Celebrating 90 Years of Independent Success

UnIfIed GroCerS
Celebrating 90 Years of
Independent Success
CelebratInG 90 YearS of Independent SUCCeSS
Unified Grocers
Unified Grocers
Celebrating 90 Years of
Independent Success
“Cooperation is not a sentiment; it is an economic necessity.”
– Charles Steinmetz (1865–1923)
U.S. Population:
Gallon of gas:
Cost of a new home:
106,021,537
$0.30
$3,000
1910s/1920s
“In my younger and more
vulnerable years my father
gave me some advice I’ve
been turning over in my
mind ever since.”
– The Great Gatsby (1925)
1
In the early days of grocery
retailing, stores tended to
be “general stores,” selling
everything from canned food
products to jewelry and hardware.
2
1920s
The Birth of the Independent Grocery Cooperative
At the dawn of the twentieth century the Western
United States came of age — railroad systems that
were built in the previous decades helped grow
the West’s populations and expanded markets for
farmers, manufacturers and professional services.
During the volatile decades between 1910 and 1930,
Americans changed the way they traveled, worked
and played. In turn, these changes spawned new
business opportunities — at the same time, chain store
retailing and distribution swept across the country.
The spirit of cooperation
Feeling the pressure of new competition and seeing the efficiencies and suc-
sources and bought prod-
cess chain stores enjoyed with volume purchasing and self-distribution, inde-
uct together to lower their cost of goods began to gain traction across the
was the solution — and the
independents’ unrelenting
drive to succeed provided
the momentum for small
family grocery businesses
to grow and prosper long
into the future.
A cooperative movement,
in which groups of regional
independent grocery store
operators pooled their re-
pendent grocery retailers knew they had to fight back. In many instances, chain
country and in the West.
stores were actually selling to consumers at lower prices than independent
In 1915, a handful of determined Portland, Oregon retail grocery merchants
retailers could obtain from their wholesale suppliers. To survive and overcome
formed a “buying group” for mutual benefit and to “launch a fight” as a local
the vast capital strength of the chains, independents needed to rethink their
newspaper reported, “against a so-called grocery jobbing ‘trust’ in Portland.”
business models and find a way to create their own purchasing power.
The organization, known as United Grocers of Oregon, Inc. filed articles of
incorporation in Salem, Oregon on November 11, 1915, listing as objectives
“to promote, preserve, and protect the retail grocery trade and business in the
city of Portland,” and to “co-operate in the purchase of goods.” The incorporators were D.R. Norton, F.L. Freeburg and A.C. Brinckerhoff, and capital
stock was $100.
In the fall of 1922, 15 independent grocers from Southern California had a similar idea and got together at the Hotel Green in Pasadena to develop strategies
for beating the chain stores at their own game. The 15 grocers concluded that
by combining their talents and resources, they would be on the same playing
Four of the original officers of Certified Grocers (from left) William E. Lind, president; D.P. Reid,
secretary-treasurer; Neal P. Olsen, manager; and John L. McMunn, second vice president.
field as the chains. The grocers paid $50 each as a membership fee, giving
them the right to make purchases from their new cooperative.
3
A few months later, the cooperative made its first purchase — a carload of
first warehouse at 2132
soap. Because the organization had no warehouse or office space at the time,
Sacramento
the 15 members divided their purchase in a rail yard.
Los Angeles. On two
consecutive
Street
in
Sundays
To a certain extent, Certified Grocers of California, Ltd. (the predecessor com-
in November 1925, the
pany of Unified Grocers) became “official” with the election of the company’s
young company moved
first Board of Directors in early 1923. Fifteen directors were elected to represent
its
the small but growing number of members in the new cooperative and stock
and inventory from the
was issued to each of Certified’s members, who at the time numbered 50.
Hunter Street office to
Led by President William E. Lind, the Board of Directors conducted its first
meeting in February 1923. Among its first decisions was to establish a business
office
equipment
the Sacramento Street
Certified’s first warehouse, 2132 Sacramento Street,
Los Angeles, as it appeared in 1997.
warehouse.
office at 2472 Hunter Street in Los Angeles. Nicknamed the “wareroom,” the
The number of members declined slightly in 1926 as financial obligations
Hunter Street facility was used more for storage than office space.
mounted. Facing this challenge, Certified’s directors decided to elect one of
their own, Clayton Whiteman, to serve as the company’s first full-time manager.
And it was used often. By the end of 1923, volume for the company totaled
$250,000. As the volume grew, excess storage space shrank.
It proved to be a wise decision. During his 1926–1945 tenure as the company’s
chief administrator, Whiteman steered Certified from turbulence to triumph.
By 1925, it was apparent that the “wareroom” could no longer meet the
Considered the “Father” of Certified Grocers, Whiteman established policies
demands of Certified’s members. The board decided to rent the cooperative’s
and principles still followed today.
Caption 6
4
Certified Grocers of California was
formed and organized at the Hotel
Green in Pasadena, California.
1920s
Early in Whiteman’s tenure, Certified took
In 1926, H. E. (Hal) Carr was made man-
a major step by merging in 1928 with
ager of United Grocers and continued in
Co-Operative Grocers, another small re-
this role until his retirement at the end of
tailer-owned wholesaler. That year, Certi-
1951. Under Carr’s leadership United Gro-
fied’s sales volume exceeded $1 million,
cers grew to a commanding position in
almost three times greater than the sales
the Oregon market, and steady progress
volume of 1926.
was attained. When the company later
expanded its membership and services to
And the growth continued. By the end
communities in southwest Washington it
of 1929, Certified’s sales volume rose
dropped “Oregon” from its corporate title.
to $27 million. Along the way, the company purchased the stock and equity of
While the roaring twenties were exciting
the Walker Brothers Grocery Co. and
times, including prohibition, jazz music
obtained a five year lease of the Walker
Clayton Whiteman, the “Father”
of Certified Grocers.
H.E. (Hal) Carr, United Grocers.
and new fashions, pursuit of the almighty dollar also was a top priority. Specu-
warehouse at 4th and Anderson streets
lation sent prices of land and stocks and bonds ever higher. “Good times are
in Los Angeles.
here to stay” was a slogan of the time that many believed.
Like Certified, the burgeoning United Grocers of Oregon found the going rough
But on October 23, 1929, panic struck Wall Street. Stock values tumbled $5
at first. Not only were existing jobbers opposed to what were referred to as the
billion that day. Tens of thousands of investors watched helplessly as their for-
“Buying Exchanges” springing up across the country to meet the challenge of
tunes vanished. The economic torture of the Great Depression had begun and
the new chain store competition, but many of the retailers themselves were
independent retailers would feel their share of the pain over the next decade.
convinced the movement had been launched as a new and different scheme
for someone to make a fortune at the retailer’s expense.
While adverse pressure mounted, the young organization found ways to overcome their obstacles and eventually prosper. In February 1916, the newlyformed United Grocers adopted an “Oath of Loyalty” to combat the “unfriendly
interests (of the competition) to obtain information of the business transacted at
meetings of the corporation.” They pledged never to divulge business transactions, prices or discounts obtained to anyone other than stockholders in good
standing of the organization. The Oath was signed by 35 members.
5
U.S. Population:
Gallon of gas:
Cost of a new home:
6
123,202,624
$0.20
$3,845
1930s
“Don’t be too sure I’m
as crooked as I’m
supposed to be.”
– The Maltese Falcon (1930)
7
Proximity to the port of Seattle
helped Associated Grocers get the
jump on fresh produce and other
perishable products, as evidenced
by the work being performed
in one of the company’s early
“banana rooms.”
8
1930s
Tough Times Spark New Vision
Despite nearly one-third of all American bread
Seeing the success enjoyed by indepen-
winners being jobless by 1933, the independent
dents in California and Oregon, a group of
grocery
industry
worked
diligently
to
help
consumers get back on their feet and move the
nation forward.
The early 1930s marked the birth of what years later would prove to be a domi-
eleven Seattle, Washington area independent retailers decided in 1934 to create their
own buying cooperative. They recruited a
gifted leader and visionary, James Blaine
(J.B.) Rhodes, from United Grocers of San
Francisco, to help them establish their or-
nant player in the grocery business: the supermarket. The earliest supermar-
ganization, and become the secretary and
kets were basic. Many were converted warehouses, garages, and even roller
manager of their new organization — Asso-
skating rinks. But with the nation clutched in the grips of the Great Depression,
ciated Grocers Co-op of Washington (AG).
supermarkets became popular with consumers who liked the idea of finding
everything they needed under one roof.
Though some retailers scoffed at supermarkets — labeling them “a passing
Under Rhodes’s guidance, the co-op affili-
James Blaine (J.B.) Rhodes,
first secretary and manager of
Associated Grocers.
ated with the National Retailer-Owned Grocers of America, an organization of
more than 20,000 independent grocers with stores in over 30 states.
trend” — Certified had a different vision. As the grocery business evolved from
predominantly small, limited-line stores to huge outlets carrying seemingly endless varieties of dry groceries, Certified embraced the change and decided to
grow along with it.
