2014 Annual Report

On the Move
Annual Report 2014
1i
Unified Grocers is a company on the move.
Sales and earnings grew dramatically in
2014 and we are #1 in market share
in every market we serve.
1ii
Contents
02
03
04
05
10
Chief Executive
Officer’s Review
Chairman’s Statement
Financial Highlights
Progress Report
Unified at a Glance
1
12
14
15
16
Owner Highlights
Associate Highlights
Officers
Board of Directors
Chief Executive
Officer’s Review
We set some ambitious goals for
I would also like to thank the board for
the company for fiscal year 2014.
its strategic guidance, as well as our
More importantly, we delivered. The
owners and our business partners for
number one goal was to improve
their support.
sales. For several years, Unified has
seen a decline on the top line. We set
Finally, as I am sure you all know, in
out to change that and challenged
December we announced an expanded
ourselves to not only bend the
relationship with Haggen, the new
curve but to get it going in the right
owners of 146 stores in the western
direction. I am happy to report that
U.S. divested as a result of Albertsons’
we were able to do exactly that as we
acquisition of Safeway. This is an
increased our year-over-year gross
exciting opportunity to build on our
billings by over $140 million.
already strong relationship with a key
member. It puts Unified in position
That is an impressive turnaround,
to add significant business to the
but not the whole story. With those
cooperative and ultimately that will
growing sales, we were able to improve
benefit all our owners.
our performance at the operating level
too. Last but not least, our owners and
At the same time, we remain focused
our board expect us to be as efficient
on being as easy to do business with
as possible, and I am pleased to say
as possible. Our owners and other
that our expenses as a percent of
customers have the right to expect that
sales are down by almost 5 percent
we bring them the right products in the
($13.8 million).
best condition, on time, every time and
that our entire company is accountable
I would like to say thank you to every
and organized around that principle.
Unified associate for helping us achieve
That is the standard we have set, and
those goals. The thing that makes me
you have my commitment that we will
proudest is seeing the quality of the
continue to deliver on that promise.
team we have in place and the way
they rallied and focused on getting
These are exciting times for Unified,
the job done in 2014.
and I look forward to updating you
on our progress.
BOB LING
President
and Chief Executive Officer
Whatever your relationship with
Unified, I hope you see in your dealings
every day with our associates that
there is a real sense of “can do” and
togetherness across the organization.
In that same spirit of teamwork,
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BOB LING
Chairman’s
Statement
From my perspective, fiscal year 2014
of our distribution network and benefit
was a very important year for Unified.
from further economies of scale.
It was a year in which the board of
directors and the management team
Bob has assembled an excellent team
made several key decisions that will
around him and the actions taken by
greatly strengthen our company for
the management team this year —
many years to come.
with the full support of the board of
directors — have put Unified in position
We were able to add greater diversity
to reap maximum benefits from all the
of talent and expertise at the board
opportunities before us.
level with the addition of retired
Chairman and CEO of Nestlé USA
The company’s improved financial
Bradley A. Alford and former Farmer
position and positive results have
Bros. Co. President and CEO Roger
reaffirmed my confidence that
(Rocky) M. Laverty. The appointment
the future is bright for Unified
of two such distinguished directors
and our independent retailers. By
reflects our confidence regarding the
strengthening the partnership between
business prospects for independent
Unified and our owners, we will
retail grocers and our commitment to
continue to prosper.
serving that market.
There were many Unified success
While outside the fiscal year timeframe
stories in 2014 and you can read about
of this annual report, the expanded
some of them in the pages of this
relationship with Haggen announced
annual report. This is only a partial
on December 19 was an exciting
snapshot of the ways Unified is on the
development for the company.
move, and there is more to come.
It was the culmination of many months
It has been an honor to serve as
of comprehensive review, analysis and
chairman for the past year and I speak
discussion on the part of our directors
for the entire board when I say we
and management as we explored the
appreciate your support.
opportunity, alternatives and ultimately
made a decision we felt was in the best
RICHARD E. GOODSPEED
interests of the cooperative.
