In one of the most spectacular stories in the food industry over the last year, Cohen's Keene, N.H.-based company, C&S Wholesale Grocers, purchased and subsequently spun off and/or swapped the various assets of bankrupt grocery wholesaler Fleming. While the dust and dollars from the Fleming deal are still settling today, C&S emerged with around 1,000 new customers and $1.7 billion in new volume. Cohen in the meantime saw his reputation for influence in the grocery industry growing.
Cohen eschews publicity and declined SN's request for an interview. Observers describe him as an aggressive executive who has grown C&S into a powerhouse by focusing on efficient execution, skillful deal-making and bright employees.
"He's the most aggressive executive that's come into U.S. wholesale and retail in the last half-century," said Burt P. Flickinger III, manager director of Strategic Resource Group, New York. "C&S continues to make more and more money."
C&S differs from other wholesalers in that Cohen leads an organization focused solely on low cost and not on related services, said Jack Haedicke, founder of Arena Consulting Group, Eden Prairie, Minn.
"His whole strategy is based on efficiency of supply. While a lot of distributors try to be all-encompassing, for example, providing category management, C&S focuses purely on the lowest cost," said Haedicke. "The other difference is that while 90% of the business from a Supervalu comes from small chains, C&S is the opposite. It focuses on very large chains who outsource distribution to C&S."
Cohen's beliefs in outsourcing and efficiency are crystallized in a York, Pa., distribution center operated by C&S' logistics spin-off, ES3. Known as a collaborative warehouse, the York center is pioneering a "one-source" distribution hub to be shared by branded manufacturers and retailers for fast-moving items. The concept "is pretty nifty," said Haedicke.
"Manufacturers have warehouses and retailers have warehouses -- they both do the same thing. Why not put one the middle," Haedicke explained. "It's ike a public utility."
There are obstacles to making such a system work, observers acknowledge. "Manufacturers have embedded capital structures that they can't necessarily abandon, so it's not a small consideration for any of them," Haedicke said. However, giants such as Campbell's Soup and ConAgra are on-board with the plan already and additional branded manufacturers are said to be on their way.
In a career that began when he was a teenager in the late 1930s, Thomas Infusino has maintained a passion for the food business, coupled with an unwavering commitment to the basic principles of good service and competitive prices.
It's a philosophy that has guided Infusino through his 33-year tenure as chairman and chief executive officer of the Wakefern food cooperative, and as a member of its board since 1967. At 83, Infusino, who is also president of the Nutley Park ShopRite, Nutley, N.J., continues to play a key role in Wakefern's success -- and the success of its 38 cooperative members and their roughly 200 stores, including about 47 corporate stores. Elizabeth, N.J.-based Wakefern, with 2003 wholesale/warehouse sales estimated at $6.1 billion, is now the nation's largest cooperative grocery wholesaler, and its third-largest food wholesaler overall. Its members' stores -- mostly under the ShopRite and PriceRite banners -- are collectively believed to be among the strongest food operators in the New York Metro market, with among the highest market shares. The stores have competed effectively against chain competition like A&P and Pathmark in its core market in New Jersey.
Infusino, one of three executives to make SN's list of 50 visionaries who transformed food retailing, as well as this year's Power 50 list, told SN his role today remains much the same as it has been, adding, tongue in cheek, "I try not to be out too many nights a week."
He defined that role as "a moderator" as well as "a liaison" between membership and Wakefern's professional staff, making sure that both "mesh pretty well." One longtime Wakefern observer told SN that Infusino continues to be "in the loop on major decision-making," and a sounding board whose philosophy "still permeates the organization."
Infusino also still works on expanding Wakefern's membership base, whose growth has been critical to its success, he said. By adding to its volume, Wakefern is able to offset cost increases without raising prices, he noted. New members come from Wakefern's own professional staff as well as other retailers.
Wakefern is known for the support services it offers members, many of them small operators, such as store design and renovation, accounting and market research. "Whatever it takes for them to be successful," he said.
As for the future, Infusino, whose good health has allowed him to remain in his position, acknowledged that Wakefern does have a succession plan so that "the company will not be rudderless." He declined to elaborate on that plan.
In one concession to age, he has turned the reins of his one-store ShopRite operation over to his son David, who runs it with the son of Infusino's former partner, recently deceased. "I do go in on a daily basis," he added.
Infusino also continues to be "extremely active" as the longest-standing board member of the New Jersey Food Council, a state lobbying group he helped to found 35 years ago, said Linda Doherty, president of the organization. "We're successful because of Tom's input, dedication and passion for our organization," she said.
What's next: Launching three- to five-year remodeling cycle for Rainbow Food Stores to align store assortments with neighborhood needs.
Since joining Roundy's in 2002 as president and chief executive officer, Mariano has been listening to customers to find out what they want. The company is about to embark on remodelings and initiatives to deliver it to them.
Roundy's bought 31 Minneapolis Rainbow Food Stores from Fleming in mid-2003. Mariano has spent a lot of time visiting the stores to communicate with customers and employees, "listening to them and reinforcing our commitment to them," he told SN.
