Although some wholesaling cooperatives shun the ownership of retail stores, Affiliated Foods Southwest said its Harvest Foods banner, which it acquired in 1997, has been a valuable addition to the company's operations.
re ownership to include 52 outlets under various banners, including Piggly Wiggly, Budget Saver, Save-U-More, SaveMart and Thriftway, which together generate about $200 million in annual sales.
AFS also acquired the Harvest Foods distribution center in Little Rock, Ark., through the acquisition. That DC, which measures about 450,000 square feet, is used for the company's convenience-store distribution operations and for warehousing certain supermarket items, such as candy and cigarettes.
"One of the best things this company ever did was to buy the Harvest Foods stores," said Jerry Davis, chairman, president and chief executive officer, AFS. "It didn't just help the co-op. It helped every single subsidiary that we operate. We knew then, and we know now, that it was a smart thing."
The company's previous philosophy was to minimize corporate ownership of retail stores.
"In the past, we owned one or two stores until we could get rid of them," Davis said. "Then we bought Harvest, and since then, we slowly added to them as customers went out of business and opportunities arose."
Buying Harvest Foods also bolstered the company's retail operations knowledge, which has been valuable to running the business, said Al Miller, special assistant to the president.
AFS allows the retail division to run itself independently, however.
"I subscribe to the theory that retailers don't make good wholesalers, and wholesalers don't make good retailers," said Davis. "They are completely autonomous."
The Harvest Foods stores have equal voting privileges with each of the other members of the co-op, he said. Executives from Supermarket Investors, the AFS subsidiary that operates all of AFS' corporately owned stores, meet with AFS each Friday to discuss strategy.