Game On At AWI/White Rose As Other Wholesalers Targeting Key Customers
Over the past few years it became increasingly obvious that many of AWI’s financial issues stemmed from the inability of the leadership at the Robesonia, PA co-op to successfully blend its 2006 acquisition of White Rose into what it believed could be a successful and diverse wholesale grocery model.
Even after eight years of marriage, former CEO Chris Michael never seemed comfortable dealing with the differences and nuances between playing in the large and diverse Metro New York market and those of serving small groups of independents who were all joined together by the structure of a co-op. That disconnect was part of the reason that White Rose lost several high-volume independent retailers and also witnessed the departures of some senior managers.
Now new chief executive Matt Saunders has a very difficult challenge on his hands. He’s attempting to sell White Rose’s distribution center in Carteret, NJ and hopefully persuade important customers such as Fairway, Kings/Balducci’s, Krasdale and Thriftway/Shop ‘n Bag to remain loyal to both AWI and potentially to a new White Rose buyer which may in fact turn out to be an AWI competitor.
And if what several sources are telling us is true – that all of AWI is being considered for sale – then you can understand just how complex Saunders’ task is. And as time passes with no movement, the task continues to become more difficult.
We’ve heard from several sources that other wholesalers are aggressively targeting AWI and White Rose key accounts, including an offer (to several AWI member/owners) from one wholesale grocery firm to potentially “make whole” any AWI debt that may linger with those particular retailers that were approached. We’ve also been told the offer has a two week expiration date. This type of selective “poaching” could be destructive to AWI, especially as it preaches to its members that unity is important in attempting to gain the highest value for the total enterprise. However, as a strategy, especially for a competing wholesaler which has no interest in acquiring infrastructure (three warehouses, hundreds of associates and substantial debt), the targeting of specific customers represents not only a method to gain new business but one that could continue to dilute AWI’s strength and resolve.
We’re also hearing that two of White Rose’s major customers – RMG (Thriftway/Shop ‘n Bag) and Krasdale (to whom White Rose supplies frozen food and dairy items) – are making contingency plans to potentially leave the wholesaler.
This is certainly a complex situation, but it’s been seven weeks since AWI first announced that it would attempt to sell White Rose. Other than an initial group of meetings held mid-June to update its customers on that initial announcement, there’s been little detailed communication from AWI to its member/owners. And every day that passes with no news of a deal to be seemingly imminent will only decrease the value of AWI/White Rose, especially if its retail customers/members decide to switch wholesalers. The clock is ticking.