Despite the loss of a major member that switched to self-supply, Associated Wholesale Grocers (AWG) has grown its membership substantially in the past three years. Sales to member stores have increased more than 8 percent, and AWG has achieved successive years of record patronage paid to its members, said David Smith, president and CEO.
AWG added new members and helped current members expand, primarily in its Great Lakes, Nashville, Springfield (Missouri) and Gulf Coast divisions.
“We are blessed to serve some of the country’s best independent retailers, and we continue to see them lead their respective areas with market share growth and smart expansion,” Smith said. “Serving their needs and supporting their growth makes us a better cooperative for all members.”
Following major expansion in 2017, AWG focused in 2018 on its four “strategic pillars” for success: accelerating profitable member growth; building, training and retaining high-performing teammates; strengthening core support and services; and leveraging technology and organizational infrastructure to enable long-term, sustainable member success.
Supplier partners supported the cooperative in reducing the cost of goods to members by another $10 million incrementally. AWG also achieved a 25 percent improvement in employee turnover and made gains in quality and freshness performance, among other key benchmarks.
“We anticipate that 2018 patronage objectives will be met or exceeded,” Smith told The Shelby Report. “Overall, a good year.”
Totality of programs boosts retailer success
Smith said there is no one program that could be defined as AWG’s recipe for success. Instead, it is the “aggregation and totality of our programs that allows our retailers to compete and be successful.
“We are proud of the collection of programs that we offer and constantly strive to improve their design, execution and effectiveness. It is the input and feedback that we solicit and receive from our retail members on the front lines that help us to achieve success with our programs,” he said. “In today’s environment, the most notable of our programs are those programs that add value not only to our member-retailers but also to the consumer.”
Some of these programs include AWG Store Brands—more than 4,000 SKUs with representation in every category. Each line has its own website complete with updated content, consumer information and customer support. Smith said AWG Store Brands’ penetration ranks as the highest of any wholesale supplier and rivals those of well-known national chains.
AWG’s Valu Merchandisers Co. (VMC) provides 40,000 consumer-focused SKUs of category solutions for health, wellness, GM, seasonal, natural, organic and specialty foods. Smith said these categories have become more important to the consumer and added that it is “imperative that our members have the variety and right cost of goods necessary to be competitive.”
VMC also boasts a pharmacy program available to AWG members and non-members alike.
Other programs include:
- StoreFront—A user-friendly web portal, StoreFront gives members and their teams easy access to the information they need to operate their businesses.
- Compete—Separate from AWG’s COMPETE publication (see box, page 38), this program, which was introduced to combat the continued proliferation of deep-discount and dollar stores impacting independent retailers, consists of multiple EDLC programs developed with strategic vendor partners, an extensive dollar program and an alternative-size national brand assortment, as well as industry benchmarking and best practices for members to help reduce expenses and increase margins.
- Omnichannel marketing solutions—The cooperative provides more than 30 different marketing programs to engage the consumer. AWG’s Sales and Services department offers the Shopper Engagement Platform (SEP), which allows retailers to promote digital offers, collect customer data and utilize a unique identifier to allow customers to load digital offers, as well as to track shopping behavior and performance. The department’s Customer Relationship Management (CRM) tool targets shoppers with personalized offers and manages variable promotions and rewards programs.
Other Sales and Services offerings include: email programs, text blasts, mobile apps, new mover programs, in-store audio, graphic design, nutrition programs, online shopping, photography services, digital signage, rebate programs, gift card programs, textile programs, print, traditional media and website design and support.
The other side of the competitive coin is hanging on to as many earned dollars as possible. Toward that end, AWG has created programs to help its members reduce expenses. One example is its lighting program, which allows retailers to add better lighting and reduce utility expenses at the same time.
Members can reduce shrink costs with AWG’s industry-leading code dating policy, which ensures that the product retailers receive has the longest possible shelf life.
The cooperative also worked with vendors to enhance its credit card processing program, allowing retailers to accept credit card payments for a greatly reduced fee.
AWG provides other cost-saving support programs, such as real estate services and store engineering; its Design and Décor Source Group (DSG); and a new store development program operated by AWG’s Super Market Developers subsidiary, which develops more than 1 million s.f. of new retail space annually. The subsidiary also manages new construction projects, eliminating the added cost of middlemen.
“We overcome operating expense escalations with our simplified business model cycle: Work every day to increase sales through our member stores, which drives our efficiency and reduces our expense rates, which in turn allows us to reduce our prices to our stores. Lower prices to our members produce increased sales and prosperity,” Smith said. “Thus, the cooperative cycle of success continues.”
Fundamental to its success are AWG’s industry-low markup policy and the return of profits back to member-retailers.
Smith said, “As we continue to see our wholesale competitors raise their markups and selling prices, we have continued to operate with the same basic markups for over four decades and our proven cooperative model for over 90 years.”
He added that AWG is fortunate to have an experienced, talented and dedicated team motivated by the cooperative’s responsibility to help members succeed and prosper.
“They take that responsibility seriously and know that we are charged with successfully executing all of our plans and commitments,” he said. “We could not be prouder of them and all they do every day to serve.”