The expanded relationship is great
Chairman of the Board
RICHARD E. GOODSPEED
news for Haggen and all of our owners,
as it allows us to enhance our buying
power, improve the efficiency
3
Financial Highlights
Dollars in
For the Fiscal Year Ended*
Thousands
Unaudited
Gross
Billings
Operating
Income
Operating
Expenses
Sept. 28, 2014
Sept. 28, 2013
Percent
(52 weeks)
(52 weeks)
Change
$3,883,144
$3,742,706
+ 3.8%
$13,870
$4,474
+ 210%
$271,819
$284,050
- 4.3%
* Fiscal year ends on the Saturday nearest September 30
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Progress Report
Expo 2014: Bigger and Better
Before the doors opened to Unified’s Expo 2014 at the Long Beach
Convention Center, pre-orders had already exceeded $65 million. Sales
eventually rose to $120 million when the final numbers were tallied (up more
than $5 million from last year). This year’s event attracted more than 2,500
retailers, suppliers and guests to 840 booths and offered many new and
exciting features that made it easy to do business with Unified.
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Progress Report
Grocery, Frozen Foods and Deli
The largest Unified department represents more than 40
percent of our business — about $1.7 billion in annual sales.
Thanks to a number of organizational re-alignments, our
Sales, Procurement and Customer Satisfaction teams
are actively collaborating to deliver exceptional service
and integrated solutions. From buying to warehousing to
delivery and everything in between, everyone is on the
same page with greater coordination and accountability.
As a result, case volume continues to show improvement.
To reduce waste and increase efficiencies throughout
the wholesale and retail operations, we extended our
electronic invoicing program to owners in all of our
operating regions. The electronic format speeds up the
order processing and product delivery process. It also
makes the order dispatch process much smoother and
gives earlier visibility to retailers in advance of load
delivery. To date, 195 headquarters accounts and 439
stores have discontinued use of paper.
Hispanic Marketing Programs Focus on Sales
Unified serves more than 400 Hispanic retailers, making us
the largest “virtual” Hispanic chain in the country. Our twopronged Hispanic marketing program leverages our scale by
partnering with key brands to drive traffic to stores, move
cases and provide a measurable return on investment for our
owners and partners. These programs, created specifically
for the Latino shopper, are proving to be a powerful force
in generating sales and building customer loyalty for our
supplier and retail partners.
MercadoSavings
There is a similarly good story to tell regarding procurement
Latinos lead the way in digital and social media use in
revenue. Forward buy performance on deals improved, we
the shopping experience. The MercadoSavings program
met or exceeded service level targets in each area, and new
embraces that trend with a mobile strategy designed to
item activity is driving new sales and revenue.
build brand and store loyalty through discounts, sweepstakes
and engaging content such as tips and recipes specifically
New marketing programs, retail technology
targeting the Latino Millennial. Scan sales lifts for participating
advances and enhanced shows to highlight
brands in top categories average between 25 to 34 percent.
Unified’s range of products, services and
MercadoSavings is averaging a 95 percent retention rate
programs also contributed to the
compared to the industry standard of 80 percent.
bottom line.
6 6
95%
80%
MercadoSavings
customer retention
Industry standard
¡Celebremos!
¡Celebremos! — Let’s Celebrate! — is built around a festive
store-front environment. Each event is customized at the
store level with different monthly themes to connect with the
local community. With up to 1,000 shoppers attending each
“
”
event, participating item scan sales are averaging increases
of more than 40 percent. While the numbers are impressive,
the feedback from retailers is equally gratifying.
Using Retail Technology
to Drive Results
“Super King Markets’ ¡Celebremos! events definitely brought
excitement and increased traffic to our stores.”
Independent retailers understand their
— Chris Denney, Grocery Buyer, Super King Markets
shoppers and react quickly, with a passion for
the business unmatched by the big chains. We’re
“For years our CPG partners have been asking for programs
finding new ways to combine that creativity, agility and
that are more community oriented and can create in-store
passion with technology and infrastructure to generate
activity. ¡Celebremos! offers a great balance between
shopper loyalty and increase sales in a secure environment.
providing an exciting event for our customers and creating
brand awareness for our partners and driving sales.”
•
Our proprietary ReadyPay electronic payment system
securely processes 112 million transactions every year.
