Edit ModuleShow Tags
Edit ModuleShow Tags

Midwest powerhouse


By concentrating on servicing independents, regional corporate-owned chains and military commissaries, the newly formed SpartanNash is fueling a future of growth. To millions of grocery shoppers throughout the Midwest, the name SpartanNash has little significance. However, for the grocery industry, the merger between Grand Rapids, Mich.-based Spartan Stores and Edina, Minn.-based Nash Finch Co. is very much the talk of the town. Family-Fare_Metro-Health-Village_produceSupermarket industry mergers are often fraught with turmoil. Uncertainty tends to be the norm with defection of executives, talent and unhappy customers to other chains and wholesalers commonplace. On the consumer level, favorite banners and brands often disappear creating a dissatisfaction that can topple the applecart. One only has to look at Safeway’s acquisition of Dominick’s or A&P’s takeover of Pathmark to see the downsides a merger can bring. Yet the Spartan Stores/Nash Finch marriage—consummated in November—is shaping up to be a happy one, fitting together on so many levels. Prior to their engagement, both companies operated with Midwestern sensibilities­­—strong balance sheets, little debt, cautious growth and deep-rooted community involvement—that have endeared them to retail customers, suppliers and consumers. The companies fared well on paper, as well, with annual sales of $2.6 billion for Spartan Stores in 2013 and $4.8 billion for Nash Finch in 2012. Officials at SpartanNash, now headquartered in the Grand Rapids, Mich. suburb of Byron Township, stress that their new company will stick to those principles. There is little geographic overlap, so massive store closings should not be an issue. Favorite store banners and house brands are being maintained. And management promises that the focus will be on servicing and building up the independent grocer with a unique portfolio that is almost equally divided between legacy wholesale, corporate-owned stores and supplying military commissaries. It is for these reasons and many more that Grocery Headquarters is proud to honor SpartanNash as our 2014 Independent Retailer of the Year. “Our companies fit together on so many different levels, not only geographically, which is obvious when you are a looking at the map, but they’re a cultural fit as well,” says Dennis Eidson, president and CEO of SpartanNash. “As we began down the path of exploring the most effective way to merge the companies, it really became intriguing to us that both companies have very similar cultures and go to market in a similar way with regard to the independent retail customer.” Parallels run throughout the two companies’ histories. Both began in wholesale and grew as distributors before entering the retail channel—Nash Finch in 1954 and Spartan Stores in 1999. Founded as a wholesale cooperative in 1917, Spartan Stores proved its grit by continuing to grow in size and sales throughout the Depression and World War II, Nash Finch has demonstrated the same perseverance and know-how since its 1885 start as a small confectionary store in Devil’s Lake, N.D. It subsequently expanded, first into the fruit growing and wholesale business, then as a distributor for supermarkets and independent grocers, and as a grocery retailer itself, before eventually entering the military sector. The result is more than 200 years of combined experience and expertise, creating what Eidson calls, “an extremely strong platform for future growth.” Strategic growth and consolidation is built into the foundation of SpartanNash, and the company’s leaders have their eyes set on more. “This is clearly a consolidating industry and the merger is a strategic decision that allows SpartanNash to be in a stronger position in the grocery wholesale and retail industry, and to be well-positioned for future consolidation opportunities should they present themselves,” says Eidson. The merger has many benefits associated with it, an “economies of scale” advantage being one of them. Now reaching a geographic region that stretches across 44 states from the eastern seaboard to the Rocky Mountains and as far south as Texas, the company expects it will be able to leverage its larger platform to build better relationships with its suppliers. The scale and ability to drive sales with suppliers, says Eidson, will result in greater access to category management support, shopper insights, loyalty analysis, co-marketing programs and an improved cost of goods. Officials estimate that the value of retail sales flowing through its customer base of corporate, independent and military channels is more than $13 billion. Balancing the portfolio Military-Commissary_DECAIt is not often a company can create synergy and success across multiple diverse business segments. Yet, SpartanNash officials see the larger platform benefiting their ability to focus on all three avenues of its business—retail (independent and corporate), wholesale and military. The military segment came