Performance driven

A dedication to servicing independents and a genuine passion for community service are among the gears driving wholesaler Nash Finch Co.’s well-oiled machine. That’s why it has been named 2010 Grocery Headquarters Wholesaler of the Year.

By Richard Turcsik

Veteran retailer Jeff Maurer had his choice of wholesalers when he decided to open Fresh Madison Market in downtown Madison, Wis. Supervalu and Affiliated Foods Midwest have extensive wholesaling operations in the region and service most of the independents in the area. But Maurer opted to go with a relatively new player to the central Wisconsin market—Edina, Minn.-based Nash Finch Co.

“This is the first time I’ve worked with Nash Finch and I’ve been very impressed,” Maurer tells Grocery Headquarters. “They have been a very good partner. They have worked very hard with me to develop this site because it is also new for them, and I think they see this [urban concept] as a potential opportunity for them around the country.”

For its efforts to help independent grocers weather uncertain economic times, along with its dedication to military families and unparalleled effort to stamp out hunger, Grocery Headquarters is proud to honor Nash Finch Co. as its 2010 Wholesaler of the Year.

Maurer says Nash Finch is going out of its way to help him succeed. They created a pilot program that used texting to reach his core customer base of college students. They are guiding him with stocking the right inventory.

“We really struggled with the inventory control to get products and that is really another example of how Nash Finch really helped us out,” he says. “In a matter of minutes by phone call they were able to get us deliveries. We increased our deliveries per week. They reduced the lead time for us so that we didn’t have to order quite so far out. They were really flexible and really stepped up to help us get trucks here sooner to replenish our shelves.”

Maurer’s sentiments are echoed by hundreds of other independents—make that 1,700—in a 28-state operating area stretching from Georgia north to Pennsylvania, and west across the Heartland to Montana.

“Nash Finch is certainly a strong supporter of their role in our state trade association,” says Jamie Pfuhl, president of the St. Paul-based Minnesota Grocers Association. “They are very active in the advancement of the retail food industry here in the state and they work very collaboratively on the behalf of their independent retailers. We see Nash Finch working to actively engage independents in the political process and making sure that they are educated for creating a sustainable environment for the independent retailer.”

“Recognition of Nash Finch with this reward is well-deserved,” says Dave McVicker, vice president of retail sales for Blue Bunny at Wells Dairy, Inc., based in Le Mars, Iowa. “It is a privilege to work side-by-side with them and we value their commitment to being a solution-driven partner.”

Raman Roy, chairman and managing director of Quatrro FPO Solutions, the Chicago-based firm that has supplied accounting services to Nash Finch’s customers for the last six years, can sum up his feelings for the wholesaler in two words: “Great people!”

“Nash Finch is just a very personable company that is very concerned about its clients, as are we,” he says. “We partnered with Nash Finch so they can provide that holistic approach of services to their customers. We’ve become another arm of services that they can offer their customers. Our goal is to make sure that their customer can also be successful at understanding their numbers, providing them with timely numbers so that they can make operational decisions that impact their success. They are delivering the groceries and we are delivering the financial results.”

Words to live by

That philosophy can be summed up by Nash Finch’s slogan: Performance Driven. It’s found on everything at Nash Finch from corporate stationery and the annual report to the sign atop the brick headquarters building along a bustling stretch of France Avenue just outside Minneapolis.

“We have a whole program built around making sure we understand what is performance in the eyes of the retailer and what is the accountability around that,” says Alec C. Covington, chief executive officer. Once a year, Nash Finch has a third party company survey all of its customers, including independents, vendors, and DeCA (Defense Com­missary Agency). “Using a third party allows them all to grade us on items that they feel are important,” Covington says. “They get to assign a scale of 1 to 5 in terms of how important each individual attribute is, and then they get to assign a point scale to it in terms of how well we do in that particular category.”

