NEW AWG WAREHOUSE TO CUT MEMBER COSTS

RAMONA G. FLOOD

KANSAS CITY, Kan. -- Associated Wholesale Grocers' new technologically advanced warehouse is expected to give some of its 900 member stores a stronger competitive position in nonfood.

"The primary reason for the warehouse," said Bill Lancaster, vice president of corporate sales for the cooperative here, "is to counteract the serious erosion in health and beauty care and general merchandise at supermarkets."

The 217,000-square-foot facility in Fort Scott, Kan., expected to open next month, is devoted almost exclusively to health and beauty care and general merchandise. It will primarily service retailers in Missouri, Kansas and Oklahoma. Specialty foods will be a small part of the warehouse operation.

About 700 member stores are signed up to participate in the program in advance of the opening. Ultimately, AWG hopes to have all of its about 900 member stores on board, said Lancaster.

Initially, the warehouse will carry between $20 million and $25 million worth of nonfood inventory, said Lancaster.

The state-of-the-art facility will be highly automated, using computerization for electronic ordering. The "paperless" technology will allow retailers to buy HBC and general merchandise at substantially lower prices. As a result, store-level, on-shelf prices will compare favorably with mass merchandiser retails, Lancaster said.

The system also will provide HBC buyers with efficient ordering and distribution so that retailers will have adequate stock without overstocks at store level, he added.

Several supermarket chains

will switch their business from a service merchandiser to AWG when the Fort Scott warehouse is in full operation. Jim Kaneaster, vice president of general merchandise at Town & Country Supermarket, Salem, Mo., confirmed that all 44 Town & Country stores would fulfill their nonfood orders through the AWG warehouse.

"The advantage of the new warehouse is that our costs will be less," said Kaneaster. "We are hoping to increase our business by being able to use what space we have to better increase our displays and feature our better-selling items more successfully."

He added, "Earlier, our projection for increase in profits in HBC with the new warehouse was about 6% to 7%, but that has decreased somewhat and it is unclear at this time exactly what the increase will be. But we're sure it will be an improvement." Town & Country formerly used Millbrook Distributors, Harrison, Ark., as its HBC merchandiser. "Up until now Millbrook was the best that was available in our area," said Kaneaster. Lancaster said Town & Country will now rely on in-store personnel instead of a service merchandiser to service the HBC sections.

"On-site personnel will allow each store to take possession of its HBC and general merchandise sections," said Lancaster, "so that they can start displaying and promoting categories more successfully."

Kaneaster agreed that the new staffing system would be an improvement over the previous system because it would be more hands on.

Eddie Thomas, HBC supervisor at Town & Country Supermarkets, Hardy, Ark., said that his 22-store chain will switch from Millbrook to AWG for its HBC products as soon as AWG completes the retagging of the Town & Country shelves with AWG shelf tags. Brad Beattie, HBC buyer for Price Cutter/Ramey's 30-store Springfield, Mo., chain, also formerly supplied by Millbrook, is looking forward to the change. "Aug. 1 is the tentative date for the new program to start, but AWG will come in shortly before that and begin the retagging process," he said.

Lancaster offered no specific projection on HBC growth, but stated that in the next five years AWG hopes to double its nonfood distribution in many of its member stores.