FOUNTAIN, Colo. -- King Soopers expects first orders to ship from its new GHC warehouse here later this month as it begins supplying nonfood to several Dillon Cos. divisions, owned by Kroger Co.
Operation of the 365,000-square-foot facility, which features semi-automated equipment, will improve King Soopers competitiveness in nonfood retailing, said industry observers familiar with the chain.
Although he wouldn't comment on the warehouse's effect on nonfood at retail, Bill Deckman, general manager of the warehouse, told SN the objective for the facility is to service four of the supermarket divisions under Dillon's. These divisions include Fry's Food Stores of Arizona, Phoenix; City Markets, Grand Junction, Colo.; Dillon Stores, Hutchinson, Kan., and King Soopers, Denver.
Observers said that through the warehouse operation, which will contain 15,000 to 17,000 nonfood items, King Soopers will be able to cut its warehouse labor and transportation costs, increase variety and buy more effectively in nonfood categories.
King Soopers executives could not be reached to comment on the warehouse's direct implications from a competitive position when SN contacted the chain.
The Fountain facility, located 80 miles south of Denver, replaces a smaller 120,000-square-foot nonfood warehouse in Denver that King Soopers has been leasing. That lease expired June 30, but it was extended until the new nonfood depot comes on line. Fry's will be the first chain to be supplied out of the Fountain warehouse, beginning July 28, with another division slated to follow two weeks later.
The name of the warehouse, officially called GHC Merchandise Distribution, reflects "the conceptual stage in talks about general merchandise, health and beauty and common item grocery. That name just kind of stuck," recalled Deckman. In addition to nonfood, which comprises about 80% of the overall mix, the balance of space will be devoted to slower moving grocery inventory such as baby food, gelatin desserts and other such lines with moderate turns.
Last month, buyers were busy selecting items for inventory, including the different brands carried by each of the divisions.
"Not all divisions carry the same brand of lightbulbs," said Deckman. "We aren't trying to get into a situation where we're mandating that every division is going to carry the same items, although we're trying to streamline wherever we can," he added.
The warehouse initially will handle the everyday nonfood needs of the divisions. "Hopefully, we'll eventually begin working our way into promotional items and in-and-outs," Deckman said. The facility will improve efficiencies for all divisions, which have drawn nonfood from their respective grocery depots. Deckman described this situation as being "very tight for space." Since the other divisions "share space with other commodities in a grocery warehouse, a major objective of the GHC warehouse was to remove nonfood and provide more space for groceries." This severe overcrowding made accepting new nonfood introductions difficult, he said. "If you brought something new in you had to take something old out because there just wasn't any more room." The overcrowding situation even caused some to turn to outside leased storage space for nonfood inventory. Nonfood orders in the GHC warehouse will be sent to the various divisional distribution centers, where they will be married with grocery deliveries in a cross-docking arrangement. Deckman envisions the warehouse will reach full capacity by early next year.