A NEW DISTRIBUTION SOLUTION

David Merrefield

C&S Wholesale Grocers, Brattleboro, Vt., is probably among the fastest-growing wholesalers in the nation. The company finished its last fiscal year with a top line of $2.5 billion and is predicting a leap toward $3.5 billion by this year's end.

What's going on in the Northland? Is this wholesaler growing by acquisition, or by amassing and running corporately owned supermarkets, as are the fashions of the moment? Not a bit of it. C&S is growing by pursuing the unusual strategy of supplying supermarket and supercenter chains. Indeed, 85% of C&S's total sales volume is driven by chains, with the balance coming from the traditional wholesaler revenue source, independent stores.

As you'll see by the news feature starting on the front page, in little more than a year C&S began supplying three significant chains: Grand Union Co., Wayne, N.J.; Edwards Super Food Stores, Windsor Locks, Conn., and supercenters operated by Wal-Mart Stores, Bentonville, Ark. It also became supplier to Mayfair Super Markets, Elizabeth, N.J., which, like Edwards, is owned by the Dutch-American operator Ahold.

Moreover, C&S is secondary supplier to locations of A&P, Montvale, N.J.; Stop & Shop Cos., Quincy, Mass.; BJ's Wholesale Club, Natick, Mass.; Big Y Foods, Springfield, Mass., and Victory Markets, Utica, N.Y.

Rick Cohen, C&S's president, chief executive officer and sole shareholder, told SN reporter Lisa A. Tibbitts that C&S sees itself as more or less alone when it comes to going after chain business.

"I don't think wholesalers have gone after chain business. Essentially, we're creating our market and it's a big untapped market."

C&S may have a clear field at the moment because many wholesale operators regard supplying chain stores as an ephemeral and troublesome situation, at best. However, that attitude is undergoing change as many wholesale companies unbundle costs and offer fee-for-service arrangements to all.

But Rick Cohen is obviously well ahead of the game when it comes to chain supply, and he hopes it's a long-running game: "There was always the pattern that chains would use a wholesaler for a short period of time and then end up doing their own distribution [and the wholesaler would lose out]. We say, 'if we're doing a great job, why should we lose it?' " And with one exception that reasoning is probably impeccable. By the way, C&S's fortunes are also boosted by being near a retailing ground zero of change. In the Northeast, many chain operations have been hobbled by a sluggish economy and fettered by high-cost union contracts, and so are unusually amenable to the idea of using a third-party distributor.

But what of the exception facing C&S when it comes to supplying a chain operation long term? It's Wal-Mart. C&S supplies nine Wal-Mart supercenters and expects to pick up six more by the end of the year, which is good, but temporary. There's no doubt Wal-Mart is busy developing its own food-distribution capacity and will ultimately sever relationships with all distributors.

And, Wal-Mart is edging distribution capabilities Northward. In recent days, the discounter said it would soon start construction of an 830,000-square-foot food-distribution center in west-central Pennsylvania to be used for supercenter supply.

Wal-Mart looms large, as always.

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