with Nash Finch, which became a major player in the military commissary business over the past 20-plus years. The Military Distributors of Virginia (MDV), which Nash Finch acquired in 1995 after supplying commissaries and exchanges for a few years, will account for about 30% of the SpartanNash revenue, according to officials. “[Nash Finch] is a market share leader in this space and it gives the company far more balance in their business portfolio with 40% being legacy wholesale, about 30% retail and 30% military,” says Eidson. He adds that the company sees opportunities for learning between the two businesses as they continue to integrate, mostly in the retail division. Both companies have focused on ways to segment their retail base. Nash Finch, for instance, has done some segmenting across its retail banners, and recently rolled out a brand called Family Fresh that was designed to cater to a more affluent consumer. “We think there are some learnings there that can translate nicely to Spartan Stores legacy corporate stores,” says Eidson, “so I think you are going to get the synergistic benefit.” Spartan Stores has also attempted to segment its retail base, which consists of more than 100 retail locations in Michigan, with multi-tiered brands, including upscale, mid- and lower-tier. The merger expands the retail reach to include Colorado, Nebraska, South Dakota, North Dakota, Minnesota, Iowa, Wisconsin, Ohio and, of course, Michigan, with a total of 172 stores. Major changes beyond sharing merchandising and marketing tactics are not on the to-do list just yet. Company executives intend on maintaining both private brand portfolios. According to these officials, the majority of the volume is being driven by the premier brands—Nash Finch’s Our Family and Spartan’s Spartan brand. SpartanNash will also be supporting the IGA and Piggly Wiggly brand. Some brands may find themselves expanding into new stores or regions, however. For example, the company sees an open door for growth within the HBC category: “We think there are some opportunities on the HBC side of the business with our Topco relationship to be able to expand the Top Care brand; it has a far wider assortment then is currently available through the Our Family brand,” says Eidson. “That’s a benefit for all the independent retailers at Nash Finch going forward.” Keeping branding and offerings will help maintain consumer allegiance during the transitionary period while the previous companies’ leaders get a handle on each other’s markets and competition. Spartan Stores has always been up against chains like Kroger, Meijer and Wal-Mart in Michigan, but Nash Finch’s more expansive retail reach is up against more competition than Spartan’s leaders are used to, and it goes beyond traditional grocery banners. “We might add to the competitive set but it is not just the traditional retail grocery banners that are in play,” says Eidson. “A growing volume is being done today in alternative channels, whether it’s the limited-assortment channel, drug store channels, which are selling more and more of what I refer to as ‘our stuff,’ and dollar stores clearly are doing more.” This is where the companies’ roots in distribution come into play: “I think part of the benefit of having an expansive distribution network, which now includes 21 distribution centers across the country, is that we have positioned ourselves, we believe, to be a supplier to alternative channels going forward,” says Eidson. “And that is a key strategic thought around the acquisition. Can we do more with the assets that we have? We think the company is uniquely positioned to be able to do that. It will clearly be a focus of the company going forward.” There are formidable distribution competitors in wholesale in the Midwest, as well, he adds, noting a premier competitor headquartered in Minneapolis. “We think having this larger size and scale will allow us to even more effectively compete in that space going forward,” he says. Creating long-term value and preparing for future growth has always been a motivator. The new platform, created by the merger, has a base for geographic growth. The synergies created should also lead to a reduction of operating costs. Dave Staples, executive vice president and CFO for SpartanNash, estimates a total of $52 million in savings over the three-year integration period. He adds that there should be the ability to use best practices across the companies to improve profitability as well. The merger also resulted in minimal incremental debt versus what would have been accrued had it been structured as an acquisition, providing SpartanNash flexibility, says Staples. “The entity will generate significant free cash flow. This strong financial position will continue to allow us to move forward with strategic initiatives including additional consolidation opportunities,” he says. Eidson agrees. When asked about the next five years, he says the company is positioned to be a leading consolidator going forward with a strong platform “where we can bolt on future acquisitions from what we know is a very fragmented industry.”  Workplace Satisfaction Family-Fare_Metro-Health-Village_front-endMore than 16,000 employees across 44 states could set the stage for human resources obstacles. SpartanNash has no qualms about its ability to invigorate a dynamic work culture. They will continue to do what they have been doing. Spartan Stores and Nash Finch have been received numerous awards of distinction for their workforce satisfaction. “We are very proud of the various awards that we have received, as they reflect not only the integrity of our company but the overall satisfaction of our workforce,” says Dennis Eidson, president and CEO of SpartanNash. The company was acknowledged by:
