t

i A COMPARISON OF VOLUNTARY AND,
COOPERATIVE GROUPS

I

5

Thesis for flu: Degree of M. A.
MICHIGAN STATE UNIVERSITY
Robert Drayton McLane, Jr.
1959

 

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A CSNPARISCHICZ 'VJLUNTAPY'AHD

CSSPE PATlVE uD\UPS

by

Rob<3 rt Dragrton hclan3, Ju.

Submitted to the Coll3ge of Business an; Public Se? wxic
Mic hi5 3n Stfite Uwivessity of Agriculture 33d
Appliei science in partial fulfillment of
the reguirements for the uegree a

9 r .

Mp rtment of Marketing and Trans powtation “l‘i1i61‘qtien

Curriculum in Food Dist leib ut ion

1959

 

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ROBERT DE“Y”“‘ IHch~ 5, JR. 2.3

The objective of this study is to give a description

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Of voluntsr;I and cooperative
and disadvantfiges of each. lo make this comparison two
highly successful wholesale operations have been described.

Is;
The first will_be—a voluntary group while the seConi is x

(I)

cooperstive. amphesi is placed on the services and retail
ossistsnce offered by the wholesaler, as well as the cost
of each plan.

Not long ago the food inoustrI was looking on the
wholesale grocer as a oinng form of distribution. it was
ssid that the wholesaler‘s ”€1TS were numbered because the
better indepencen t retailers wculd begin buying direct from
the manufacturers, and thst the wholesaler was too old— #1
fashioned to survive.

in the 1920's the wholessle/ prices were often at 3
leIel tM1 t m1de it oifficult fo:“ the independent retailer
to compete with the food chain. in planning advertising,
merchs.n13 ising, and pro omotion e"er ts there was little cooper—
ation between the who los le: and retailer. host whole—
salers o «fe”eo the retailer little assistonce in finding

new retail store sites, in helping to finance new stor

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construction, in planning efficient store lsyouth o1 in
many of the other retailing problems where the wholese or

could be of direct service.

‘F UT“?H‘ of: “tyre ‘1 In T we J .1 err“ ‘ r “I“
Heg‘L‘glfii L'I'xf‘x ,J.‘\.:)ll‘ 'ILCL1‘\1‘II_‘J, R. .L.:)I-. L,‘L:‘k\v

Rat ailers have often been reluctant to concentrate
purchases with F single wholesaler to help lower the cost
of distribution. Also few retailers would eke the whcle-
seler into their confidence and ask for assistance in the
many are%. of retail operation where the group whole SFler
could offer specialized retnil services.

With the development of the voluntary and cooleretive
groups these problems hFVe been largely overcome. By
working together as e teFm, these groups have made it
possible for both the wholesaler and the retailer to be
more successful in incre Fsing the seles one profit of their
operation. They h: lve Fl so found thrt they can work to gether
without jeopardizing trmei i divio uFlit As a result of the
voluntary Fnd co operFtive group formSof distribution, the
independent wholesaler and retailer are stronger today
then at any time since the 1920's and promises to become

even stronger in the future.

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ference between the corporate chain and
voluntary end cooperative Troups is the ownership of the
retail store. in Joluntacr and cooperative groups the

' , f: ‘ ‘ a - a J— - ’7
owned by independent me:-

 

A C1 -‘A ~ . q“ 1 l- r -‘
own to tn the wnolesnle 1nd

the retail stores.

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Of the several different types of Lffillfltéd gr oip

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the wholesaler-sponsored voluntary and the retFiler-owne

 

ROBEE‘ :E‘Yhm” Nclux., JE. A3 TRACT

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cooperative have become he most important. A retailer-

a form of business enterprise

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owned cooperative group

owned and controlled on on equal basis by retail grocer

stockholders twio patm nize th busmi ie on:

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any savings in proportion to their pitronage.
The wholesolerponsored volunt31'y group is an organ-

‘

ize tion compose ed of a group of independently owned retail
stores, es sociated with n sponsoring inoe enden'ly owned
wholessler. The retailer members voluntefiy affiliate with
the wholesaler for the purpose of buying and selling mer-
chandise, as well as specifil se;"’vice offired b7 the
wholesnl e:.

