Supervalu has made recent moves to shake up its organization. Locally, Farm Fresh Food & Pharmacy, the Virginia Beach, VA-based division of Supervalu, will be shifting primary merchandising responsibilities to its sister supermarket organization, Shoppers Food & Pharmacy, based in Bowie, MD. And, just before presstime, the Eden Prairie, MN based wholesaler-distributor-retailer announced its intention to merge with Commerce, CA based Unified Grocers in a $375 million deal.
At Farm Fresh, 21 merchandising positions will be eliminated at and those duties will be absorbed by current Shoppers’ merchandisers. The move reportedly will be effective on June 23. A Supervalu spokesman said that Farm Fresh’s current headquarters at 833 Seahawk Circle will remain open and that 40 associates involved in operations, loss prevention, IT, human resources and food safety will remain based out of that office. Additionally, 19 people will continue to work at the division’s central floral warehouse, also based in Virginia Beach. He added that Shoppers will be adding some new jobs to support its expanded organization.
As a part of this realignment, former Farm Fresh president Micky Nye now becomes regional VP of operations for an enlarged Shoppers division. She will report to Bob Gleeson, who will remain president of Shoppers.
The expanded Shoppers structure will now include 51 Shoppers Food & Pharmacy stores, 40 Farm Fresh Supermarkets and 22 Shop ‘n Save stores, which were acquired last year from Food Lion as a part of the government-mandated divestiture of more than 80 Ahold Delhaize owned units.
To several industry observers, the downsizing of Farm Fresh was not surprising given the fact that sales and market share have been shrinking for the last five years. Moreover, no new stores have opened during that period and the real estate pipeline for new stores and major remodeling has been negligible at Farm Fresh over the past decade.
With new CEO Mark Gross focusing on SVU’s core wholesale business, the recent sale of its Save-A-Lot discount unit to Canadian private equity firm Onex Corp., industry speculation has been strong that the company is also looking to sell its more than 220 corporate stores. Now comes word that Supervalu will be merging with Unified Grocers, a retailer-owned wholesale grocery distributor that supplies independent retailers throughout the western United States. The transaction is valued at approximately $375 million, comprised of approximately $114 million in cash for 100 percent of the outstanding stock of Unified Grocers plus the assumption and pay-off of Unified Grocers’ net debt at closing (approximately $261 million as of April 1, 2017).
Together, Supervalu and Unified operate 24 distribution centers supplying customers in 46 states and serve a combined customer base of more than 3,000 stores. In a release, the company said combined organization will be uniquely positioned to efficiently serve a broad range of independent customers and offer a diverse array of value added services, helping customers compete in an increasingly demanding grocery environment. The acquisition also provides new growth opportunities across multiple geographies, including the expansion of Unified’s Market Centre division, a growing business providing specialty and ethnic products to independent customers.
“We’re thrilled at the opportunity to bring together these two great organizations,” said Gross. “By acquiring the Unified business, including gaining a wealth of expertise and talent, we will become a stronger and more efficient organization. The transaction will enhance our ability to help our customers better compete in the evolving grocery industry. We’re also excited to serve Unified’s dynamic retailer base. Unified’s Members and customers operate some of the country’s most exciting and progressive Hispanic and multiple other ethnic formats, specialty, gourmet, natural/organic, price impact and traditional stores. They complement our existing customer base and we look forward to facilitating collaboration and innovation across such an impressive collection of creative merchants.”
Gross continued, “We appreciate the experience, intelligence and dedication of the Unified team, and look forward to welcoming Unified associates to SUPERVALU and supporting them as we continue the important work of contributing to the growth and success of our customer network and helping to deliver value to our stockholders. We will make a great team together.”