Realizing that its 4th and Anderson warehouse would soon be unable to
meet the demands of the supermarket-oriented food industry, Certified ordered the construction of a new warehouse at 4455 Fruitland Avenue in
1931. The company moved into the two-story, 62,000 square-foot warehouse the following year.
9
Before the end of Rhodes’s
first year in office, 74 Washington stores were members
of AG and posting “This Is
A Shurfine Store” signs in
their windows. A year later
AG’s membership doubled
in size. By 1936, supermarkets, featuring fresh meats
as well as groceries, were
on the rise and AG tallied
two million dollars in sales
with 177 member retailers.
Associated Grocers’ first offices and warehouse, 1990 Alaskan Way, Seattle.
Building on his experience from owning his own stores and working with other
cooperatives, Rhodes made “warehouse efficiency” the first objective on AG’s
agenda. The co-op’s first offices and warehousing facilities were at 1990 Alaskan Way, in the heart of Seattle.
Rhodes said many years later, “We began from scratch, and I can tell you that
sometimes there wasn’t much to scratch.” Still, Rhodes felt that in spite of
hard economic times, the independent grocer never had a better opportunity
to grow.
Rhodes also believed that cooperatives must provide the services that independents needed. “Think retail” was a concept and phrase Rhodes coined
and took to other cooperatives across the country. The phrase became the
cornerstone of AG’s growth throughout Washington.
A national survey at that time showed 50 percent of women shoppers did all of
their shopping in one store. Service was the number one reason. So Rhodes
added produce, advertising and a national private label line of goods, Shurfine,
to AG’s offerings.
10
A retail store in Washington “advertises” that it
carries the Shurfine private label line of products.
As Certified, United and AG became stronger players in their respective marketplaces, they also outgrew their facilities — and expansion became routine.
In 1938, Certified expanded its Fruitland Avenue warehouse by 150 percent —
to 150,000 square feet. At the same time, its sales exceeded $10 million and
membership increased to 310 retailers operating 380 stores. By 1939, retailers
operated 750 stores.
In 1938, AG opened a second warehouse in Yakima, Washington to accommodate its continued growth on the eastern side of the state.
In 1940, United purchased a five-story, 72,000 square-foot, facility near downtown Portland.
1930s
United Grocers distribution facility and offices.
11
U.S. Population:
Gallon of gas:
Cost of a new home:
12
132,164,569
$0.18
$3,938
1940s
“Of all the gin joints in all
the towns in all the world,
she walks into mine.”
– Casablanca (1942)
13
Increasing competition in the
grocery business brought new
ideas to the marketplace. Meade’s,
a long-time customer of Associated
Grocers, used this vehicle to
experiment with home deliveries.
14
1940s
Independents Support the War Effort
The beginning of World War II saw the fierce
competition within the grocery industry subside,
as grocers — independents and chains alike — joined
to meet the nation’s wartime needs. During the war,
independents and their wholesalers instituted
procedures to help conserve resources for the
war effort.
than ten-fold between 1939 and 1945. Despite food rationing remaining in
Many of Certified’s wartime policies were those of Clayton Whiteman, who was
Avenue facility was fully operational.
promoted to the title of president in 1945. Cambell Stewart assumed Whiteman’s previous job as general manager. Under the guidance of these two executives, Certified earned a reputation for integrity which served the organization
well for years to come.
place for several years after the war to assist war-ravaged European and Asian
countries, the independent grocery cooperatives began experiencing a deluge
of membership requests.
As membership grew, so did grocery orders. To keep up, Certified began construction of a 277,000 square-foot facility at Eastern Avenue in Commerce,
California in April 1947. By September, the facility’s distribution center was
open. Two months later, its offices were in use and by early 1948, the Eastern
While Certified was building its new warehouse in 1947, it also was busy
launching its Springfield line of quality private label products. Just months after
they were introduced, the Springfield products — June peas, green beans,
tomatoes, whole kernel corn, cream style corn sliced peaches, pear halves,
The need for workers in the expanding defense industry attracted hundreds of
tomato sauce, tomato juice, and tomato ketchup — rang up $223,000 in sales
thousands of new residents to the West Coast where wages increased more
at member stores.
Certified’s Board of Directors in a shot taken in the early 1940s. Seated in the first row
(in the middle) is Clayton Whiteman, general manager of the company.
Aerial view of Certified’s executive offices and
warehouse on Eastern Avenue in Los Angeles.
15
Also working to keep up with the consumer demand and increase operational
efficiency, in 1942, AG moved to a new larger 160,000 square-foot warehouse
at Holgate and Occidental in Seattle, installed state-of the-art IBM equipment
and increased its fleet to 84 vehicles. In addition, the company began offering a
complete retail pricing service to help improve service level.
AG achieved further efficiencies in 1947 when it began picking product by number rather than name, using a string of flat cars pulled by a single tractor allowing
product to be pulled from both sides of the warehouse aisles simultaneously.
In 1948, AG acquired the Younglove Grocery Company of Tacoma boosting the
total number of stores served by the cooperative to over 500.
16
1920s
17
U.S. Population:
Gallon of gas:
Cost of a new home:
18
151,325,798
$0.27
$7,354
1950s
“A people that values its
privileges above its principles
soon loses both.”
– Dwight D. Eisenhower (1953)
19
United Grocers distribution
center and executive officers are
open for business with Mt. Hood
providing a scenic backdrop
worthy of a postcard.
20
1950s
Growth in “The Supermarket Age”
Convenient, one-stop shopping was the desire of
the American consumer in the 1950s and as a result,
retailers embraced the “supermarket age.” At
retail, conveyor belt checkstands sped checkout
by 30 percent, “eye level, buy level” mass produce
merchandising cases were introduced, and store
promotions featuring the likes of Superman and
5,000 pound cheese wheels drew huge crowds.
In 1951, Certified diversified its dry grocery and frozen product lines by launching its General Merchandise Division, then known as the Health and Beauty
Aids Department. It was the company’s first foray into non-food distribution.
In 1951, Certified purchased Gross Systems, Inc., a trucking company that had
provided delivery service to the company’s retail members since 1927.
That same year, Certified opened a coffee and bean processing facility and
Certified also purchased Gross Systems, Inc., a trucking company that had
introduced its own private label bag coffee.
been making deliveries to Certified’s members since 1927. The purchase yielded about 140 pieces of equipment, including 50 tractors and trailers. With this
fleet, Certified delivered about three-fourths of its customers’ orders, with the
remaining 25 percent picked up by the members themselves.
In 1952, Certified’s truck drivers delivered 16,733 loads of merchandise, totaling 262,000 tons.
Fifty closed-van trailers were added to Certified’s fleet in 1953, when the company’s drivers logged well over 1 million miles, hauling 18,132 loads for a total of
276,000 tons. While the fleet grew, so did the company’s sales volume, which
eclipsed $166 million at the end of 1953.
Certified’s growth did not go unnoticed. The company was singled out in “The Path
to Profit,” a book by Gordon Cook, editor of the Self-Service Grocer. He wrote:
One way to enhance the shopping experience was to invite a superhero
to pay a visit to your store, as one Seattle-area retailer did here.
“The best operated grocery distribution organization in the world is Certified
Grocers of California, Ltd., Los Angeles, California. The warehouse of this
21
retailer-owned group a little
Continued expansion led Certified to construct its first dry grocery branch ware-
over two decades ago had
house in the San Fernando Valley. Completed in 1957, the 340,000 square-foot
an annual volume of between
facility was designed primarily to serve Certified’s customers in the northern
$200,000 and $300,000. To-
suburbs of Los Angeles.
day the organization has the
largest grocery warehouse
Officers and dignitaries of Certified pose at the
groundbreaking ceremony for the company’s new
warehouse in the San Fernando Valley.
in the world, with the lowest
The year 1951 marked a change in command at United Grocers. Longtime
operating cost of any grocery
manger, Hal Carr, retired and the United Board engaged Harry Thye to suc-
warehouse in the world, and
ceed him. Thye came to United with the understanding that expansion was a
an annual volume through the
definite must — which necessitated a new and larger warehouse. After person-
single warehouse in excess of
ally inspecting many grocery warehouses around the country to see the latest
$100,000,000.”
features in warehousing, Thye launched a project to secure land and build the
To further diversify its product
most up-to-date grocery warehouse in the United States.
offerings, Certified opened its Delicatessen Division in 1956, marking the first
When it was completed in 1954, the 120,000 square-foot mechanized ware-
complete deli program ever offered by a retailer-owned organization.
house facility and office complex just off Lake Road in Milwaukie, Oregon,
The Deli Division grew rapidly. At the end of its first fiscal year, the division
racked up more than $7 million in sales volume
To keep pace with its exponential sales growth and ever-widening array of products, Certified installed an electronic data processing system (EDP) for order
processing in 1956. In doing so, Certified was one of the first food distributors
in the nation to use EDP.
boasted many modern features including: a 400-foot railroad dock, hydraulically operated shipping and receiving platforms, a repack room, an underground
Towveyor completely circling the front section of pallet racks, and a pneumatic
tube system for moving papers between the office and warehouse.