Nash Finch is so serious about the survey that its incentive system, which is used to reward managers all the way up to the CEO, is based upon its results. Apparently it is paying off. Sales in fiscal 2009 were up 12.5%, to a record $5.213 billion. After adjusting for acquisitions and an extra week of sales in 2008, total company comparable sales decreased 0.6%, still pretty admirable, given the state of the economy.

“The competitive pressures on the supermarkets that we supply today are at some of the highest levels,” says Christopher A. Brown, president and COO of Nash Finch Wholesale. “So what we’ve been doing as a company is trying to block and tackle better than anybody. Not just as us from a wholesaler to our retailer, but more importantly to help the retailer on some of the core fundamentals of the business.”

Those fundamentals cover key areas including NFC Brands private label, perishables, metrics (supply chain), center store, store core (programs and services, like accounting and store design), a variety of store formats, and marketing and advertising. Take perishables, for example. “When it comes to our meat, produce, deli and bakery we outpace our competition,” Brown says. “In many of our divisions we do all of our own produce; in our meat program, one of our stellar brands is our proprietary brand—Angus Pride, from Cargill.”

“At Nash Finch, everything centers around the idea that it’s important for independent business to survive—and it is vitally important that somebody be there to develop and support the needs of independent retailers. And in doing that you can’t have any conflicts,” Covington says, with a nod towards his wholesaler competitors that also have extensive corporate store holdings.

Fresh concepts

That’s not to say Nash Finch doesn’t have corporate stores. It operates 54 of them, including the Hispanic-targeted AVANZA and traditional stores under several different banners, including Family Fresh Market, its newest, operating stores in the far outer ring Twin Cities suburb of Hudson, Wis., and the more rural New Richmond, Wis., where a 1950s-era Econo Foods was expanded and is more than holding its own against the 8,000-population town’s Walmart Supercenter.

Family Fresh Market offers a full assortment of perishables, including store-made salads, service seafood, butcher shop, an extensive in-store bakery and a Caribou Coffee shop. AVANZA, meanwhile, operates out of 30,000-square-foot stores stocking an “authentic portfolio” of imported and domestic products geared to first and second generation Hispanics. It’s the type of store where the Roma tomatoes and avocados are piled high and mid-aisle pallets are filled with sacks of rice and beans.

“The purpose of owning these corporate stores is to develop formats that can in turn support our independent retailers. And we’re not going to be operating them in conflict,” Covington says, adding that when the corporate stores are well established, Nash Finch often sells them to its independent members.

While the news is full of stories about the recession causing scores of long-established independents to bite the dust, according to Covington, real estate being vacated by declining chains actually opens up new avenues for independents seeking to expand or get a foothold in the market. “Are there as many independents as there were at one time? No,” he says. “But there also aren’t as many conventional stores in total. There’s this great big belief that the independent retailers are deteriorating at a faster pace, but if you look at our quarterly earnings compared to Safeway and Supervalu we fall right in the median of the industry.”

The number of independents has dropped dramatically over the past 35 years that Covington has been in the business, but he notes many of the survivors are operating more than one store and have become quite business savvy. “Today, my customers have their own chief financial officers. They have an outside board that in many cases helps guide their business, so there may be fewer independents in number, but they are much better capitalized and educated, more organizedand have a clear sense of what they need.”

Smaller board

When it comes to Nash Finch’s own board of directors, Covington finds smaller is better. After joining Nash Finch as CEO in 2006, one of the first things he did was to shrink the board to seven members, including himself. “Our belief was that if you have too many people in the room you can’t get things done. We’ve been able to construct a very solid, well-engaged board that I genuinely enjoy working with,” he says, adding that members were specifically recruited for what they could bring to the wholesaler.

A smaller board resulted in streamlined committees. “I just can’t tolerate that in a typical board meeting you spend the first day in all of your committee meetings, and then on the next you spend half the day updating board members who weren’t in the committee meeting. Then whatever time you have left you finally get to talk about the business,” Covington says. “My idea was to ask all board members to serve on all committees so we don’t have any committee updates. We do all of that stuff on the first day and on the second we spend the whole day talking about the business—what are we going to do and how are we going to run it.”

