KANSAS CITY, Kan. - Associated Wholesale Grocers here has begun construction on a new 800,000-square-foot full-service distribution center in Oklahoma City that is scheduled to open in mid-2007.
That facility will replace six smaller warehouses - that combine for 600,000 square feet - that AWG acquired from Homeland Stores in 1995 and Fleming Cos. in 2003, according to Steve Dillard, vice president.
Dillard said AWG has been using the former Fleming warehouses to distribute dairy and meat and the former Homeland facilities to distribute groceries, frozen food and produce. The new distribution center will be located a few miles from those facilities, he said.
The wholesaler also said it is reducing its fuel surcharge by 20% and its freight charges for produce - a combination that will save its retail members several million dollars annually, Dillard told SN.
He said the surcharge reduction became possible because of more-efficient fleet utilization resulting from increased volume and better use of cube since the company began distributing former direct-store-delivery items, including ice cream, cookies and crackers - a practice that is also reducing the cost of goods for members, he said.
He said AWG is lowering freight charges on produce shipments to bring them closer to the grocery rate. He declined to pinpoint the exact charge.
For the fiscal year that ended Dec. 31, AWG said sales were up 7.5% to $4.9 billion.
In a talk to shareholders at the company's annual meeting, Gary Phillips, president and chief executive officer, said AWG has added $1.8 billion in sales over the past three years, or an increase of 56.6%.
Mike Rand, executive vice president of wholesale operations, told the shareholders that AWG has reduced selling, general and administrative expenses over the last three years by more than 50 basis points, for a savings of $20 million.
Dillard told SN the expense reduction is the result of several factors, including added volume, technology advances, increased productivity and consolidation of grocery procurement.