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BOISE, Idaho - Albertsons' only Bay Area distribution center, a 439,703-square-foot facility in San Leandro, Calif., will shut down as the grocer seeks to consolidate operations.
"Albertsons is continuously looking for ways to improve our efficiency to ensure that we remain competitive in an increasingly competitive marketplace," Quyen Ha, spokeswoman for the company's San Leandro-based Northern California division, told Progressive Grocer. "Our distribution network in Northern California offers a tremendous opportunity for streamlining and cost reduction. After careful consideration, the company has decided to consolidate our three Northern California distribution centers into two.
"We will expand our Roseville DC and move work between the three centers until all operations have been reallocated between the Roseville and Vacaville facilities," Ha continued. "We will then close the San Leandro DC. We expect this transition to begin in the fall of 2004 and be completed in late 2005."
Albertsons said it plans to start expanding the warehouse from its current 440,000 square feet to 560,000 square feet in the autumn.
The 870,000-square-foot Vacaville center is the area's biggest. While the Roseville location is a full-line warehouse, containing dry goods, produce, deli foods, and meat, the Vacaville center holds only dry goods.
An estimated 400 people work at the San Leandro facility, while a total of 700 work at the Roseville and Vacaville centers.
Neil Stern, a partner in the Chicago retail strategy firm McMillan-Doolittle, said he sees Albertsons' strategy as a way to cut costs in a market where it remains solidly in second place, behind Safeway. This is a sensible move, according to Stern, given the present competitive milieu.
When asked to speculate on whether the industry is likely to experience further distribution center closures and/or consolidations, Stern told Progressive Grocer: "I think all companies, retailers and wholesalers, will continue to take a hard look at all of their cost issues, including distribution.
"Wal-Mart has significantly raised the bar from both a front-of-the-house and back-of-the-house standpoint. Their EDLP strategy is well understood, but it is really the lead they have in logistics, buying, and distribution that makes it possible -- labor plays a role, but not as large as everyone thinks. Retailers will have to drive more efficiency out of their operations to be successful in the future," said Stern.
-- Bridget Goldschmidt