In addition to Covington, the board consists of chairman William R. Voss, managing director of Lake Pacific Partners; Robert L. Bagby, former chairman and CEO of A.G. Edwards; Mickey P. Foret, president, Aviation Consultants; Douglas A. Hacker, former executive vice president UAL Corp., Major General (Retired) Hawthorne P. Proctor, managing partner, Proctor & Boone LLC Consulting; and Sam K. Duncan, chairman, president and CEO of OfficeMax.

“Sam is somebody that understands our business, and in the event that the board felt like it was their moment in time and they needed to step in and run the business, they have somebody that really understands this industry from a retailer perspective and is someone who has done some very successful things in life,” Covington says. “Likewise, Pete Proctor’s background is proven from the military side. He understands DeCA, understands the military culture. He plays a critical role in our military strategy.”

Winning with the military

Headed by Ed Brunot, Nash Finch’s MDV subsidiary services many domestic military installations east of the Rockies and overseas in Europe, Cuba, the Azores, Egypt and other countries and is a growing part of the business. Other wholesalers, including C&S, Supervalu and Bethel-Eckert Enterprises, are key players in military distribution, but Nash Finch is the largest.

“The way we’ve tried to set Nash Finch up for more of a global perspective is that first of all we’ve tried to get people understand for business to be sustainable and for people to want to be aspired and want to participate with you, they’ve got to be able to look beyond the business plan and see that there is a meaningful purpose that you are trying to serve to society and to the community at large,” Covington says.

That is accomplished by making its em­ployees understand their job has a purpose. “I can tell everybody that we want to double ourselves in five years. That’s intellectually interesting, but it isn’t inspirational, except to maybe shareholders and senior management,” Covington says. “But when you stand up and tell people that we have an organization whose desire is to ensure that families stationed abroad can experience the same products that they can at home, and we believe that it is worth doing, that serving the families of our heroes that take care of us here and abroad is something worth doing—you get a whole different reaction.”

Walk through MDV’s Norfolk, Va. headquarters and you’ll find a staff that sees themselves as a connection to military families throughout the world, Covington says. “They are working hard everyday on [military families] behalf,” he says. “They know that when they load up a container going to Germany that if they misload it that may influence what families are able to purchase in a commissary somewhere in Europe for days. They take that very seriously. Most of them are former military. Their extended families are military.”

Three-tiered private label

In addition to the name brands, shoppers in commissaries as well as Nash Finch-supplied civilian stores are requesting the company’s three tiers of private labels. Our Family, dating back to 1904, is the flagship, encompassing more than 2,000 offerings of national-brand quality products in food, non-foods and HBC. Introduced about nine years ago, Value Choice offers hundreds of value-oriented food and non-food products. Nash Brothers Trading Co., a line geared to the natural and organic shopper, is the most recent entrant.

“We launched Nash Brothers Trading Co. just as the economy was heading south,” Brown recalls. “We started to think it was the wrong time, but guess what? The organic and natural consumer wants to save money as much as anybody.”

“We hope to expand Nash Brothers Trading Company into a lot of different areas,” Covington says. “The eventual goal is to expand beyond just our own customer base and sell it outside of our own Nash Finch network really as more of a brand.”

Behind the scenes all three tiers receive national brand treatment. “Upstairs in our headquarters we have a QA lab,” Brown says. “We do product testing, sampling, sensory perception, etc. We have label design and label development departments and designers. Our QA department writes our own specs, which we then bid out to vendors.”

The quality of that private label gives an added edge to the independents that Nash Finch serves. “Everything centers around the idea that it’s important for independent business to survive,” Covington says. “It is vitally important that somebody be there to develop and support the needs of independent retailers.”

Luckily for those independents, there’s Nash Finch.

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