— Tony Hernández, Director of Marketing,
Vallarta Supermarkets
•
The new Mobile Ordering app enables retailers to view
item descriptions, pack size, cost, order history and
“¡Celebremos! is truly a game changer
more using their iPhones.
when it comes to store-front customer
engagement promotions.”
•
Through the Scan Advantage program, Unified is the only
wholesaler in the country providing a scan data service.
— Omar Milbis, Vice President
of Sales and Marketing,
•
Rio Ranch Markets
In-store beacon technology in partnership with
inMarket’s “Mobile to Mortar” platform is poised to
transform how retailers communicate with shoppers.
•
eDeals videos are a fun, fast-paced way to showcase
limited-time only deals.
•
A new show format called Sales Marketing and Retail
Technology (SMART) brings together retailers and
technology vendors. The shows feature learning sessions
on everything from social media, scan data, and mobile
payments to loyalty programs, systems security and
Unified’s Business Center site.
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Progress Report
Fresh Programs and Manufacturing
Another stellar performer is our Fresh Programs, what we
used to refer to as Perishables. The division (which includes
meat and seafood, service deli, service bakery, produce, floral
and our dairy and bakery operations) exceeded $1.3 billion
in gross billings in 2014. That’s more than double the gross
billings of only six years ago. It’s an incredible success story.
Moving away from a geographic approach to a departmentfocused approach has resulted in greater efficiencies
and enhanced collaboration across our buying and
selling functions. As a result, we saw record growth in all
departments as the top line exceeded the previous year by
more than $190 million.
Meat represents the biggest part of the business. Total meat
sales were up almost 18 percent over the prior year. We
saw sales growth in all geographic regions, both in terms of
selling more to existing owners, on-boarding new owners and
increased sales to other customers. Total pounds were up 8.2
percent; cases up 9.6 percent, and case value up 7.9 percent.
Meat and seafood sales benefited from some inflation, due
to record cattle and shrimp prices, but the year-over-year
growth in tonnage represents true, incremental growth.
Our produce business benefitted from the
strategic partnership in the Pacific Northwest with
Charlie’s Produce, the West’s largest produce company.
The one-year anniversary of that partnership passed in July
and it’s proving to be a win-win for both companies. As
an exclusive partner in all produce categories in Oregon,
Washington and Alaska, Charlie’s gives our owners access to
a wide variety of quality fresh produce (including organic),
floral and service deli products. Charlie’s is also benefitting
from the partnership and is expanding its operations in
Portland to facilitate further growth.
The Manufacturing divisions were another success story.
Bakery sales were up 40 percent and Dairy sales up 9 percent
year-over-year. Plant efficiencies reduced overhead costs and
throughput measures continued to improve.
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Market Centre
Logistics
Market Centre is an integral part of what sets Unified
All of this growth momentum is exciting, but it is important
apart from the competition, representing more than $700
to note that we are doing it with a focus on the well-being of
million in annual sales. 2014 was another great year for
our people. Injuries inside the warehouses were down over 30
our specialty subsidiary and sales were up more than
percent and we are not done yet. We want to work fast and
$25 million year-over-year.
efficiently, but also safely.
Growth of the Natural program was a key sales driver. The
A key transportation project was the introduction of new
product offering is robust in the Pacific Northwest and, for
route optimization software. The software optimizes
the first time, California retailers now have access to many of
the amount of miles driven, drive time and delivery
our dry and perishable products.
time. As a result, service times are improved and
delivery cube maximized on every dispatch.
Market Centre has the signature brands to be a market
leader. The competitively priced Natural Directions brand is
performing well and is now available throughout California
and the Pacific Northwest. With over 200 products in the
range (we’re adding new categories every month), sales
growth was 25 percent ahead of the prior year.
A key General Merchandise/Health, Beauty and Wellness
(non-foods) initiative in 2014 was the introduction of in-store
wellness centers. The Market Centre team has converted 34
stores to date, and each has experienced double-digit sales
growth. No other distributor can provide a fully integrated
retail solution and the wellness centers delivered an
incremental $1 million in sales.
Through our Neighborhood Markets smaller-store program, we
supply a variety of niche retailers. Neighborhood Markets sales
were up 18 percent year-over-year.
Market Centre also launched a new website in 2014:
marketcentre.com. The site is dedicated to showcasing the wide
array of products and resources and enhancing relationships
with retailers, suppliers and other key business partners.
