Supply Scan

News and trends from across the food supply chain.


Independent, Large Chain Retailers See Sales Growth

Supermarket industry sales increased 4.6 percent in 2005 and same-store sales rose 3 percent, the highest mark for same-store sales growth in a decade, according to the Food Retailing Industry Speaks, 2006, the annual state-of-the-industry report released by the Food Marketing Institute (FMI).

Independent retailers posted the largest gains in overall and same-store sales at 4.73 percent and 4.56 percent, respectively, followed by chains operating more than 100 stores at 4.57 percent and 2.56 percent.

Net income before taxes and extraordinary items increased to 2.1 percent of sales, up from 1.8 percent in 2004.

"The industry is performing with remarkable resilience and vigor," says Tim Hammonds, FMI's president and CEO. "The smallest and largest companies are meeting the challenges of fierce competition, spikes in fuel and healthcare costs and even the worst Mother Nature can deliver in last year's Gulf Coast hurricanes.

"The larger companies are succeeding with technology, efficiency and new store formats that cater to changing consumer lifestyles," he says. "Smaller retailers lead in sales growth because they are the epitome of meeting customer needs."

The results varied widely across the industry, as in years past, with some companies reporting double-digit sales increases and others decreases up to nearly 5 percent. Yet more companies are growing by meeting consumer demands for convenience and fresh, perishable foods.

The self-checkout lane is now a standard supermarket feature, with three-quarters of stores offering customers this option.

More retailers are offering shoppers a quick stop prepared-foods department where they can pick up dinner. Nearly four in 10 retailers now have quick-stop areas, a more than 10-point increase from the previous year. Most shoppers can also grab coffee to go with almost seven in 10 stores featuring coffee bars.

Welch's, Weber Distribution Sign Three-Year Contract

Welch's signed a three-year contract with third-party logistics provider Weber Distribution, Santa Fe Springs, CA, to serve as its West Coast distribution center.

From Welch's Lawton, MA, manufacturing plant, more than 100 different flavors and sizes of juices and jellies are shipped by rail to Weber's La Mirada, CA-based facility. The 203,000-square-foot distribution center contains six on-site rail doors where approximately 260 inbound loads, or nearly 450,000 cases, of Welch's products are received each month.

Some of the product is stored in a 75,000-square-foot section of the warehouse, while much of it is immediately processed and labeled for distribution to Welch's customers across 11 Western states. Welch's customers include mass retailers and grocery chains such as Wal-Mart, Costco, Safeway and Vons, as well as convenience, food/drug and specialty stores.

According to Bruce True, Welch's manager of distribution planning, Welch's hired Weber because of its expertise in handling grocery and its solid distribution network. "We closed our plant on the West Coast, so we needed to find a third-party logistics (3PL) company that could handle warehousing, order consolidation and delivery to our customers," he says. "Until Weber, we were shipping 95 percent of the product from our plant warehouses directly to our customers."

Weber processes, picks, labels and transports an average of 425 orders, or more than 350,000 cases, per month for Welch's.

As part of the agreement, Welch's is taking advantage of Weber's vendor compliance program, which manages all of the major retailers' specific routing, shipping and labeling requirements. At the heart of the compliance program is a custom-designed internal Web site that allows all of Weber's warehouses to quickly reference every major retailers' most recent routing and shipping requirements, without having to individually review and interpret routing and vendor guides.

Wal-Mart, Schneider Establish Import DC In Chicago Area

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