In Seattle, AG also
staged open house
festivities on Sunday,
Certified’s growth rate intensified in
August 17, 1952 for
1957, when the company acquired
its new architectural
its first subsidiary, Spartan Grocers of
award-winning office
Torrance, California. Founded in 1915,
facilities
Spartan had 1,000 members operating
cery warehouse that
1,087 stores when Certified acquired it.
covered nearly nine
Like Certified, Spartan was a retailer-owned wholesaler. But unlike Certified, Spartan handled only dry grocery products. With the acquisition, Spartan’s members
could receive the same broad range of products as their Certified counterparts.
22
The 50’s also brought expansion to the cooperatives in the Northwest.
acres
and
and
gro-
served
over 600 stores.
Interior views of Associated Grocers’ new warehouse.
1950s
During that time, innovative AG mechanics also
were especially proud of
The Miss Thriftway
hydroplane racing boat.
the “Kneeling Nellie” trailer
they designed because it
could be lowered to the
ground to facilitate unloading at retail.
At the end of that year,
Associated’s J.B. Rhodes (left) poses with
his successor, son Willard Rhodes.
J.B. Rhodes announced
his retirement and his son,
Willard Rhodes, who had
served as AG’s assistant secretary and manager since 1945, was appointed to
succeed him by the Board of Directors.
In the mid-50s, when all the kids in the country were wearing coon-skin hats
AG’s “Kneeling Nellie”
trailer facilitated
unloading at retail.
and singing Davy Crocket ballads, the Seattle region’s Thriftway group of stores
was becoming a household name as they began sponsoring the popular Miss
Thriftway hydroplane racing boat. Actually, Thriftway sponsored three Miss
Thriftway boats from 1955 to 1963 that were driven by one of the sport’s most
popular drivers and future Hall of Famer, Bill Muncie.
In order to keep Washington retailers competitive in every phase of the food industry, AG continued its expansion through the end of the decade with projects
such as a new Yakima, Washington warehouse; a new fluid milk, cottage cheese
and ice cream program; and its own private label brand, Shur-Fresh, to maintain
better quality control and often an alternative for value-minded shoppers.
United also maintained the pace with the opening of its southern Oregon branch
operations in 1956. This followed the 1955 purchase of Northwest Grocery Co.,
a wholly-owned subsidiary in Ashland, Oregon that was acquired to better serve
United’s non-member wholesale business — Cash & Carry. To help consolidate
its operations in 1958, United sold the Ashland property and bought the Mason
Ehraman Co. in Medford, Oregon, which was later expanded 1965 and 1975.
Shur-Fresh offered quality and value to shoppers.
23
U.S. Population:
Gallon of gas:
Cost of a new home:
24
180,671,158
$0.31
$12,700
1960s
“If a free society cannot
help the many who are
poor, it cannot save the
few who are rich.”
– John F. Kennedy (1961)
25
Changes in consumer demand
leads to new product lines and
service offerings from all three
cooperatives.
26
1960s
A Decade of Rapid Expansion
The ’60s began with much excitement and hope for
the future. Shortly after Russia launched its first
satellite (Sputnik) into space in 1957, the United
States responded with a surge of support for
science education and research, which included
rocketing Alan Shepard skyward into space and,
later, putting John Glen into orbit of the earth. At
this time, the grocery industry was also soaring.
better quality and service from
Certified Grocers entered the 1960s with 1,600 member stores, more than
subsidiary, the company pumped more than $1 million into equipment, layout,
1,000 employees and an annual sales volume exceeding $300 million. By the
planning and merchandising for its members during the year.
end of the decade, the company would have nearly $700 million in sales volume, 1,900 employees and more than 2,000 member stores. A lot happened
along the way.
retailers. Grocers responded by
designing and equipping their
stores to efficiently handle their
customers’ needs.
To help independent grocery
members meet these demands,
Certified established the Grocers Equipment Company in 1963. With GEC, Certified’s second wholly-owned
The year 1963 also saw Certified establish its fifth operating division, the Ice
Cream Division, which allowed the members to meet — and often beat — their
chain store competitors on ice cream prices.
In 1960, J. Murray Yunker was named executive
The following year, Certified acquired the privately-owned Grocers and Merchants
vice president of Certified. As such, he assumed
Insurance Service, which had been a tenant in Certified’s Eastern Avenue facility
many of the administrative duties of general man-
since its opening in 1947. As Certified’s third subsidiary, GMIS gave members a
ager Campbell Stewart. When Stewart retired the
comprehensive package of insurance and related services at competitive prices.
following year, Yunker was elected Certified’s president and chief executive officer. In the 15 years that
The “Christmas Flood
Stewart served in that position, the company’s an-
of 1964” was a major
nual sales volume grew from $53 million to $300
flood that took place
million, member stores increased from 900 to
in Oregon between
1,600 and employee strength swelled from 235 to
more than 1,000.
J. Murray Yunker, president
and CEO, Certified Grocers.
Certified’s dramatic growth was paralleled by the rapid increase of Southern
California’s population, which grew from around 5 million in 1950 to more than
9 million in 1960. As their numbers increased, Southern Californians demanded
December 18, 1964
and January 7, 1965
spanning the Christmas holiday. As rivers
and streams in the
region began to over27
flow and still frozen
ground
became
saturated, it created
mudslides,
closed
roads and isolated
towns. Heavy warm
rain
and
melting
snow caused more
flooding
again
December
in
1965.
While the natural disasters hit United’s
facilities and significantly impacted
wholesale and retail
operations, the Oregon independents
worked
together
to overcome their
tough situations.
Following
an
ex-
haustive three and
There can be a happy balance between work and play as
evidenced by this employee newsletter from United.
a
half-year
study
examining its customers’ existing and
future meat distribution needs, Certified broke ground in Vernon on a $2.5 million,
76,000 square-foot Meat Distribution Center in March 1965. The center opened
a year later with a 14-store “shakedown” test. Originally, 50 employees staffed
the center. That number doubled quickly, and by the end of the year, the center’s
weekly capacity was 2.5 million pounds of meat.
By the end of 1966, Certified’s companywide sales volume was nearing $400
million. And the company’s retail membership had climbed to 1,722 stores.
28
The Eastern Avenue entrance to the executive offices at Certified.
This continued growth was the impetus for construction of Certified’s second
dry grocery branch warehouse. The 360,000 square-foot warehouse opened
in 1967 in Corona. With its completion, Certified’s combined distribution facilities were about 1.8 million square feet, including the San Fernando Dry Grocery
Warehouse, the head quarters facility and three facilities in Vernon — the Meat
Distribution Center, the non-foods warehouse and affiliated Spartan Grocers, Inc.
1960s
When Certified’s sales volume exceeded $500 million in 1968, the Board of
During the decade Washington residents welcomed the world to their doorstep
Directors scheduled its first planning conference to examine the future needs
when President John F. Kennedy relayed a message via satellite at noon on April
of its membership.
21, 1962 to officially open The Century 21 World’s Fair in Seattle. In six months,
Those needs were at least temporarily addressed in 1969, when Certified ex-
ten million visitors attended the fair, contributing to the region’s prosperity.
panded and remodeled its existing facilities on Eastern Avenue. The project
In 1968, Willard Rhodes, AG’s leader for the previous 15 years, passed away
included construction of a three-story office complex.
suddenly and Louis Arrigoni was appointed AG’s president in 1969, a position
In 1968, Harry Thye retired from his
he held until 1971.
leadership post at United Grocers and
Fred C. Gast took over the management helm. A year later, United initiated
a fluid milk distribution program with
Mayflower Dairies in Portland providing
their retailers a complete line of Mayflower, Carnation and Western Family
dairy products.
Fred C. Gast takes the helm at United in 1968.
Washington retailers also continued on
their path of expansion. In 1960 AG launched a complete bakery program and
later introduced a new private label, Western Family, to Washington retailers.
29
U.S. Population:
Gallon of gas:
Cost of a new home:
30
205,052,174
$0.36
$23,000
1970s
“Leave the gun.
Take the cannoli.”
– The Godfather (1972)
31
The 1970s brought many “new”
things to the Pacific Northwest –
a new refrigerated warehouse and
modern trucks for Associated, and
a new, efficient computer system
for United.
32
1970s
New Competition and New Technology
Following a decade of remarkable expansion, the
independent wholesalers began the 1970s in similar
fashion — despite a troublesome recession that was
dogging the country. Helping fuel the continued
growth were a number of industry innovations,
technological advancements and a need to meet
consumers’ changing shopping patterns.