In conjunction with the site’s roll out, Market Centre introduced
a new logo and the tagline, “A World of Difference,” designed to
celebrate its extensive offerings in many product categories.
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Unified at a Glance
A Full-Service Wholesale Cooperative
compete in today’s grocery industry.
rse
ive
n
U
Profe
ssi
on
es
rvic
Se
al
western United States, providing everything retailers need to
Pro
du
ct
Unified is the largest distributor of grocery products in the
Decisions are made to maximize service to our owners
e
so
and the communities they serve
•
Our goal is to create value for our customers
•
We return surplus revenue to our owners
pp
R
•
re
owners of the company
Su
Independent retail members are both customers and
Sto
•
ort
At Unified:
ur
ces
M
e
ark
ti n
g
We provide an array of products in every category found in a
typical supermarket:
•
Grocery, Frozen, Deli
•
General Merchandise/Health, Beauty and Wellness
•
Produce, Meat and Seafood
•
Corporate Brands
Buying Power
Our volume generates more leverage on our
Market Centre Product Offering
owners’ behalf. That means:
Hispanic
•
Better prices
•
Greater promotional allowances
•
A wider range of products
Asian
Gourmet
1,600+
1,300+
7,500+
Natural
5,300+
General Merchandise and Seasonal
Natural Health, Beauty and Wellness
A World of Difference
Consumers are different and so are the products they buy.
Natural Bulk and Candy
Market Centre understands these differences. We have
one of the most comprehensive specialty and signature
brand offerings in the grocery industry.
9,000+
1,400+
1,900+
Other Ethnic
1,000+
Our mission is to bring that world of difference to each
and every customer on a daily basis at a competitive price.
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Natural Frozen and Ice Cream
650+
Strength in Numbers
Unified supports
365 members
x 10
Unified supplies
2,900+ retail stores
in the western United States as well as Alaska, Hawaii, Guam
and international customers
Top Quality,
Competitively Priced
Corporate Brands
x 10
•
Signe Franzen, Divisional
Controller; Karen Cononetz,
Senior Director of Center Store
Procurement, PNW; Abby Fox,
Manager, Procurement Strategy,
2014 Honors
and Tina Juarez, Director, Benefits
were named Progressive Grocer
®
•
Unified was named
2014 Top Women in Grocery
Store Brands magazine’s
2014 Wholesaler of the Year
•
Senior Vice President and Chief
Marketing Officer Sue Klug was
•
Senior Vice President and
named Chairperson and President
President of Market Centre Joe
of the Western Association of
Falvey was named 2014-15 Chair of
Food Chains, the first female
the California Grocers Association
chairperson in the organization’s
(CGA) Board of Directors
history
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Owner Highlights
Northgate González Markets Wins
2014 Ben Schwartz Retail Grocery Visionary Award
Ben Schwartz (left) and Oscar González
Anaheim-based Northgate González Markets, which operates 40 supermarkets
in Southern California, was the recipient of the 2014 Unified Grocers Ben
Schwartz Retail Grocery Visionary Award. The annual award recognizes an
outstanding independent retailer demonstrating leadership and innovation.
Amen Family Inducted into
CGA Educational Foundation Hall of Achievement
The Amen family
Left to right: Jeanne, Joanne, Jim and Renee
Four members of Los Angeles-based Super A Foods’ Amen family were
inducted into the California Grocers Association Educational Foundation
(CGAEF) Hall of Achievement at its annual gala in March. Lou Amen, a
longtime member of the Unified board of directors, had previously been
inducted into the Hall of Achievement in 1999. This year’s honorees were Lou’s
son, Jim, who is president of Super A Foods, and Lou’s three daughters —
Jeanne, Renee, and Joanne — who also work for the company.
New Store Openings
Demonstrating the health and vitality of independent grocers throughout the West, many
Unified member retailers celebrated new store openings in 2014.
