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    Wholesale Banners a Growing Tool for Independents: NGA Workshop

    LAS VEGAS -- From Wal-Mart's continued onslaught to the national repercussions of the Albertsons' deal, independents in markets across the country will face critical shifts in marketplace power this year and beyond. It's time many of them start seriously considering hitching their wagons to wholesalers' banner programs, to strengthen their own positions as part of "virtual chains," said Steve Dillard, v.p. corporate sales and business development, Associated Wholesale Grocers of Kansas City (AWG), during a workshop at the National Grocers Association convention here this week.

    LAS VEGAS -- From Wal-Mart's continued onslaught to the national repercussions of the Albertsons' deal, independents in markets across the country will face critical shifts in marketplace power this year and beyond. It's time many of them start seriously considering hitching their wagons to wholesalers' banner programs, to strengthen their own positions as part of "virtual chains," said Steve Dillard, v.p. corporate sales and business development, Associated Wholesale Grocers of Kansas City (AWG), during a workshop at the National Grocers Association convention here this week.

    Dillard's own company, a wholesale cooperative based in Kansas City, Mo., successfully runs eight such banner programs, and has seen participation grow as market conditions have toughened. "The enemy is everywhere out there," said Dillard. "But we can win in the marketplace," he added, if wholesalers and retailers, however dissimilar they are, work closer together than ever before. Banner programs are one way for the two species to achieve symbiosis; individual operators band together under shared advertising, marketing, decor, and market positioning strategies guided by the wholesaler, to reap the benefits of critical mass.

    AWG's own strategy relies on eight banners that offer distinct stratifications in market positioning, to suit a given retailer's preferred strategy and specific challenge vis a vis competitors. The wholesaler has got 280 stores allied to the banners, representing 15 percent of its total customer base but doing 23 percent of its volume. "So, you can see the programs are pretty successful," noted Dillard.

    For the workshop Dillard focused on four of AWG's concepts: The high-service, competitive-price banner Price Chopper; the convenient neighborhood Apple Market; the upscale specialty Sun Fresh Market; and the community-focused, rural Country Mart. Each has a niche built on size, value proposition, metro or rural focus, and other differentiating factors, but shares a focus on fresh foods and strong service levels.

    For the strategy to work, however, retailers must know the customer base and its needs well, and must be willing to surrender some autonomy to meet the banner groups' standards for image and merchandising, including presenting a uniform advertising and marketing message.

    AWG is committed to expanding the banner group concept as a vital survival tool for independents, said Dillard. It was clear, however, that it could be a hard sell to many independents, who are individualists by nature. Dillard fielded pointed questions, for example, about how AWG manages to avoid or resolve banner overlap or competitive conflicts among members; and what kinds of costs and fees are involved.

    After the presentation, he admitted that even with its many obvious benefits, the banner strategy often runs up against skepticism from independents unwilling to risk abandoning or diluting their original banner's equity for the benefits of joining forces with others.

    --Stephen Dowdell

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