NEW YORK -- Nash Finch, Minneapolis, said last week it intends to assess opportunities at its 85-unit corporate store base over the next 18 to 24 months to build better competencies and determine whether a value-added or extreme-value format would be appropriate.
"Our retail business has been impacted by approximately 40 supercenter openings over the last four years, and we didn't always handle the competitive response as well as we should have," Ron Marshall, chief executive officer, told the 24th annual Piper Jaffray Consumer Conference here. "So we will spend the next 18 months to two years to follow through on dramatic steps to revitalize and fine-tune our competitive response at our corporate stores.
"In markets where we are the second store in a Wal-Mart-dominated environment, we are clearly the fresh alternative and the high-value, high-service alternative, and we see opportunities to grow and consolidate that business," Marshall pointed out.
"We also believe extreme-value stores may be desirable in certain areas. We learned a lot from our Buy n' Save stores [an extreme-value format that Nash Finch is closing], and we have an extreme-value format called WFO in Nebraska and Colorado that has done well, vs. traditional competitors, and that has absorbed the Wal-Mart impact better.
"So our first goal is to fix what we have and build competency and confidence, and then to assess opportunities on a store-by-store basis to determine how we can fit either a value-added or deep-discount/extreme-value format into our store base."
Nash Finch is in the process of seeking a buyer for three Denver-area units of Avanza, its Hispanic-oriented format, and closing 18 other corporate stores, including three other Avanza units; nine EconoFoods stores; five Buy n' Saves; and one Sun Mart. Marshall said last week the stores represented 3% of total corporate sales, "so it's a non-event for the top line, and because the stores are so spread out, no single distribution center will be affected."
Marshall echoed previous comments by Nash Finch executives that the company sees ongoing opportunities to pick up some of the former Fleming volume that is currently being supplied by other wholesalers.
"The perception is that the Fleming sweepstakes ended when contracts were signed by C&S, Supervalu and Associated Wholesale Grocers, but that's not the case," he said.
"Although many of those contracts were for five, six or even seven years, the average length is three years. As they come up for renegotiation, it will provide an opportunity for us, as well as other wholesalers, over the next few years."
To illustrate the potential for wholesale growth, he cited the example of Fairway Foods, a Minnesota-based wholesaler that was acquired by Supervalu four years ago. "Several independents formerly served by Fairway came [immediately] to Nash Finch, and over the next several years, other retail customers joined us.
"As a result, we ended up gaining 20% of Fairway's volume, or $80 million, without spending a dime. While we don't expect to get 20% of Fleming's volume, we hope to get our share."
Marshall said Nash Finch's wholesale distribution business increased more than 10% last year as a result of volume picked up from Fleming.
He said he sees additional volume opportunities from stores being sold or closed by a variety of chains, including Ahold, Penn Traffic, Winn-Dixie, Albertsons, Dominick's and Farmer Jack. "Many of those stores will end up with independent operators who might become Nash Finch customers," he pointed out.