•99 Ranch Market
•
Hidden Valley Market (Grants Pass)
•
La Superior Mercados (Yuba City)
• Amapola Market
•
Lilac Foods Market (Valley Center)
(West Covina)
•
New Seasons (Portland, Tualatin)
•
Northgate González Market
(Corona)
• Big Saver Foods
(Long Beach)
•
Saar’s Super Saver Foods
(Auburn, Seattle)
•
Seafood City (Rancho
Cucamonga, Waipahu)
•
(Los Angeles)
Superior Grocers (Gardena,
Maywood, Pomona)
•
Cardenas Markets (Murrieta)
•
Oliver’s Market (Windsor)
•
Three Bears (Chugiak)
•
El Super (Long Beach, Ontario,
•
Omni Swanson’s (Bethel)
•
Vallarta Supermarket (Hesperia,
San Diego, Victorville)
•
Pancho Villa Mercado (San Ysidro)
•
Farm Direct Market (Irvine)
•
Payless Foods (Sumay)
•
Gelson’s Market (La Canada-
•
R-N Market (Fresno)
Flintridge, Long Beach)
Oxnard)
•
(Laguna Niguel)
•
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Wholesome Choice Market
Willamina Select (Willamina)
Haggen Team Honored
Clement Stevens
Leading Pacific Northwest independent grocery retailer Haggen was named the
Large Business of the Year by the Bellingham/Whatcom Chamber of Commerce
and Industry for its service to the local community. In December, Unified
announced an expanded relationship
with Haggen, the new owners of
146 stores divested as a result of
Albertsons’ acquisition of Safeway.
Bristol Farms’ Davis Recognized
for Entrepreneurial Achievements
Left to right: Leslie Sarasin, Kevin Davis and Frederick Morganthall
Bristol Farms President and CEO Kevin Davis was presented
the Food Marketing Institute’s Robert B. Wegman Award for
Entrepreneurial Excellence at the 2014 FMI Midwinter Executive
Conference in January. In addition to leading the 13-store Bristol
Farms chain, former Unified chairman Davis is a prominent member
of the food retail community, serving on FMI’s board of directors and
many other organizations working to advance the grocery industry.
WFIA Honors Three Unified Retailers
Mike Koens (left) and Paul Kapioski
Three Washington retailers — Paul Kapioski (West Seattle Thriftway), Norm
Mathews (Vashon Thriftway) and Darris McDaniel (Shop ’N’ Kart and 13th
Street Market) — were honored by the Washington Food Industry Association
(WFIA) at its annual Food Industry and Awards Reception. Kapioski was
presented with the WFIA 2014 Grocer of the Year award for his lifetime
commitment to the independent grocery industry and leadership in his
business and community. Mathews and McDaniel each received Excellence in
Operations awards for excelling in the daily operations of their stores, product
merchandising and commitment to their employees.
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Associate Highlights
Women’s Resource Group Has Successful First Year
Kimmie Barton (left),
Unified’s Women’s Resource Group (WRG) accomplished
Bridgette Wright and
much in its first year. Thanks to the support of women — and
Signe Franzen
men — throughout the company, the WRG hosted many
successful networking and career planning events, work/life
Regional Service Recognition Awards honor
balance discussions, learning groups and charitable activities.
associates who’ve reached significant milestones in
their Unified careers.
Unified Associates Share Their Expertise
In 2014, our subject-matter experts spoke at many key industry
Our people are our most valuable asset and Unified associates
events, including the National Grocers Association Show, FMI
prove that every day, whether they’re helping our company
Connect and the Shopper Marketing Conference.
and retailers grow and succeed, or assisting each other and
their communities.
At the Natural Products Expo West in Anaheim, California,
Market Centre team members Stephanie Steiner, Director of
Earth Day is Every Day at Unified
Sales and Marketing, and John Creed, Category Manager for
Unified associates celebrated Earth Month 2014 with a
Natural, Frozen and Dairy, served as panelists in an educational
calendar full of “green” activities. Led by the members of
session hosted by Supermarket News.
the Green 365 Team, associates in all operating regions
participated in “Reduce, Recycle and Reuse” educational
At the Hispanic Retail 360 Summit in San Antonio, Regional
sessions, document shredding and electronics recycling
Marketing Manager Nancy Lopez-Pedroza moderated a
events, as well as composting and planting seminars. More
discussion featuring Unified retailers Hector González Jr.
than 800 saplings were distributed to associates during Earth
of Northgate González Markets, Beto Chavez of Chavez
Month to take home and plant.
