GENUARDI'S PLANS TO SHUT TWO WAREHOUSES

JENNIFER L. BALJKO

NORRISTOWN, Pa. -- Genuardi's Family Markets here plans to close its two distribution warehouses later this year to focus on its retail business.

The chain's 52,000-square-foot dry grocery warehouse in Oaks, Pa., and its 45,000-square-foot perishables facility in Hatfield, Pa., are slated to be shut Dec. 31, spokesman David Genuardi told SN last week.

Genuardi's decided to close its limited self-distribution operation after entering a five-year supply agreement with Richfood, Mechanicsville, Va., last week. The chain expects the deal to yield several efficiencies, namely in buying power and pricing capability, Genuardi said. "We felt that with the deal with Richfood, it's better for us to pull out of the distribution end and concentrate on our retail section," he explained. "There are significant efficiencies that come from the deal. One is that Richfood can buy the product better than we can, and those efficiencies will be visible to the consumer."

Before last week's agreement, the primary supplier for Genuardi's, which operates 26 stores in Philadelphia suburbs and in Delaware, was Super Rite Corp., Harrisburg, Pa., with frozens and perishables supplied by Rotelle, West Point, Pa., and Norristown Wholesale, Norristown, Pa. -- all of which Richfood has acquired.

Although Genuardi's will continue to receive products from those divisions, the new deal calls for Richfood to pick up distribution of Genuardi's self-supplied items in dry grocery and perishable categories plus fill out its grocery, bakery, deli, dairy and meat lines from its Harrisburg facility, said J. Stuart Newton, Richfood senior vice president and chief financial officer. The wholesaler also will supply Genuardi's with some Richfood private-label items as well as the chain's store-brand line, officials from both companies said.

Genuardi's and Richfood executives said the supply contract will help Genuardi's zero in on its core business.

"Our new agreement represents a strategic alliance between Richfood and Genuardi's," said Charles A. Genuardi, chief executive officer. "Richfood's focus on low cost, distribution and logistics will allow us to concentrate on our superior customer service and the future growth of our retail business."

John E. Stokely, Richfood president and chief operating officer, said in a statement, "Genuardi's is a valued customer, and we are excited about our expanded role in their future growth and success. Our size and position in the Mid-Atlantic marketplace and our highly efficient operations allow the services we provide to be an attractive alternative to self-distribution for independent retail chains like Genuardi's."

Genuardi's dry grocery warehouse has been used since 1968, and the perishables facility was built about 30 years ago, David Genuardi said. Warehouse employees have been offered jobs at the chain's retail outlets.