As the Boeing Company in Seattle was forced to reduce its workforce by
approximately two thirds at the start of the ’70s, independent retailers found
ways to help their customers hang on through rough times. It was discovered
that given the right pricing, shoppers would mark their own groceries, bag
them and carry them out to their cars. The “box store” became the darling of
retail, paving the way for major discount formats in the decades ahead.
In 1970, United Grocers celebrated the opening of the first store in
its Springfield line of quality products, which received a packaging facelift at the
same time.
Though a relatively common occurrence in California, earthquakes occasionally merit more than passing attention. One such quake rocked the San Fernando Valley on Feb. 9, 1971. Only six miles from the epicenter, Certified’s
San Fernando warehouse was hit hard — but not knocked out — by the
quake. Operations at the San Fernando plant were halted for three weeks.
In 1971, Bert Hambleton was appointed AG’s new president and chief operating officer. Hambleton held the position for the next 15 years and helped the
company post sales increases of 13 to 18 percent each year through the end
of the decade.
Certified Grocers of California, Ltd. celebrated its 50th anniversary in 1972. A
company that originally was without warehouse space and boasted only 15
members, now had grown to $700 million, 972 employees and 867 members.
Oregon to use a heat reclamation
Certified’s golden anniversary year also marked the beginning of its Food Service
system pioneered by United en-
Division. With a one-man staff, the division shipped fresh meat cuts not normally
gineers. Over the next five years,
sold at market level to members with fast-food operations. Growing to include
51 other United member stores
a staff of a manager, 11 division employees and six warehousemen, the Food
began implementing this innova-
Service Division accounted for $3.5 million in sales volume during its initial year.
tion that reclaimed heat from conAn innovative experiment in Seattle-area retailing,
Mark-it Foods, where shoppers used a felt tip pen
to mark the price directly onto the item.
Meanwhile, Certified introduced a new private label, Gingham, to complement
densers that ran the freezer cases
as well as heat from overhead
lights and body heat.
In April 1970, Certified Grocers began construction of a 138,250 square-foot
frozen food and delicatessen center in Santa Fe Springs. With its completion in
At the close of 1973, Certified had 915 retail members and revenues of almost
$800 million.
In 1973, Murray Yunker announced his retirement, marking the end of a 39year career with the company. With that announcement, the Board of Directors
named Randolph Price company president and Yunker as corporate chairman.
December, Certified’s total facilities exceeded 2.15 million square feet.
33
During Yunker’s presidency, Certified’s volume had soared from $294 to $790
dolph Price noted these acquisitions in his 1974 “Mes-
million. Along the way, the company built three distribution centers — the meat
sage to the Membership.”
distribution center, the Corona warehouse and the frozen foods/deli distribution
center in Santa Fe Springs — and leased three others — for general merchandise, central warehouse and produce.
our philosophy in all of our actions — what the chains do,
we must do. What they are good at, we must be better
Fiscal Year 1973 marked the birth of Certified’s Produce Division. Growing from
at. When marketing imbalances are a ‘way of life,’ Certified
a modest customer base of 12 stores to nearly 100 stores in its first year, the
cannot stand idly by and accept this. We must make the
division yielded close to $5 million in sales volume that year. The division’s suc-
moves to correct these injustices in marketing with the sole
cess was credited to price selection, freshness, quality and diversity.
aim of enabling you to be as competitive with the national chains as possible.”
Born that same year was the company’s Retail Operations Assistance Pro-
Certified’s Springfield label made a strong case as a regional brand name after a
gram. At the request of any member, Certified’s Retail Operations Assistance
Department would complete a thorough analysis including: site location analy-
Certified President
Randolph Price.
1974 advertising campaign that more than doubled the line’s sales of products
from the year before.
sis, store image, employee relations, grocery merchandising, perishables de-
Larger than many private line carriers, Certified’s transportation fleet had grown
partments, competitive shopping and pricing reports, advertising, accounting
to 325 tractors and more than 600 trailers in 1974, while 300 Certified drivers
systems, payroll analysis and store security. Members who took advantage
logged 11 million road miles.
of Certified’s Retail Operations Assistance Program during its inaugural year
reported increases in sales ranging from 12 percent to 67 percent.
Though inflation was up and
first to utilize it. AG and United followed suit in 1975 by helping their retailers be-
national
was
come the first stores in the Northwest to introduce IBM scanners. News reports
down in 1974, Certified
at the time stated, “The supermarket of the future is quickly becoming a reality.”
productivity
economic conditions and
reported $835 million in
sales for the company and
its three subsidiaries.
Certified entered the bread
and dairy business in 1974
by acquiring the Gordon Bread
Company in June and the
An array of Certified’s Springfield
line of grocery products.
In 1974, the Universal Product Code (UPC) had been adopted by about 50
percent of the nation’s supermarkets and Certified’s members were among the
weathered these adverse
34
“We are now doing what the chains are doing. And this is
Economic conditions improved across the nation and at Certified in 1975 when
the company posted $962.1 million in sales volume. Sales were particularly
swift in Northern California and in the company’s Produce, Dairy, Food Service
and Bakery divisions.
In addition to sales success, the company’s Dairy Division garnered awards. At
the 1975 Los Angeles County Fair, judges presented the division with six gold
medals for product excellence in homogenized milk, half and half, lowfat, nonfat
and extra-rich milk, and chocolate ice cream.
Golden Pride Creamery in Sep-
More than 20 new items were introduced by Certified’s Bakery Division in 1975,
tember. Certified President Ran-
including brown ‘n’ serve rolls, hot breads, fruit shells and specialty and vari-
1970s
ety breads. Plans were under way to launch additional bakery items, including
“This mechanized facility is a major investment in
doughnuts and fruit-filled luncheon pies.
each member’s future,” said President Christy. “It
Fiscal 1975 marked the 50th anniversary of Grocers and Merchants Insurance
Service, owned by Certified since 1964. GMIS posted $6.1 million in sales in its
golden anniversary year.
That same year, United Grocers celebrated its 60th Anniversary. In a special
Oregonian newspaper Sunday supplement that celebrated the organization’s
success, General Manager Fred Gast said, “There is no question that there is
a tremendous future for the retailer-owned grocery wholesaler….We can’t ever
will pay back big dividends only through a truly cooperative effort.”
The year 1978 also saw the launch of an intensive
outdoor advertising campaign for the Springfield line
of products. Individually-painted billboards were rotated monthly throughout Certified’s primary trading
William O. Christy, president
and CEO, Certified Grocers.
area, reaching more than 90 percent of all marketplace adults 35 times a year.
let ourselves think we have reached our zenith. We have to constantly be aware
In 1979, Cerified introduced its “Engineered Standards” employee work incen-
of the competition in all areas of the food distribution industry and grow with it.”
tive program, offering extra pay and/or time off for production output that ex-
In 1976, AG made its major move into the general merchandise business
by opening a new state-of-the-art 83,000 square-foot General Merchandise
Warehouse. Decades later, the closing of this warehouse resulted in a collaborative effort with Unified Western Grocers, the successor company to
Certified, that enabled AG to continue providing General Merchandise items
ceeded standards. In addition to improving the bottom line for Certified and
its customers, the Engineered Standards sharply boosted production levels,
cut absenteeism and hiked employee morale. The revolutionary program drew
national attention, including a report on CBS News by anchorman Dan Rather
and a front-page story in the Los Angeles Times.
to its Northwest retailers.
Certified closed out the ’70s with $1.35 billion in volume.
Certified President Randolph Price described 1976 as “unquestionably the
One certainty facing retailers in the decade ahead was the changing consumer
most trying year in recent decades.” Although, sales volume topped off at
environment. Demographics, buying habits, and the economy were all chang-
$995.7 million, a concerted price war with national chains kept the company
ing — anticipating those changes and preparing for them was the challenge
from surpassing the billion-dollar sales mark.
that lay ahead.
That threshold was crossed in 1977, however, when Certified recorded more
than $1 billion in sales volume. That same year, Executive Vice President William
O. Christy was promoted to president and chief executive officer of the company.
In 1978, with sales volume climbing to $1.2 billion, Certified made plans to
construct a 635,000 square-foot mechanized distribution center. Though it
was not scheduled to be completed until at least 1980, the project reflected
Certified’s commitment to keep its operations as efficient as possible for its
members and customers.
The groundbreaking
ceremony for
Certified’s new
Mechanized
Distribution Center
in Commerce
attracts a visitor
from outer space.
35
U.S. Population:
Gallon of gas:
Cost of a new home:
36
227,224,681
$1.25
$68,200
1980s
“We’re putting the
band back together. ”
– The Blues Brothers (1980)
37
United’s Distribution Center and its
fleet of trucks sport a new, crisp,
clean look in the early morning
hours at the company’s Milwaukie,
Oregon Distribution Center.
38
1980s
Retailers Find Their “Niche”
The ’80s brought with them an onslaught of huge
60,000 to 80,000 square-foot discount formats
that not only brought fresh products into the
picture in a big way, but did so in a fashion that
struck fear into the hearts of most conventional
store operators, which prompted many of them to
convert their stores to upscale formats.
