dealing with battered children, and it was true. During negotiations we were asked to put many of our assurances in writing, one of which included a request for direct access to a single top-level White Rose executive to resolve a dispute if need be. But that was like breathing for us, and we obviously had no problem accommodating this very reasonable request."
Recalling the initial integration stage, Zumba notes: "We were simply amazed to find that these retailers were being hurt by the very basics with out-of-stocks, product mix, and delivery schedules. How they survived is beyond me, and it's a great testimony to their tenacity and commitment."
White Rose, like the majority of regional wholesalers throughout the country, has "revisited every aspect of how we deal with our retailers," Zumba says. "We have bisected and dissected each and every one of our programs, to make sure our customers are up to date with technology, perishables, formats, and so on."
Bullish outlook
In spite of the formidable challenges confronting independents, Zumba's outlook is bullish: "Independents aren't dying, but will instead thrive and become stronger if they pay attention. Too many had blind trust, and we're encouraging our retailers to challenge everything we do and hold us accountable. We further encourage them to only utilize the services they need and to not be afraid to speak up about doing things their organization can do better or cheaper on its own."
Other regional distributor firms that have also reported healthy gains in recent months include Cheshire, Conn.-based Bozzuto's Inc., which finished 2003 with 177 new accounts, and has gained 19 new ones since the beginning of this year, throughout Maine, New Hampshire, Connecticut, New York, and Pennsylvania.
"We are quite pleased by the growing number of independent retailers who have chosen to make Bozzuto's their distribution partner," says George Motel, e.v.p. of retail development. In the past 12 to 16 months, he says, Bozzuto's gains have resulted not only from Fleming's and Supervalu's departure from the Northeastern and Mid-Atlantic regions, but also from accounts previously serviced by Syracuse, N.Y.-based Penn Traffic Co.
Associated Grocers' Ocala division has also reported a 150 percent increase in business since the beginning of this year, as a result of acquiring many former Fleming accounts. Servicing some 250 central and north Florida independents, AG is now the largest among a handful of other grocery wholesaler competitors in the Sunshine State, home of the self-supplied Publix, which recently announced plans to open about 57 new stores this year and spend about $500 million on the new stores, remodels, expansions, and enhanced information technology applications.
Further, Pittsburgh-based Giant Eagle's Ohio-based wholesale division, American Seaway Foods, "has realized healthy gains from business formerly served by Fleming distribution, including supplying some banners that are not affiliated with Giant Eagle," says Rob Borella, director of communications. "We'll continue to be opportunistic in gaining this type of business. Another upside is that we can accommodate this additional activity without making significant systems changes or investments in our wholesale infrastructure."
Wake-up call
Within the independent segment, Bill Bishop envisions that the retailer/wholesaler relationship will go one of two ways: "It'll either get stronger and more intimate, or the independent will not depend on a particular wholesaler for anything except for low cost of delivered product. In either case the partners will be working with a different level of trust that will be far more worthwhile for both parties than it's been in the past."
And while it appears that much of the smoke has cleared one year after Fleming's infamous inferno, that disaster was a wake-up call to the wholesale business that it couldn't continue as usual. Now, depending on how things shake out with Penn Traffic's bankruptcy proceedings, the next round of related new business activity may already be unfolding.