Supermarkets and Omar Milbis of Rio Ranch Markets. The
discussion focused on independent grocers’ efforts to
Thanks to suggestions from associates, electric vehicle charging
connect with Hispanic shoppers.
stations were added to the Commerce headquarters parking lot.
Left to right: Hector González Jr., Omar Milbis, Beto Chavez and Nancy Lopez-Pedroza
14
Executive Management
Bob Ling
Rich Martin
Leon Bergmann
President and
Executive Vice President,
Executive Vice President,
Chief Executive Officer
Finance and
Sales and Procurement
Administration and
Chief Financial Officer
Dan Murphy
Joe Falvey
Sue Klug
Executive Vice President,
Senior Vice President and
Senior Vice President and
Fresh Programs and
President of
Chief Marketing Officer
Manufacturing
Market Centre
Christine Neal
Randy Scoville
John Bedrosian
Senior Vice President,
Senior Vice President,
Vice President,
Finance and Treasurer
Accounting and
Manufacturing
Chief Accounting
Officer (Retired)
Terry Ann Bodwin
Scott Bower
Bob Garibaldi
Vice President,
President,
Vice President, Sales,
Chief Human Resources
Springfield Insurance
Northern California and
Officer
Company and Unified
International
Grocers Insurance
Gary Hammett
Gary Herman
Mark Johnson
Vice President,
Vice President,
Vice President,
Real Estate
Information Services and
Procurement
Chief Information Officer
15
Board of Directors
Richard E. Goodspeed
Louis A. Amen
Jay T. McCormack
Chairman
First Vice Chairman
Second Vice Chairman
Principal,
Chairman of the Board,
President,
Goodspeed & Associates
Super A Foods, Inc.
Rio Ranch Markets
Bradley A. Alford
John Berberian
Oscar González
Chairman and
President,
Co-Owner,
Chief Executive Officer,
Berberian Enterprises, Inc.
Northgate González
Nestlé USA (Retired)
Markets, Inc.
Paul Kapioski
Darioush Khaledi
Mark Kidd
President,
Chairman of the Board and
President,
CAP Food Services
Chief Executive Officer,
Mar-Val Food Stores, Inc.
Company
K.V. Mart Company
John D. Lang
Roger M. Laverty
John Najjar
President and
President and
President,
Chief Executive Officer,
Chief Executive Officer,
Cardiff Seaside Market, Inc.
Epson America, Inc.
Farmer Brothers Company
(Retired)
Thomas S. Sayles
Mimi R. Song
Michael S. Trask
Senior Vice President,
President and
President,
University Relations,
Chief Executive Officer,
Stanlar Foods, Inc.
University of Southern
Super Center Concepts, Inc.
California
Kenneth R. Tucker
Richard Wright
President,
Chairman of the Board,
Evergreen Markets, Inc.
Market of Choice, Inc.
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16
Offices and Facilities
Southern California
Northern California
Corporate Headquarters and Distribution Center
Distribution Center
5200 Sheila Street
1990 Piccoli Road
Commerce CA, 90040
Stockton, CA 95215
323-264-5200
209-932-9440
Bakery Facility
Office
457 East Martin Luther King Boulevard
455 North Canyons Parkway, Suite C
Los Angeles, CA 90011
Livermore, CA 94551
323-232-6124
925-456-3575
Dairy Facility
Oregon
3626 11th Avenue
Office and Distribution Center
Los Angeles, CA 90018
6433 Southeast Lake Road
323-731-8223
Milwaukie, OR 97222
503-833-1000
Distribution Center
15015 Valley View Avenue
Washington
Santa Fe Springs, CA 90670
Office and Distribution Center
562-921-1848
3301 South Norfolk Street
Seattle, WA 98118
Unified Grocers Insurance Services
874 South Village Oaks Drive
Covina, CA 91724
626-915-1951
Cautionary Statement
This annual report contains certain forward-looking
statements with respect to the financial condition,
results, operations and business of Unified Grocers,
Inc. There are a number of factors that could cause
actual results or developments to differ materially
from those expressed or implied. Nothing in this
annual report should be construed as a profit forecast.
206-762-2100
5200 Sheila Street
Commerce, CA 90040
323-264-5200
unifiedgrocers.com
marketcentre.com
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