It's been the best of times and the worst of times for Unified Grocers. During the past year, the largest retailer-owned cooperative in the Western U.S. continued to add new members, including Alaskan & Proud and Times Supermarkets, but like many in the food business, the wholesaler has been challenged by a sluggish economy, inflation and rising health care costs. And, mirroring broader industry trends, Unified is seeing its upscale members perform very well, while other members continue to struggle in areas with high unemployment.
“The economic situation is generating mixed results throughout the regions in which we operate,” Al Plamann, Unified's chief executive officer, said in a second quarter earnings report. “In the Pacific Northwest, our upscale retail operators are outperforming other formats and are optimistic about the future. Many of our retailers throughout California, on the other hand, are continuing to experience sales and margin pressure and, in some cases, are aggressively implementing cost-control measures.”
To help its members navigate these difficult waters, Plamann last month split his responsibilities as president and CEO with Bob Ling, Unified's long-time general counsel. Ling now serves as president, and will be working more closely with the company's 500 members. Plamann will continue serving as CEO, focusing on the strategic goals of Unified.
Currently, Unified is looking to address challenges faced by many of its members. For many consumers, the recession led to shifts in buying habits that have persisted through an uneven recovery, Plamann told SN.
“Several things are happening,” he said. “The consumer is continuing to both try more and buy more private-label products. Secondly, I used to talk about the consumer inventorying products in their pantries by either buying multiple packs or buying a super-large pack. But I believe they are [now] way more interested in the dollars they are spending on a weekly basis than they are in getting the best deal per ounce.”
Unified has focused on three key areas to help its members maintain or build traffic and sales during this prolonged economic slump.
“We've spent a lot more time and money and energy trying to track the competitive pricing in our marketplaces down at a pretty low level,” Plamann said. The goal is not always beating the prices of local competitors, he explained. But, as shoppers have become more price sensitive, it has become more vital to ensure that a member's prices aren't too far out of line with those at major supermarket chains or big-box stores.
Second, Unified has encouraged its members to drive down costs, although Plamann noted that most of Unified's members “have done a pretty good job taking excess cost out of their operations at this point.”
And third, Plamann emphasized the importance of remaining competitive with staple items. In areas that are still struggling, pricing staples too high may not only cost a retailer a sale, it may cost them a customer.
“Make sure on really price-sensitive items — [items] the consumer is going to buy every day — that they stay relatively competitive so they don't lose that customer during a difficult time, because they're tough to get back.”