Associated Wholesale Grocers Expanding Its Reach

ELLIOT ZWIEBACH

Associated Wholesale Grocers seems to have been at the right place at the right time to expand contiguously for nearly 15 years.

Starting from its base in Kansas City, Kan., the member-owned cooperative has been able to make strategic acquisitions of distribution facilities as other companies faced financial difficulties.

In 2007, when Albertsons LLC, Boise, Idaho, was scaling back, AWG was able to acquire the company's 1.1-million-square-foot warehouse in Fort Worth, Texas, and to add the division's retail volume.

In 2003, Fleming's death throes helped AWG add three distribution facilities in Tennessee: a 750,000-square-foot warehouse in Nashville, a 750,000-square-foot facility in Memphis and a 550,000-square-foot general-merchandise distribution center in Memphis.

In 1995, the co-op acquired a distribution center from Homeland Stores in Oklahoma City while that company was going through its first bankruptcy. AWG also picked up that chain's business, and when the retailer ultimately ceased operations as an independent enterprise following a second bankruptcy in 2001, AWG added the remaining stores as a corporate subsidiary.

Most recently, AWG added approximately 400 stores generating an estimated $350 million in sales when Affiliated Foods Southwest, Little Rock, Ark., filed for Chapter 11 bankruptcy protection in May.

While each added facility meant additional volume for AWG, the cooperative was also signing up new business for its two original distribution centers in Kansas City, Kan., and Springfield, Mo., plus a general merchandise operation in Fort Scott, Kan.

By the Numbers:

• Sales since 2004 have increased by nearly half — from $4.6 billion to $6.8 billion last year, with volume expected to exceed $7 billion this year.
• Selling, general and administrative expenses have been falling since 2000, dropping 22 basis points to 3.68% of sales in 2008.
• AWG's patronage dividend hit a record $136.1 million last year, or 2.55% of qualifying sales. Total net income for the year rose 27.25% to $134.5 million.
• Total distribution to members has been rising steadily, increasing 18.4% last year to $420.4 million.