Business Spotlight: Healthy Relationships

There have been plenty of company milestones for Maurice Henry and Associated Wholesale Grocers Inc. during his 25 years at the Springfield facility. But the most recent announcement was major even by Henry’s standards.

AWG announced net sales of $7.06 billion at its annual shareholders meeting March 21. The amount represented a 3 percent, or $204 million, increase from the previous year, according to an AWG news release.

“The $7 billion (sales) is a very nice plateau for us, and we envision that our growth will continue at a very static and steady rate as we go forward,” says Henry, senior vice president/division manager in Springfield for the privately held retailer-owned wholesale cooperative.

The 830,000-square-foot Springfield distribution center is considered an original AWG division, started in 1938, along with the Kansas City, Kan., headquarters. The company added Oklahoma City in 1995, two Tennessee divisions in 2003 and Fort Worth, Texas, in 2007.

Henry says AWG also has added two primary-subsidiary companies: a nonfoods health and beauty subsidiary in Fort Scott, Kan., and a second warehouse in Memphis.

“As we have spread our geographic base, we have added more individual retailers and individual chains in our geographic area,” Henry says of the 2,259 stores serviced.

With AWG’s grocery brands, including Always Save, Best Choice and its private label, AWG Brands, built on value pricing, penny-pinching consumers have eaten up its products at local retailers such as Summer Fresh and Ramey-Price Cutter.

As a result, shareholders saw 2009 gains of 4.1 percent in the trading value of AWG stock to $1,510 per share. AWG distributed to shareholders a record $145.7 million, or 2.61 percent of qualifying warehouse sales, the release says. That amount represents what retailers purchased from the warehouses in 2009, Henry said.

“The last year has been economically challenging for our nation in every respect,” AWG President and CEO Jerry Garland says in the release. “This year saw a dramatic shift in consumer priorities with a real need to stretch consumable dollars. Our marketing direction stressed value and as a result, AWG Brands, our private label, had a record-breaking year.”

Springfield’s ‘huge role’
Henry says the Springfield distribution center, 3201 E. Division St., plays a major role.

“Out of this division, we service right at 390 retail supermarkets,” Henry says. “Springfield has always been just a very strong division for the world of AWG. Our sales next year are budgeted at just a tad more than $1.2 billion.”

The Springfield site is the second-largest of AWG’s six distribution centers.

“It and Kansas City operated together for much of the history of the company,” says Steve Dillard, vice president of corporate sales. “It plays a huge role in AWG. It’s a wonderful division with great retailers.”

Price Cutter Executive Vice President Larry Hayward has a unique perspective on the services AWG offers the local grocery chain. Hayward worked 14 years at AWG.

“As a customer of AWG for the last 40-plus years, Ramey-Price Cutter has been satisfied with the support we receive from them in their efforts to supply us with a quality product at a competitive price,” Hayward says.

Henry credits the success of the Springfield distribution center partially to its adaptability to change.

“At one point in time, the Springfield distribution center would only have supplied grocery products,” he says. “Fresh meat (and) produce, would have only been supplied by other vendors that called on the stores separately. As the business evolved, the landscape evolved; those vendors disappeared. Fresh meat and fresh produce was brought into the warehouse. It became available to our retailers in the same manner.”

In the mid-1980s, deli and bread distribution was added, Henry says.

Long on history
Although Springfield’s role within the company has always been as a distribution center, some functions have been moved or changed.

“Like most companies, technology has enabled us to centralize functions,” Henry notes.
Accounting functions, along with a couple hundred jobs, were moved to Kansas City in 1996, and some buying functions were later moved.

Historically, AWG has played a significant role in Springfield since its days as United Grocers, Henry says. AWG, founded in 1926, purchased United Grocers in Springfield in 1938, two years after it bought Associated Grocers in Joplin.

The two facilities later merged, and Joplin closed.

AWG Springfield employs about 700, down from its peak of 1,000 in the mid-1990s. It’s held steady the last six years, Henry says.

Henry says during a typical day at the warehouse, about 200 tractor-trailers come and go.

“Over the course of a week, it will be just under a million cases outbound – a rule of thumb for every case out, there’s a case in,” says Henry. “On average, 2 million cases of product every seven days.”[[In-content Ad]]Associated Wholesale Grocers claims to be the second-largest retailer-owned wholesale cooperative in the country supplying more than 560 members and operating more than 1,900 independent supermarket operators in 21 states. AWG, including subsidiaries, delivers to 2,259 retail outlets in 23 states through eight distribution centers.
Trade magazine Supermarket News ranks AWG fourth in sales among grocery wholesalers.
The Top 5 grocery wholesalers for 2010, based on sales in the most recent fiscal year:
1. Supervalu: $41.3 billion, fiscal year ended Feb. 27
2. C&S Wholesale Grocers: $19 billion, fiscal year ended Sept. 30
3. Wakefern Food Corp.: $11.7 billion, fiscal year ended Oct. 3
4. Associated Wholesale Grocers: $7.06 billion, fiscal year ended Dec. 26
5. Nash Finch Co.: $4.7 billion, fiscal year ended Jan. 2

Source: Supermarket News trade magazine