Déjà vu all over again. At this time last year, grocery wholesalers were challenged by two key issues – supply chain dysfunction and the first signs of inflation. While inflation has certainly had a greater impact on the retailers they serve than 12 months ago, wholesalers remain frustrated by the number of products that still remain out-of-stock or are available only on an allocated basis.
“It’s like trying to play whack-a-mole,” said one senior VP of merchandising for a large regional wholesaler based in the Northeast. “Some products return to the system while other items where we had previously experienced little if any disruption over the last three years are now unavailable. And because we’re not Walmart or Costco, our leverage is almost non-existent with many of the large CPG suppliers. The same holds true with the increasing number of products that have been restricted or allocated. This is hard on us and hard on our independent retail customers.”
And while service levels in many cases remained under 80 percent, most of the wholesalers analyzed in this survey did post sales gains over a year ago because the inflation tailwinds continued to blow strongly.
Once again, leading the pack was member-owned Wakefern Food Corp., the largest wholesale grocery co-op in the country. The Keasbey, NJ-based co-op rang up a record $14.4 billion in wholesale volume which was generated primarily through the success of its nearly 400 retail supermarkets under the ShopRite, Price Rite Marketplace, The Fresh Grocer, Dearborn Market, Fairway Market and Gourmet Garage banners. Wakefern’s market area covers New Jersey, New York, Connecticut, Pennsylvania, Delaware, Maryland, Massachusetts, New Hampshire and Rhode Island, and includes dominant positions in the large Metro New York and Delaware Valley markets. During the past year, Wakefern added four new ShopRites as well as 10 Gerrity’s Supermarkets in Northeast PA, which now trade as Fresh Grocers. Another independent group that the company supplied, Morton Williams, joined the Allegiance/Foodtown group and switched wholesalers to C&S.
Internally, there were a lot of changes at Wakefern. Former executive VP Chris Lane left the co-op in June (no replacement has been yet named) and long time president and COO Joe Sheridan announced that he would be retiring in October 2023 after 47-years with Wakefern. A national search is ongoing to find Sheridan’s successor. Industry veteran Kevin O’Donnell (ex-Fairway Market, A&P) was promoted to president of the company’s Price Rite Marketplace discount division replacing Jim Dorey, who is now running store operations for large Wakefern member Inserra Supermarkets. Brett Wing, who once served as president of the company’s ShopRite Stores (SRS) division and most recently was senior VP-excellence for Wakefern, retired. Promoted from within were: Michael Day to group VP-strategic planning, business development and member services; Dan Tarnopol to VP-site development, real estate and member services; Ryan Maloney to VP-retail services and member initiatives; and Danny Perriello to director of retail operations.
C&S Wholesale Grocers, the nation’s largest privately-owned wholesaler, ranked second among all retail distributors in the Mid-Atlantic region with estimated annual sales of $11.8 billion. It was an active year for the Keene, NH-based distributor. Internally, it announced it will be shifting operations to a cloud-based platform, a major initiative which is projected to be completed late next year. There were also some customer gains and losses which affected C&S’ top line during 2022. Leaving C&S during the past 12-months was most of the remaining Ahold Delhaize USA business (a process that was announced in 2019 and will be completed in 2023) and Gerrity’s Supermarkets (which was serviced from the company’s Robesonia, PA depot). On the plus side, C&S added 132 Price Chopper stores, a move made after the creation of Northeast Grocery, Inc. which combined the assets of Price Chopper and Tops Markets (C&S has long served as Tops’ wholesaler). As part of that 2021 deal, C&S also acquired a dozen divested stores which now trade as Grand Union and Piggly Wiggly. Additionally, C&S gained the business of two New York City-based regional groups – 15-store Morton Williams, which is now part of the Allegiance/Foodtown group; and Western Beef with 20 supermarkets, which joined ASG earlier this year. All of Allegiance/Foodtown and ASG member retailers are supplied by C&S.
UNFI’s growth this year was bolstered primarily from a full-year of supplying Key Food. The Providence, RI-based distributor enjoyed a strong sales year and remained the third largest wholesaler in the market, with an estimated volume of $11.6 billion in the Mid-Atlantic. Key Food is being serviced from UNFI’s new distribution center – a one million square foot depot near Allentown, PA. In addition to Key Food, UNFI continued to supply some of the region’s largest independent groups – Redner’s, B. Green, Karns, Graul’s, Murphy’s and McCaffrey’s.
Two of the largest national convenience store wholesalers – McLane and Core-Mark – dominated c-store distribution in the region. McLane’s 12 warehouses serving more than 6,000 stores (including many 7-Elevens) amassed estimated regional sales of $2.91 billion; and Core-Mark, which became a division of Performance Food Group in 2021, supplied nearly 3,000 c-stores and amassed estimated annual wholesale sales of $2.8 billion in the region.
Family-owned wholesale grocers, the genesis of virtually all grocery distribution, remained an important part of the landscape, despite continuing industry consolidation on a national basis.
Bozzuto’s, owned by the Bozzuto family, continued its tradition of strong customer service and innovation. The Cheshire, CT-based wholesaler serviced approximately 1,200 independent stores, many of which fly the IGA banner, and rang up wholesale sales of $2.5 billion in 2022.
Merchant Distributors, Inc. (MDI) remained the leading wholesaler in the Southeast, serving more than 700 stores (including Lowes Foods, the regional chain of nearly 100 stores that parent firm Alex Lee owns). Annual wholesale volume is estimated at $2.2 billion for the Hickory, NC-based firm which in recent years has expanded its independent retailers bases deeper into the Mid-Atlantic..
Two metro New York based distributors – Krasdale (owned by the Krasne family since 1908) and General Trading (owned by the Abad family) – also showed positive growth during 2022.
Krasdale Foods, based in White Plains, NY (with a distribution center in the Bronx), supplied many independent retailers under such banners as AIM, Bravo, C-Town, Market Fresh, Shop Smart and Stop 1 – whose combined sales paced all independent retailers in the five boroughs of New York City. All told, the company serviced approximately 3,050 stores in the metro New York and Philadelphia markets and accrued estimated sales of $1.6 billion this year.
General Trading, based in Carlstadt, NJ, also serviced many independent merchants doing business in the areas in and surrounding New York City. Of the company’s nearly 3,500 stores it supplied, many were ethnic and specialty customers. Annual wholesale revenue is estimated to be $641 million.
Of all the classes of trade, nobody performed better than the three large club operators which performed well nationally and regionally. We have broken out store counts and estimated sales for those units which operate in our coverage area. The nation’s largest club store operator – Costco –led the pack in the Mid-Atlantic with 78 stores and an estimated $7.2 billion in annual sales (extrapolated to include only food and related products). Nobody grew faster than BJ’s Wholesale, which not only operated the most stores in the region – 108 – it added five new units over the past 12 months which produced annual estimated extrapolated sales of $5.2 billion while Walmart-owned Sam’s Club’s 45 stores amassed $2.6 billion in estimated extrapolated volume this year.