Dale Riley, who left the company last month as general manager of the Rainbow operation, said Mariano's presence in the stores has been inspirational for employees who had been expecting to lose their jobs while the stores were owned by Fleming. "Bob spent part of each week at the stores for the first nine months so people would get to know him, and they revere him and are happy and proud to be working for Roundy's. He's been able to breathe spirit back into the employees."
With the employees revved up, Mariano's next task was to determine what customers wanted Rainbow to be, he explained. With that process now completed -- one on one and through consumer research -- Roundy's intends to try to meet those needs over the next three to five years by remodeling the stores into combination food-and-drug units with a neighborhood slant "and aligning our assortment accordingly," he said.
Mariano said it's taken several months to begin the process of remodeling the Rainbows "because we didn't have the merchandising staff ready to go. Even if we'd had the staff, we didn't know what they needed to be ready to do because we hadn't determined what the marketplace needed."
Included in the remodeling efforts will be initiatives aimed at looking at ways to improve the customer experience using technology at the point of sale, Mariano told SN. For example, a remodeled store in downtown Milwaukee that's scheduled to reopen under the Pick 'n Save banner in August will have "line busters" -- employees with handheld scanners who will try to speed up front-end service by checking customers out while they're still in line. Roundy's also hopes to allow customers to utilize the handheld scanners themselves at a store still to be determined, he added.
The Milwaukee store will also use fingerprint identification technology to enable customers to check out more quickly without the need for checks or credit cards, Mariano said.
This is Mariano's second tour of duty in the industry. He spent 25 years at Dominick's Finer Foods, Chicago, ultimately becoming president and CEO, before the company was sold to Safeway in 1999. He spent the next three years as a consultant, "but that was not very satisfying because I like seeing things get done, not just telling someone how it ought to be done.
"The wonderful thing about being a retailer is, you get together with other people to figure out how to deliver something to customers and then the customers respond. So you learn very quickly if you've been listening to them or not."
Roundy's is continuing to shift its focus from primarily wholesale to primarily food retail -- a process under way when Mariano got there, he noted. The sales mix is now 61% retail to 39% wholesale, he said, "and we will continue along that path by adding more retail businesses."
Mariano said he sees opportunities for growth through ongoing industry consolidation and expects most of Roundy's retail growth to come in states contiguous to Wisconsin and Minnesota where its 120 retail stores operate under the Pick 'n Save, Copps and Rainbow banners.
Most growth will be funded by internal cash flow, he pointed out. "But if an acquisition that makes sense comes along of a size that requires substantial financing, then Willis Stein & Partners [Roundy's Chicago-based major equity investor] would consider putting in additional equity," Mariano said.
Fleming's struggles last year created a rare opportunity for other wholesalers to attract Fleming-served independents. Gary Phillips made the most of it for Associated Wholesale Grocers, Kansas City, Kan.
AWG picked up 480 new stores that boosted volume by $1.25 billion, according to Phillips, its president and chief executive officer for almost four years. Along with those stores, AWG acquired six Fleming distribution centers, of which three were kept, two were closed, and one was sold.
Overall, AWG's sales were up 18.5% to $3.7 billion last year, enabling the co-op to climb six notches to No. 28 on SN's list of the top 75 food distributors (retailers and wholesalers). AWG is now the nation's third-largest co-op, serving over 1,300 stores from six DCs.
"Our company has taken advantage of tremendous opportunities," Phillips told shareholders in April. "The cooperative approach to supplying goods and services has proven to be very efficient." AWG is continuing to attract retailers who sought out short-term distribution solutions during the Fleming fallout.
Phillips, 57, began his career at AWG in 1974. He led its Springfield, Mo., division for 14 years as senior vice president and general manager before becoming AWG's chief financial officer in 1996, and CEO in 2000. He is the current chairman of the National Grocers Association.
Jim Queen, who retired as vice chairman of AWG's board five years ago and whose son Barry runs the family's four Price Chopper stores based in Paola, Kan., has known Phillips since the 1960s. Queen described Phillips as a "hands-on" CEO who is able to relate well to retail members regardless of their size.
"So many CEOs get into that position and focus their attention on the big guys," said Queen. "Gary's not that way. He's sensitive to small retailers, and AWG has many small retailers."
Queen credited Phillips for AWG's success in the Fleming acquisitions, calling him a "great negotiator." The additional volume has given AWG a new "sense of direction," while giving it greater buying clout -- crucial in the competition with Wal-Mart, he noted.
Barry Queen, who sees Phillips regularly as a member of AWG's board, said Phillips' ability to talk in comprehensible terms about the complex financial and legal issues associated with Fleming "absolutely blows me away." Phillips, added Queen, "is a powerful man. I don't know what we'd do without him."
The Fleming acquisitions have started AWG in the dollar merchandise business as one of the Fleming warehouses has been deployed for that product line. Under Phillips' leadership, AWG has also become more active in using technology, including voice-based picking in its DCs and Web-based EDI.