Working to help these savvy independents
The ’80s were also the baby boomers’ “decade of indulgence” — a genera-
took a major step forward during the 1980s.
tion whose influence was felt by every type of merchant, even the traditional
This was perhaps best demonstrated with
supermarket.
the completion of the Mechanized Ware-
It was the decade when it appeared you either had to be huge and low-priced
or smaller but very service-oriented and specialized. Two new words entered
the industry jargon: “upscale” and “niche.” Retailers started to ask themselves
questions like: “Who am I?” “Who are my customers?” and “How do I need to
improve to attract the right customers?”
who were listening to consumers and finding
their niche in the marketplace, wholesalers
stepped up their efforts to seek new ways
to improve operational efficiencies and offer
retailers more product and service choices.
Though always a hallmark of Certified Grocers, the company’s efficient operations
house in late 1980.
Everett Dingwell is named president
and CEO of Certified Grocers in 1989.
In the company’s annual report for 1981, Certified President William Christy wrote:
“Before this warehouse began operating, and for a while afterwards, some of
our members expressed concern over problems they thought it was going to
cause. We held several meetings with those members to lay any concerns to
As a result, retailers
rest. We did lay them to rest; for those members now tell us that the new ware-
in the West began to
house far exceeded their most optimistic expectations. Frankly, it has exceeded
diversify their stores
ours, too! We expected it to demonstrate improved efficiency and economy,
to meet the wide and
but not as quickly and dramatically as it has. In 1980 — the last year before the
varied needs of con-
Mech Warehouse opened up — warehousing costs at Eastern Avenue amount-
sumers
were
ed to 2.64 percent of dry grocery sales; in the 15 months since, we switched to
discovering that they
the Mech Warehouse and those costs have dropped to 1.96 percent of sales.
liked
That’s a 26 percent improvement in economic efficiency in only 15 months.”
who
more
choice
in the products they
shopped for.
Learning the new computer
system at Associated Grocers.
The year 1980 also was a milestone for AG as the company unveiled its
new 225,000 square-foot Perishables Warehouse designed to meet growing
demand for fresh foods. As AG’s sales approached $1 billion, the company
leveraged its growth to expand into new markets in Alaska and Hawaii.
39
In 1981, Certified established a company that further differentiated it from the
competition: Grocers Specialty Co. (GSC). In short, GSC was designed to meet
two specific needs:
•Provideaone-stop,convenientandeconomicalsourceofproductforsmallvolume purchasers who are usually at a price disadvantage compared to
large-volume product purchasers.
•Establish a convenient and economic source of specialty foods – ethnic
foods, health foods and gourmet brands – for customers who previously were
required to buy such products from individual (outside the house) suppliers.
Corresponding with the launch of GSC, Certified converted its Eastern Avenue
warehouse from dry groceries to a combined facility for GSC and general merchandise. Also in 1981, the company’s meat storage facility in Vernon was remodeled, with plans to add 6,000
square feet of freezer space by
early 1982.
Certified’s sales volume in 1981
was $1.64 billion, up from $1.47
billion in 1980.
The following year, sales volume
climbed to more than $1.76 billion. By this time, the company had more than 2,700
employees. In 1982, Certified marked the sophomore
year of Grocers Specialty
Co., which was beginning
Management and dignitaries tour Certified’s new
Mechanized Distribution Center in Commerce.
to see consistent growth in
both sales volume and product diversity.
Certified’s Grocers Specialty Company expands
its offering of ethnic and specialty foods.
40
1980s
Also that year, Certified
launched its Retail Assistance Division, designed
specifically to make the
company’s members more
competitive and profitable.
The division offered counseling on all aspects of retail operations.
A primary goal of both Retail Assistance and GSC
was to help Certified’s
The Springfield label begins to appear on dairy
products manufactured by Certified’s dairy.
“Without Certified, we’d spend too much time and money dealing with individual
suppliers. We like working with Certified. They seem to go out of their way to help.”
– R&R Ranch Market
“We attend to customers’ needs by listening to what they say. They can tell you a lot
about how to run your store. Certified ships to us five days a week. Merchandise goes
out of here as fast as it comes in. No one else could provide the variety and quick
service we need.” – The Original 32nd Street Market
“We operate under the philosophies of a chain store grocer but we merchandise each
store to the community in which it is located. Certified is our primary supplier of
dry groceries, frozen foods, meat, deli and general merchandise. And it’s our private
supplier in dairy and bakery. Certified’s ability to supply a market chain of our size
and diversity is very impressive.” – Hughes Markets, Inc.
“We make sure that quality runs throughout every one of our stores. Fish, meats,
service – we make it the best. We want good personal contact with our customers.
It’s their store. We’ve dealt with Certified for over 30 years. They stock so many items
and at such favorable prices that it just makes sense to work with them. They play a
tremendous role in keeping us going.” – Gelson’s Markets
members and customers succeed. That success was evident in letters from
members to Certified in 1982 (left column).
During this time, consolidation began to occur in the West’s wholesale grocery
industry. Fleming Companies, Inc., based in Oklahoma, purchased AmericanStrevell, a company that had been the supplier to hundreds of non-chain food
stores in Oregon. For years, American-Strevel and United Grocers had vied
for dominance in the local independent marketplace. In the fall of 1982, the
Willamette Week newspaper reported a separate development involving merger
talks between United Grocers in Portland and Associated Grocers in Seattle.
At the time, United’s membership was reported to be 280 members and AG’s
315 members.
In talking about a possible merger, United’s General Manager, and Chief Executive Officer, Joseph Ahern, said, “This is an extremely competitive business, and to stay healthy we’re looking for ways to help our members stay
competitive as possible….It all comes down to if it
would mean significant savings to our members.”
In 1983 Certified launched a new corporate and
store identity program to get more customers into
members’ stores. Certified created a brand identity
41
The Board also decided to institute a Service Fee Program, which encouraged volume purchasing by rewarding customers with reduced service fees
when they placed large, efficient orders. The program included annual volume
discounts in dry grocery, frozen foods, deli, general merchandise and bakery.
Referred to in the company’s annual report as a “rough year,” 1984 nevertheless brought many successes for Certified and its customers. Among them was
Grocers Specialty Co., which posted a record sales volume of $109.6 million
that year.
called “Cergro.” A new “Cergro” logo was created, incorporating the familiar
half-daisy found on the labels of Certified’s well-known Springfield products.
The 1983 annual report explains the company’s goals for the identity program:
“...Public awareness of Certified Grocers and the more than 2,000 retail outlets
we served has intensified at the consumer level with the ‘Springfield/Cergro’
plant, which produced more than 30,000 bags of Happy Time Party Ice cubes
every day during the work week.
The year 1984 also saw Certified expand its presence in Northern California.
The 1984 annual report states:
promotion. Similar inroads are being made in the business and financial com-
“Long-haul truckers take the spotlight as Cergro becomes a force in Northern
munities as ‘Cergro’ is recognized and accepted by more people and agencies
California. Where once Las Vegas and California’s Central Valley were consid-
with whom we do business. Why the concerted effort to build a ‘big company’
ered distant service areas for our Los Angeles-based firm, now we distribute
image? Why the emphasis on identifying 2,000 member stores as ‘Cergro’
more than 200 truckloads of merchandise weekly to more than 70 stores
affiliates? Because it helps assure your independence. Certified has been,
throughout the Sacramento, San Jose, San Joaquin Valley and San Francisco
and always will be, committed to serving the independent grocery retailer. By
Bay areas. Annual volume in the northern part of the state approaches $200
graphically uniting more than 2,000 retail markets under the ‘Cergro’ banner,
million and grows steadily.”
we create a corporate image that elicits public acceptance and consumer trust.
Individually, then, each market becomes stronger and more independent as a
result of more customers, more profit and more competitive clout.”
Rapid changes in the food industry and the entry of competing distributors into
the California market in 1984 made such huge demands on Certified Grocers
that a less flexible, less prepared company might not have survived.
42
Another success: the opening of Certified’s ice manufacturing and packaging
The push to the north continued in 1985, with Certified making plans to open a
Northern California distribution center in 1987. Also planned were new facilities
for Certified’s growing Grocers Specialty Co.
But while artists’ renderings and blueprints were high on the agenda for Certified in 1985, so was something far less material, and perhaps even more
important: an emphasis on “the personal touch.” The company’s annual report
Faced with the loss of more than $300 million in annual sales volume, Certified
for 1985 explains: “Today, competition has a keen edge, and time is a luxury.
took quick, decisive action to keep its retailers more competitive. Among the
Business styles have changed and the pace, at times, is frantic. But one thing
Board’s decisions was to close and sell the Corona warehouse and increase
that never goes out of style is the personal touch. And nowhere is that more
efficiency by consolidating operations.
evident than on our front line — drivers, sales and service representatives, retail
1980s
operations counselors and the
challenges. We are now in a fine position to be bullish in 1987 and beyond for
retail support staffs in every Cer-
Cergro and our independent retail members.”
gro division.”