  • Michigan Business and Professional Association - West Michigan’s 101 Best and Brightest Companies to Work For
  • Forbes Magazine - America’s 100 Most Trustworthy Companies, 2013
  • Fortune - World’s Most Admired Companies, 2012
“Preliminary culture surveys that we did prior to the legal close of the merger show a mirror image of the two companies, which gives us a lot of confidence that we will come together to build an even stronger culture,” adds Eidson. Engaging social responsibility The SpartanNash merger brought together two businesses that are not only strong players on paper, but also in the community. Through SpartanNash’s foundations, the NFC Foundation and Spartan Stores Foundation, the Grand Rapids, Mich.-based company’s social investments focus on the staples in life—hunger, shelter, health, education, literacy and diversity. Since food is the company’s primary business, hunger is a top priority for the foundations. Spartan Stores Foundation, founded in 2007, has supported numerous food drives and initiatives over the years, such as West Michigan’s Annual Food for Families food drive and other initiatives through its numerous retail banners. The NFC Foundation, which Nash Finch introduced back in 1922 as the Helping Hands Society, teams up with Loaves and Fishes, a Minneapolis-based local hunger relief agency. Each month, NFC volunteers serve meals to dining sites in need. NFC Foundation also strives to feed kid’s imaginations. Through Feeding Imagination, an educational program NFC created to provide books to children from areas and schools that have limited access to reading materials, it has donated more than 115,000 K-6 books to schools and nonprofits. Both foundations support the Special Olympics in their respective states. Spartan Stores, specifically, brings with it a 29-year partnership with the Special Olympics Michigan; 2014 will be its 30th year as a sponsor of the State Summer Games. In addition to financial support, hundreds of SpartanNash associates, retirees, friends, families, suppliers and independent retailers will volunteer at the summer games. Since 1985, the company has contributed $7 million to support the State Summer Games and the year-round athletic training of 19,613 children and adults with intellectual disabilities. —Molly Zimnoch A region of super-sized selection Family-Fresh_Hudson_butchersThrough the strategic merger and consolidation of Nash Finch Co. and Spartan Stores, the new Grand Rapids, Mich.-based SpartanNash will bring a wide variety of private label brands to the retail marketplace. While availability for each line varies, all brands will be distributed through Spartan Stores’ and Nash Finch’s existing retail banners. The Michigan-based banners include Family Fare Supermarkets, Glen’s Markets, D&W Fresh Market, VG’s Grocery, Valu Land and Forest Hills Foods. Outside Michigan locations include Econofoods (Minnesota, Wisconsin, North Dakota); Family Fresh Market (Minnesota and Wisconsin); Family Thrift Center (South Dakota); Germantown Fresh Market (Ohio); No Frills Supermarkets & Bag’n Save (Nebraska and Iowa); Pick’n Save (Ohio); Prairie Market (South Dakota); Sun Mart Foods (Colorado, Minnesota, Nebraska, North Dakota); Supermercado (Nebraska); and Wholesale Food Outlet (Iowa). With private label brands continuously gaining market share, company officials say they are maintaining their private brands for the time being.
  • b leve (specialty HBC products)
  • Full Circle (natural and organic products)
  • me too! (low-tier, economic alternative)
  • Nash Brothers Trading Company (organic, natural and premium products)
  • Our Family (backed by SpartanNash’s Satisfaction Plus Guarantee, Our Family aims to be equal or better than national brands)
  • PAWS Premium (dog and cat bagged dry food, canned items, cat litter, treats, toys and accessories)
  • Spartan Brand (national brand equivalent products that are low in fat, sodium and sugar to meet dietary and nutritional concerns)
  • Spartan Fresh Selections (high-quality fresh products)
  • TopCare (HBC products)
  • Valu Time (value-priced fresh, grocery and nonfood products)
  • World Classics (premium line of affordable, indulgent products) —Molly Zimnoch
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags