SALT LAKE CITY — Associated Food Stores is on a mission to make sure its members' stores are “warm, uplifting, friendly places,” said Lee Badger, chairman of Associated's board and president of Lee's Markets in Logan and Smithfield, Utah, as he spoke via video recording at the co-op's recent annual meeting.
Rich Parkinson, president and chief executive officer, Associated, reiterated that theme to SN, noting that Associated foresees ongoing sales growth driven by training and “localization” — individualized merchandising, geared to store-specific demographics.
For the 52-week fiscal year that ended March 29, Associated reported consolidated sales of $1.63 billion, up 7.2% from the previous fiscal year's 53-week total of $1.52 billion. Inflation accounted for more than half of that growth, driving sales up by 4% to 4.5%, Parkinson said.
Based here, Associated has 450 retail members in six states: Utah, Idaho, Colorado, Montana, Wyoming and Nevada. Associated also operates 23 corporate stores and supplies about 150 non-rebate-qualifying non-members.
Predicting a 5% growth in consolidated sales in the current fiscal year, Parkinson noted challenges facing Associated stores include the slow economy and high gasoline costs, which will leave customers with less money for food. He projected inflation will account for about 3% of next year's growth, with the remaining 2% of real growth materializing as Associated stores are able to stimulate sales though the adoption of localized retailing.
During the next two to three years, Associated's 12-member, full-time Localization Team hopes to approach all members with recommendations gleaned from demographic studies of their individual marketing areas. So far, two corporate stores have “localized” and eight more are scheduled to “localize” by the end of this summer, Parkinson told SN. The transition from a standardized to a store-specific format takes six to eight weeks, he said.
Associated has endeavored to weave education programs into both the localization effort and into the overall fabric of the company itself. Over the past year, the company has tripled its financial commitment to training programs to $300,000, Parkinson said.
Last January, Associated held its second, three-day Partners in Leadership seminar. Close to half the 30 participants represented the upcoming generations within family-owned stores, he estimated.
These Partners in Leadership sessions, as well as Associated's participation in internship programs co-sponsored with the Western Association of Food Chains, contribute to inspiring confidence and interest among young people in pursuing careers in their family's grocery business, Parkinson said.
In September, Associated will launch its Associated Food Stores University. Twenty-one classes, lasting one to several days, will be taught throughout the year by the company's six-member, full-time training staff at the 25,000-square-foot training center opened last year at headquarters. Sponsored by their individual stores, participants will earn a Grocery Leader Certificate after taking classes in team leadership, business management, entrepreneurship and personal effectiveness.
Associated's Macey's chain, along with the 13 other corporate stores, posted a 6.7% sales gain in fiscal 2008, reaching $531.3 million, compared with $498 million in fiscal 2007. Corporate stores account for about 33% of Associated's total consolidated volume.
Retained earnings, which derive primarily from corporate stores, totaled $90.8 million, up 12% from the previous year's $81.4 million.
Patronage allocation to non-corporate stores was $37 million, up 20% from last year's $30.7 million. Included in this year's patronage allocation was an accelerated $5 million rebate given in key categories as an off-invoice reduction allowing members to either lower their cost of goods or place those monies in an interest-bearing account with Associated, according to the annual report.