In 1986, AG’s President and Chief Operating Officer Bert Hambleton announced
The report continued by offering
his retirement shortly after merger negotiations with Unitied Grocers broke off
examples of the “personal touch”
that year. Under Hambleton’s leadership, lasting changes were made that el-
between Certified and its cus-
evated AG’s position in the wholesale industry. Hambleton was credited with
tomers. One of the company’s
many improvements to AG’s efficiency and accuracy in all facets of its opera-
400 drivers, for example, recalled
tions. He was succeeded by Donald Benson, the company’s executive director
a situation in which he helped
of finance, who held the post through the end of the century.
solve a customer’s problem:
The year 1987 marked the opening of Certified’s Dry Grocery Warehouse in
“When you go to the same
Stockton. The 428,000 square-foot facility was the company’s first physical plant
stores all the time and take care
in Northern California. At the time, the Stockton warehouse represented about
of the same people, you get a
21 percent of Certified’s total grocery volume and handled all export distribution.
relationship going,” frozen food
and deli driver Ron Reid said.
“You begin to understand a retailer’s needs, and can see things from his point
of view. I remember one delivery when a customer was short 250 cases of juice.
It was an ad item, and he needed them. I figured it didn’t matter whether he
Along with the development of the Stockton warehouse, Certified in 1986
opened a sales and service center at Pleasanton, where products are selected to match the unique needs of the company’s Northern California retail
members/customers.
forgot to order them or the order got lost in the computer. The point was, he
had an ad coming out and he didn’t have the product. So I did some telephoning and arranged to have the 250 cases delivered the next day.”
Fiscal year 1986 was marked by an eight-week work stoppage by Teamsters,
as well as other food industry-related unions, forcing Certified to operate on a
limited basis with replacement workers.
The strike, in large part, caused the company’s sales volume to drop from nearly
$1.8 billion in 1985 to just over $1.62 billion in 1986.
Nevertheless, Certified was characteristically optimistic.
“Thank you for your support and patience in a difficult year,” Board Chairman
Leonard R. Leum and Certified President William Christy wrote to shareholders. “Together, we grew stronger as we responded to diverse changes and
43
At the Stockton warehouse, as well as the new facility occupied by Grocers
Also in 1988, Certified acquired 29 former Alpha Beta, Lucky, Vons and Safe-
Specialty Co., pallet flow-racks were installed to improve operations and dis-
way stores for its retail members. Meanwhile, the company’s advertising and
tribution. The new system increased productivity, cut labor costs and reduced
promotions department introduced its “Quality Food Stores” (QFS) campaign
out-of-stocks after its installation.
targeted to stores that catered to upscale customers.
In 1987, Certified’s Export
The year 1988 also saw construction begin on a new frozen food and deli ware-
Division posted $63 mil-
house addition in Stockton. The design plan called for about half of the 138,250
lion in sales volume, rep-
square-foot facility to be maintained at 10° F for frozen food, with the remainder
resenting a 28 percent in-
of the warehouse at 36° F for deli items.
crease over the previous
In 1989, Certified President William O. Christy announced his plans to retire end-
year. Major growth areas
ing a career that spanned four decades. Christy, who had held the positions of
in 1987 were Guam, the
treasurer, senior vice president of finance/treasurer and executive vice president
Federated States of Mi-
of operations since joining the company in 1954, was named corporate chair-
cronesia and the Repub-
man. His successor was Everett Dingwell.
lic of Palau.
Like Christy, Dingwell began his career at Certified in 1954. He progressed to sev-
That same year, Certified
eral management-level positions before leaving the company in 1962 to pursue
introduced the “Space-
sales management positions at other food operations. He returned to Certified
man” space management
in 1968 and began a steady progression of management positions that included
system. With Spaceman,
executive vice president of marketing, president of Certified’s Northern Division
members used color video
displays to determine the
most effective merchan-
Mechanized in-floor “Towveyer” rapidly
moved product through AG’s warehouse.
dise layouts on store shelves.
Companywide, Certified’s annual sales volume for 1987 was more than $1.8
billion dollars.
At the end of Fiscal 1988, Certified posted $1.96 billion in sales volume. Along
the way, the company reorganized its management structure. Three management groups were created — Northern, Southern and Service Companies —
with a member of the company’s executive staff designated as president of
each group.
44
and executive vice president.
As planned, the Stockton frozen food and deli warehouse was completed in
1989. The General Merchandise Division became Grocers General Merchandise Company (GGMC), a Certified Subsidiary. That same year, Certified’s
companywide sales volume easily surpassed the 2 billion level at nearly $2.33
billion dollars.
1920s
A 1987 ad campaign that ran in Washington
Food Dealer magazine touted the many
benefits of AG’s retail services.
45
U.S. Population:
Gallon of gas:
Cost of a new home:
46
249,438,712
$1.16
$79,100
1990s
“The greatest trick the devil
ever pulled was convincing
the world he didn’t exist.”
– The Usual Suspects (1995)
47
Increasing demand by
consumers for fresh products
convinced many retailers to put
more emphasis on produce and
other perishable products in
their stores during the 1990s.
48
1990s
Competition Heats Up Merger Discussions
The 1990’s were ushered in with dynamic changes
in consumers’ attitudes. Few decades have begun
so differently than the previous decade had begun.
Consumers now wanted it all — they demanded it all
— and with high standards for quality, freshness,
courtesy, and fast service, they also wanted
convenient products with value, products worth
more and that cost less.
completion allowed Certified to
For retailers, the new mantra for success was “the right products for the right
porated a unique no-pallet system
customers at the right time.” Flexibility was the cornerstone of retailers’ futures.
in which merchandise was loaded
Having the ability to help stores tailor their offerings to the respective communi-
into bins and placed on a conveyor
ties they served became the primary focus of the wholesale operation.
belt into a waiting trailer.
In the early 1990’s, AG recognized the importance of becoming a more skilled
Also in 1990, the company’s dairy
and better informed marketing
warehouse was expanded and re-
organization to help retailers
modeled. The area that had been occupied by the ice cream plant was con-
meet and exceed consumers’
verted to a conveyor-driven warehouse for milk and milk by-products.
needs. Shoppers’ high expectations ranged from store image and food safety to variety
and quality of fresh products,
One of the leading private label programs in the
Pacific Northwest, Western Family.
ship a million cases a week to its
Northern California members and
international accounts.
A month after the Stockton addition
was completed, Certified opened
a new General Merchandise warehouse in Fresno. The automated,
138,250 square-foot facility incor-
Certified Grocers’ annual report for 1997.
With its new state-of-the-art facilities, Certified continued to grow in terms of
sales volume, which climbed to nearly $2.7 billion in 1990. New President Dingwell was pleased:
to easy access to video, phar-
“There is no doubt that the future holds challenges for all of us, and we, to-
macy, take-out foods and the
gether, have always demonstrated the ability to respond in a positive way to
Northwest specialty, espresso.
these opportunities.”
In 1990, Certified expanded its
Dingwell’s prediction proved accurate in 1991, a year of change, uncertainty,
Stockton facility with a 205,000
gains, losses and significant challenges for Certified and the food industry. In
square-foot addition to the dry
1991, the national economy was in a recession and attention was focused on
grocery warehouse. Its August
the Persian Gulf conflict and consumers’ demands for quality, service and value.
49
Despite these challenges, Certified Grocers sales volume grew — albeit modestly — to nearly $2.8 billion in 1991.
The year also saw Certified expand its Mechanized General Merchandise Warehouse in Fresno from 142,000 square feet to 300,000 square feet. Considered
one of the most modern general merchandise facilities in the United States, the
expanded warehouse allowed the company to warehouse 6,000 health and
beauty aids and 7,000 houseware items.
Fiscal Year 1992 marked a period of restructuring, reshaping and redirecting
strategies at Certified. That’s because several challenges faced the company,
including a wave of consolidations, mergers and new entrants into the grocery
business that led to increased competition for market share. Growth, however,
was still possible as 30 retail stores became new members of the company and
existing members opened an additional 20 stores.
The year 1992 was challenging and opportunistic for United, as well. Despite
a difficult economic environment, the company was able to enjoy several successes, most notably the completion of its Portland facility expansion and improvement of profits in its subsidiary operations. At the end of the year, sales had
increased 1.4 percent to $893.8 million.
Though many of 1992’s challenges remained in 1993, Certified recorded a solid
performance for the year, according to the annual report:
“Our year reflected the current economic conditions that continue to impact
California and Hawaii...Consumers are cautious and watching their expenditures for everything, including food purchases. All food store operators have
felt this change, although our independent operators appear to be holding their
own. We continued to make the necessary operational adjustments to offset
volume declines from large members moving into their own facilities.... Expense
reductions and improvements in productivity, along with an increase in fees for
The year 1994 brought many changes to the food industry, including Certified
the fiscal year, were the prime factors in our year-end results.”
