NASHVILLE, Tenn. -- The shift to centralized buying by large distribution companies has forced C.B. Ragland here to exit the wholesale grocery business and liquidate its inventory, said Michael Hayes, the company's chairman and chief executive officer.
"A variety of trends came together over a period of time," he explained. Among them was the move by Kroger and Fleming to close area distribution centers and relocate buying offices out of state. "Those moves reduced our coverage from the manufacturers. We felt like we were getting less attention from the major manufacturers, and the pricing differential between us and the larger wholesalers who consolidated their buying offices made it difficult for us to compete. It was the final straw," Hayes told SN.
On top of this, there was the entry of large discount chains into the market, which has forced manufacturers to realign the grocery supply chain. "In this new structure, buying and distribution functions have become so centralized that independent, regional distributors cannot procure products at competitive prices," said Hayes in a prepared statement.
He named Publix Super Markets as a new rival in the market, and he said that Wal-Mart Neighborhood Market stores were expected sooner rather than later in Nashville (see related story on Page 4).
The company expects an orderly transition for its 160 independent retail customers within the next 60 days. The company has slated Oct. 18 as the date it plans to be out of the business.
According to F&D Reports, published by Information Clearinghouse, Great Neck, N.Y., the wholesaler's grocery inventory will be sold to Fleming Cos., Dallas. Hayes would not confirm that report, nor would he cite a dollar amount of inventory on hand. A Fleming spokesman said he was not aware of the company acquiring Ragland's inventory.
While Ragland will close its grocery distribution operation, which supplies food and general merchandise to independents operating in the five-state area of Alabama, Georgia, Kentucky, North Carolina and Tennessee, it will still maintain its Nashville distribution center, as well as its ICC Trucking and Colonial Realty subsidiaries. Hayes said there were no immediate plans for use of the distribution center.
The wholesaler employs 171 people who will be affected by Ragland's decision. "For the next 60 days, our emphasis will be on helping our employees and customers prepare for the future. We are working to structure an assistance package that reflects our concern for the commitment of our employees. Plus, we will do whatever it takes to help our customers make the transition to their new supplier," said Hayes.