He'll never be mistaken for Monty Hall, but it's quite a game of “Let's Make A Deal” that Rick Cohen has been playing.
The chief executive officer of Keene, N.H.-based C&S Wholesale Grocers has skillfully navigated a crisis at one of its largest accounts by winning business with new retailers and driving more volume through others, all while addressing its own costs with a series of moves to tighten up the already-lean grocery wholesaler.
When A&P filed for Chapter 11 bankruptcy last December, the chance for collateral damages at C&S was considerable — particularly since the retailer considered its supply contract as one of the reasons it was in trouble in the first place. C&S supplied around 70% of A&P's $8 billion in annual sales and faced the potential that A&P would reject the contract.
C&S, however, showed a willingness to renegotiate, hammering out a new contract with the wounded retailer and agreeing not pursue a lawsuit regarding the rejection of their previous deal. The result is a new contract that A&P said would save it $50 million annually — and provides C&S with at least $28 billion in sales it can count on. A&P called the deal “the beginning of a renewed and symbiotic relationship between [A&P] and C&S.”
C&S is making up the difference by becoming more efficient and productive. It pitched in to take over trucking services for A&P after the retailer rejected a contract with that provider, and moved to consolidate warehouses it operated for A&P — an effort expected to accelerate in the months ahead. At the same time, C&S moved to transfer work for some of its other clients including Ahold's Giant-Landover chain. That retailer's volume gains over the last year helped soften the blow of A&P's decline.
A cost-savings plan to shift Giant's volume from a Jessup, Md., facility to C&S' York, Pa., warehouse earlier this year was potentially explosive, but C&S drew praise from labor groups following an agreement with union workers there that moved only half the volume. “I have to give C&S credit. They stepped up to the plate and were willing to compromise themselves,” Richie Brooks, president of Teamsters Local 730, told SN after the deal was sealed in May.
C&S is also looking to expand volume from growing food retailers like Target and from new accounts, including Foodtown, another Northeast chain.
The move to rein in costs is a challenge for C&S, which has traditionally been a lean operator, observers noted.
“For C&S, it's always been about volume and efficiency. And as a no-frills wholesaler there's a lot fewer levers to pull in terms of reducing costs while maintaining tonnage and volume,” Neil Stern, senior partner at McMillan Doolittle, Chicago, told SN. “They are truly working in a penny business with incredibly slim margins. Over the past decade we'd seen incredible growth for them, and now it's getting a little tough to find that growth.”