Grocers. Among them, Alfred A. Plamann, then chief financial officer, was
In a cost-cutting move, Certified closed its Produce Division in 1993.
the same time, Dingwell announced his plans to retire from the company at
elected president, and Everett Dingwell was named corporate chairman. At
the end of 1995.
50
1990s
In 1994, Certified spent a considerable amount of
time and energy focusing on one objective: Finding
ways to simplify the company’s business structure
while simultaneously improving profit opportunities
for customers. The net result was a strategic threepoint plan: Focus on process, focus on building
Alfred A. Plamann was elected
president and chief executive
officer of Certified Grocers in
February, 1994.
partnerships and focus on expanded service.
In 1994, AG made major advancements in its efforts to increase flow-through distribution and
United Grocers also had a good year in 1995. In addition to enjoying a record
cross-docking activity. The company also stepped up its marketing and com-
year for sales and profits, the company invested over $1 million in Project En-
munications activities by providing company-wide access to data on many dif-
terprise, an information platform and debit/credit card system for customers.
ferent computer platforms and introducing its new Lotus Notes framework. A
Later in the year, the company also purchased three distribution facilities and
major benefit of this system was the elimination of printing order guides and
the inventory of Market Wholesale to better serve United’s customers in North-
invoices, which were now transmitted electronically to the stores.
ern California.
On March 17-18, 1995, the officers of Certified committed the company to a
In 1996, Certified successfully stepped-up its efforts to expand productivity
course of action to ensure long-term success and profitability for members/
and efficiency.
customers. Named C3, for Certified’s Commitment to Customers, the strategic
initiative was designed to re-invent the company and fundamentally change the
In the Manufacturing Division, the dairy was able to increase its production
way Certified conducted business in an increasingly competitive marketplace.
to nearly 100 percent of capacity with the addition of a $45 million customer,
The mission of the initiative was straight-forward: To be the most cost effec-
Certified’s dairy became one of the largest — and most efficient — in the state.
tive, quality-driven company that provides world-class services and complete
product selection by creating a partnership with retailers and strategic alliances
Ross Swiss Dairies. Producing just under one million gallons of milk a week,
Certified’s bakery also added a significant amount of business to its day-to-day
with suppliers.
operations. In the fall of 1996, Certified’s bakery announced a partnership with
Not long after the C3 initiative got underway, progress could be seen in a variety
line of premium bread products. This addition to the bakery’s production signifi-
of areas throughout the company. In FY 1995, Certified significantly enhanced
cantly enhanced its overall efficiency.
its presence in the Arizona wholesale grocery market by adding Phoenix-based
Megafoods Stores, Inc. to its membership roster. Additionally, Nob Hill Foods,
a 25-store retail chain in Northern California, began purchasing several lines
of product, adding $100 million to the company’s sales volume. Certified also
added 14 new members (17 stores) in 1995.
St. Louis-based The Earthgrains Co. to produce and distribute the company’s
Certified’s Meat Division expanded into Northern California in 1996. As FY 1997
commenced, the first deliveries of meat and service deli products to customers
in the North were made from the newly established meat division. In the South,
Certified’s Meat Division expanded its presence into Mexico, with approximately
120,000 pounds of poultry per week shipped to customers there.
51
In 1996, Certified subsidiary Grocers
Equipment Company (GEC) unveiled
a banner store program — Apple
Market — designed to introduce
modern technologies and merchandising strategies to older stores by
converting them into state-of-the-art
retail operations with new layouts and interior decor.
A research project conducted in 1996 by Exvere Inc. found that though the
Northwest held the highest concentration of independent retailers, the figure
was on the decline. The study found that 40 percent of retail grocers in Oregon,
Washington, Idaho, and parts of Montana were independently owned stores,
compared to a national average of 25 percent. The decline was attributed to
expansion by large supermarket chains and a flurry of consolidation and acquisitions. Despite many years of growth independents wholesalers in the West
sensed the need to take additional measures to protect the market share of
their member stores.
In 1997, Certified celebrated the 75th anniversary of the company and also the
50th anniversary of its Springfield corporate brand with specials events at Expo
(the company’s annual buying show in Long Beach) and “open house” events at
The “community” surrounding United’s Milwaukie warehouse is
much more filled-in in this late 1990s photo.
its distribution centers and manufacturing facilities. The company also purchased
9 Petrini’s retail grocery stores in the Bay Area and transferred them to several
members in Northern California who had expressed interest in operating them.
In the spring of 1997, United Grocers and AG rekindled their merger discussions. By November 1997 the two companies had agreed to establish a joint
venture rather than a merger. The joint venture would provide information and
distribution services to member retailers of both companies, shipping goods
from the nearest warehouse to speed up delivery service.
The joint venture never materialized, however, and much to United’s surprise,
AG announced a joint venture with Fleming Companies Inc. in September
1998. Oklahoma City-based Fleming, the second-largest food marketing and
distribution wholesaler in the United States, teamed with AG to form AG/
Fleming Northwest LLC. The new company would join purchasing and distribution systems to better serve retailers in the Northwest. As part of the deal,
AG purchased Fleming’s warehouse operations in Portland, which supplied
74 grocers, and two Oregon stores. That same year, AG was rocked when
Quality Food Centers (QFC) were purchased by Fred Meyer, which was then
52
1990s
bought by Kroger Co. The transaction resulted in more than 80 QFC stores
leaving AG. Though AG maintained that it still planned to pursue the joint
venture with United, it never happened.
At Certified, 1998 and 1999 were indeed productive years. In 1998, the company decided to sell a portion of the Commerce property and consolidate the
executive offices and the headquarters of the company into the 4-story West
Office Building, located on the western edge of the corporate campus. Proceeds from the sale of the property were used to upgrade systems and infrastructure throughout the company and also to prepare and upgrade facilities in
the new office building for incoming executives and other employees.
In 1999, Certified made a number of key acquisitions. Early in the year, the
company purchased seven Sav Max stores in Northern California and instead
of transferring them to new owners, decided to operate the stores itself. Later in
the year, the company purchased 32 spin-off stores from Albertsons, transfer-
With a Certified tractor and a United trailer, this vehicle serves as a visual reminder of the
1999 merger between United Grocers and Certified Grocers.
ring all to members, and also purchased three specialty foods companies —
Gourmet Specialties, Central Sales and the non-candy business of J. Sosnick
pany offices, warehouses, retail headquarters, stores and vendors to share in-
and Company — to bolster the company’s offerings in its GSP Division.
formation via the company’s wide area network. The new system also allowed
Also in 1999 Certified Grocers of California announced that it would merge with
United Grocers to form Unified Western Grocers.
The resulting company would have combined annual sales of $3 billion, including $1.8 billion from Certified and $1.2 billion from United Grocers. In a
Supermarket News interview, Al Plamann said, “The new post-merger entity
could serve as a magnet for other retailer-owned cooperatives, particularly in
retailers to inquire about the status of orders, add items, and adjust scheduling
to accommodate load volumes and labor needs.
In December 1999, Donald Benson retired as AG’s president and chief executive officer and was succeeded by Art Jones, the company’s executive vice
president. The transition began a series of changes at AG that were designed
to restore the health of the company.
the western United States.” Plamann explained, “If this merger proves to be a
good solution to cooperative growth, then our intent would be to entertain interest by other companies, on a co-op by co-op basis, to join with us.”
As the end of the century neared, AG was spurred on by the requirement to
have all of its systems Y2K compliant by January 1, 2000 and chose to add
value to all of its business processes by adopting “open technology” and “best
of breed” hardware and software applications. AG’s new systems allowed com53
U.S. Population:
Gallon of gas:
Cost of a new home:
54
281,421,906
$1.74
$119,600
2000s
“All our hopes now lie with
two little hobbits, somewhere
in the wilderness. ”
– The Lord of the Rings (2002)
55
After acquiring Associated
Grocers in 2007, the company
changed its name to Unified
Grocers and installed a new
brand symbol in front of the
corporate headquarters building
in Commerce.
56
2000s
When Three Cooperatives Become One
At the dawn of the New Millennium, the biggest
news at Unified Western Grocers was no news at
all. After months of preparing for an Armageddon
that might occur because four digit dates on
computers had long ago been abbreviated into
two digits and might recognize January 1, 2000 as
January 1, 1900, the Y2K crisis came and went at
Unified without a hitch as all computer systems
worked perfectly — the long-established grocery
cooperative would survive to face another decade
of challenges and opportunities.
In 2001, rising interest rates and fuel costs were be-
Having completed the merger with United Grocers only a few months prior, the
cal year. In addition to a cost-cutting campaign led by interim CEO Bob Hoyt,
main order of business at Unified in the early days of 2000 was integrating the
AG sold its large, underutilized non-foods warehouse in Kent, Washington to a
cultures of the two companies and utilizing transition teams to find, select and
developer for $12.5 million.
implement best practices where appropriate. Among the first items of business in this regard was consolidating (and
subsequently closing) several United
warehouses into Unified’s Stockton
Distribution Center. Another
early project for the transi-
Ever-conscious of consumers’ interest in healthy living,
Unified launches Natural Directions, its new line of organic,
natural and earth-friendly products.
ginning to take their toll on the marketplace
and with the dot.com bubble beginning
to burst, Wall Street took notice and
the equity markets began to tank —
badly. All of this activity had a negative effect on the grocery industry.
Wherever
possible,
companies
began to cut costs and also look
for ways to serve customers better.
Unified Western Grocers began an
extensive cost reduction program that
would save more then $6 million during the fis-
In September of 2001, Unified Western Grocers signed an agreement to jointly
purchase general merchandise and health and beauty aids products with Associated Grocers and agreed to distribute them to the Seattle wholesaler’s members
and customers. In addition to improving product selection for AG’s members,
the arrangement helped keep product costs competitive within the marketplace.
tion teams was to relocate
As the economy began to improve slightly in 2002, so did the prospects for
and consolidate the
Unified Western Grocers. A new sell plan for the Pacific Northwest launched
Portland data center
a year earlier by the company was a success with Oregon members and
and all of United’s
customers and Unified’s newly-re-energized Neighborhood Markets program
accounting functions
(a distribution program for small retailers who were not members of the co-
into the Commerce
operative) was growing rapidly in Northern California. Three significant deci-
headquarters.
sions also were made in 2002 by the Board and executive management. After
several challenging years, Unified decided to exit its retail business; the Board
57
adopted an Equity Enhancement plan designed to increase permanent equity
enables the company to
in the company; and for the first time in the history of the company, three
distribute
outside directors (non-shareholders) were added to the Board of Directors.
do
not
in
a
In July of 2002, veteran retailer Robert P. Hermanns was named president and
products
physically
Unified
that
reside
warehouse
to member retailers, was
chief executive officer of AG, succeeding interim CEO Robert Hoyt.
introduced at various Unified
In Southern California, the big news of 2003 was a strike by retail clerks
facilities. Also, the company
against three large chain store companies, which resulted in a four-month
began
lockout of employees by the employers. Unified and independent retailers
label products to Mexico as
were the primary beneficiaries when chain store customers refused to cross
part of its “Brands Without
picket lines and decided to shop elsewhere. The result was a windfall in sales
Borders” initiative, rebranded the specialty products division “Market Centre,”
for Unified’s customers.
initiated a major expansion of the Stockton Distribution Center, and introduced
In 2004, Unified was named the recipient of the Annual Technology Excellence
Award from the editors of Supermarket News for being on the cutting edge of
Retail Grocery Visionary Award,” named after long-time Unified member and
former Chairman of the Board Ben Schwartz.
its perishables sales throughout the year, continued to reduced its outstanding
In October, 2005, John Runyan was
“Growth in Sales and Profits” (GSP). Also in 2004, Al Plamann celebrated his
tenth year as president and CEO of the company.
private
a new annual award for progressive independent retailers, the “Ben Schwartz
technology in the grocery industry. The company also significantly increased
debt ($105 million since 2002) and launched a new companywide initiative,
shipping
named president, CEO and vice chairman at the Seattle cooperative, replacing Bob Hermanns who departed
Unified continued its forward progress in 2005 with a number of major
abruptly after two years at the helm.
projects taking center stage. Flow-through distribution, a strategy that
After evaluating strengths and weaknesses during his first 90 days on the job,
Runyan developed 21 initiatives to right the company. “We’ve instituted a number of changes that on an annualized basis will allow us to see the light at the
end of the tunnel,” Runyan said. “We’ve been nicely profitable in the last four
months and the Board is very pleased with the direction.”
As part of Runyan’s 21-point plan, AG sold its 55.27-acre headquarters to Seattle
developer Dave Sabey for $91 million in February, 2006. The transaction enabled
AG to continue to lease its headquarters from Sabey for up to four years, during
which time AG would locate and/or build new facilities for the company.
Huge outdoor festivals and marketing events help Unified and
its retailers connect with consumers on a personal level.
58
The sale of AG’s property served as the precursor to a May 3, 2007 announcement in which it was revealed that Associated Grocers had signed a preliminary
2000s
which was completed in only a few weeks and without a hitch, served as a harbinger of the integration process to come — quick, cooperative and generally
free of errors or issues.
In addition to continuing integration and
transition projects, Unified was buzzing
with other projects in 2008. The company
launched “Natural Directions,” a line of natural and organic products sold exclusively to
independent retailers, was approved to become
a supplier of products and a licenser of retail stores for
the Independent Grocers Alliance (IGA) and completed the expansion of the
Stockton warehouse. Later in the year, the company was named “Outstanding
Wholesaler of the Year” by Progressive Grocer magazine.
The economy, however, had already begun to falter. Bank failures, rising unemployment and a bursting housing bubble were the daily lead stories on the
nightly news — and as a result,
consumers began to significantly
AG’s President and CEO John Runyan (top, right) turns over the key to the AG property
to Seattle developer, Dave Sabey. (Bottom, from left) Unified President and CEO Al
Plamann, AG Board President Ron Brake and Runyan toasted the sale of AG to Unified.
curtail their spending. As the
nation descended into a recession, Unified and its independent
members and customers cut
agreement to combine operations with Los Angeles-based Unified Western
costs, paid close attention to
Grocers. The transaction, which closed on October 1, 2007, meant that for the
their balance sheets and made
very first time, three regional wholesale grocery cooperatives (with 220 years
sure they kept closely in tune with
Part of the expansion project at the
Stockton Distribution Center.
of accumulated history between them) now were housed under a single roof.
consumers’ purchasing patterns.
As part of the transaction, Unified Western Grocers shortened its name to Uni-
In spite of the difficult business climate, Unified’s members opened 47 new
fied Grocers, a company that now could boast that it supplied nearly 2,500
independently-owned grocery stores throughout the western United States.
Having learned its lessons well from the United merger eight years earlier, Unified put integration and transition teams together quickly and began the process of combining the two companies. One of the first orders of business was
to “hire” nearly 700 of AG’s employees as Unified employees. The process,
stores in 2009, a significant achievement considering banks’ reticence to extend credit during this time. Unified also solidified its existing business with new
and/or extended supply agreements with several large customers, including
Cash & Carry and Haggen in the Pacific Northwest. The company also enhanced productivity with the installation of a new phone system and an electronic time-keeping system for employees.
59
U.S. Population:
Gallon of gas:
Cost of a new home:
60
299,228,000
$3.24
$210,000
2010s
“You is kind.
You is smart.
You is important. ”
– The Help (2011)
61
Twelve years into the New
Millennium, Unified and its
independent retail grocery
partners are well-positioned
to meet the needs of
today’s – and tomorrow’s –
discerning consumers.
62
2010s and Beyond
A Slow Recovery and a Faster Pace of Change
By January of 2010, the long-awaited recovery
to remain relevant and competitive in the months
from the nasty recession of a few years back
and years ahead.
began as a trickle — certainly not the steady flow
of prosperity that accompanied similar recession
To help guide the company in its short- and long-term planning efforts, management developed and the Board approved in 2010 a “Strategic Design for
recovery periods. As a result, companies and
Unified Grocers,” a document that describes the companies strategic path for
consumers alike remained careful and cautious
success in the months and years ahead. The company also successfully ex-
about spending and cost containment. At the
tended its lease on the Seattle warehouse through April, 2015, instituted a new
same time, with new technologies emerging on
communications forum for company associates called “Officers Update,” and
almost a daily basis (smart phones, mobile devices,
applications,
social
media,
etc.),
there
were
suddenly new ways to communicate with consumers
launched “Innovation Centers for Growth,” teams of Unified associates who
explore, refine and develop ideas that have significant potential for increasing profitable sales at the company. In early 2011, Unified was named the “Licensed Distribution Center of the Year” by IGA and was awarded the IGS USA
and new ways for them to enhance their grocery
President’s Cup for the fast growth and success of its IGA store licensing and
shopping experience. In other words, time to do
general store support program. Unified also redesigned its corporate Website
some serious planning if a grocery company wanted
and also created a separate version in Spanish.
The Future?
What does the future hold for Unified Grocers?
for growth and are retailers are capitalizing on them as never before. We are
changing at Unified, too. We have evolved into facilitators of success at retail
In Unified Grocers’ 2012 annual report, CEO Al Plamann described the company’s prospects:
— we have the products, the services and the expertise to help ensure that our
retailers are not only competitive, but growing and thriving. I am confident that
“I don’t have a crystal ball, but I believe the future is bright for Unified and
our company and supply channel are on course for greater growth and success
our independents. The marketplace is dynamic — there are new opportunities
in the years ahead.”
63
Since 1996, Unified’s annual
Summer Youth Employment
Program has been helping create
a bright future for its participants,
Unified and the grocery industry.
64
UnIfIed GroCerS
Celebrating 90 Years of
Independent Success
CelebratInG 90 YearS of Independent SUCCeSS
Unified Grocers