The voluntai y and cooperet re groups of tcdfiv
passed the experimental stwge of their 0 er: ion. At the
present time well organiZed offilieted groups are able to
maintain their pre esent m rkets and are actively competing
with the corporate chains for new markets. In 1958 the
voluntsry and cooperative groups accounted for fortv-five
per cent of the total grocery seles~4nd eleven years ago the
affiliated groups had only twenty-nine pen cent of the
nation's food sales.

The strength and importance of voluntgr=x one cooper-
ative groups is shown by the success of the plan and its
stability in the food industry. The growin ; competition in

the food industry between chains and independents will

 

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" DWPW “Si' 7w w IT Law" J i A 1c" ..
lLOiJZL .L I MAY DLI DC .rfllw'L. it . HE ii‘LrA‘ -

increase the importance of these :ffiliated groups becmuse

of the msrmrzurrmitnges offered tfl131ret3ilers.

 

 

The Food Distribution program at Mic
State University is under the sponsor
of the National Association of Food C1

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A cowrnai on O? taiuyraxv :3
COOPERAT V3 G 31“:
by
Robert Frayton Mclane, Jr.

3>
*1
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Submitted to the College of Business and Public Service oi
Michiga State University of Agriculture and
Applied Science in partial fulfillment of

the reiuirements for the degree of

Department of Marketing and Transportation Administration

Curriculum in Food Distribution

1959

 

 

ACKLKNTLEDGifiiiTS

The author wishes to express his sincere appreciation

to the management of The Fleming Company, Inc., and

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spartan
Stores, Inc., who gave willingly of the r time in supplying
the necessary information for this study. He is particu—
larly indebted to Mr. Ned fl. Fleming, President, Fleming
Company, inc., and Mr. Joseph G. Fov, General Manager,
Spartan ;tores, lnc.

sincere appreciation is extended to Dr. 2. A. Brond

for his assistance and counsel in the pre aration of this

{I}

The author gives special recognition to his parent
for their constant inspiration and guidance throujhout his

life.

 

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CnfoiaR

I. INTRODUCTION. . . . . . . . . . .

Purpose of the study . . . . . .
Definition of te ms . . . . . .
Wholesale r- sponsored voluntary group.
Retailer affiliation . . . . . .
Retailer—owned cooperative . . . ,
Food chain . . . . . . . . .
Methodology . . . . . . . . . .
Limitation of the study . . . . . .

E: IDETTLOPII: IT P VOLUJTAEY ATCD
COOPER ATIVE GROUPS . . . . . . . .

The effect of the foo d chain . . . .
The growth of the voluntary groups . .
Retailer-owned co 'perative groups. . .
Wholesaler- ponoo'es voluntary groups .
The operation of voluntary and coo per-

ative groups . . . . . . . .
Adventa es of voluntary and cooperative

gioup membership .

Cost “czant’re of g oup affiliat tion .
Supervis ion for eta il m3mbe1 s . .
Store engineering . . . . . . .
Retail accounting . . . . . .

m-

Financing and leasing progr ms. . .
advertising . . . . . . . . .
Merchandising service. . . . . .
Wholesalers advantages in affiliated
groups . . . . . . . . . . .
Weaknesses of vo untary and cooperative
groups . . . . . . . . . . .
The success of voluntary and cooperative
groups . . . . . . . . . . .

III. THE PLEMTXG CONPLHY--A VOLUUTREY GROUP
xIAJYI—I<)1.}E:f_j) ‘fl‘I4ER O O O I O O I O O O I

History . . . . . . .
warehouse ownership a 0 organization. .
Company growth and tradin ai
The Fleming Company's sales s

PAGE

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CHAPTER PG:

Merchandise program . . . . . . . #8
Grocery probram. . . . . . . . 49
Produce program. . . . . . . . 50
Frozen food program . . . . . . 50
Meat progra . . . . . . . . . 51
Dairy program . . . . . . . . 52
Bakery program . . . . . . . . 5
Manufacturing program. . . . . . 54

Retail assistance of: ered by the

Felming Company . . . . . . . . Eh
Retail operating assistance. . . . ES
Reta il accounting . .. . . . . . 56
Adveltis in.g . . . . . . . . 57
Store development program . . . . 59
Training schools . . . . . . . 62
Company publications . . . . . . 63
Warehousing and transportation. . . 6’

Fee schedules of th sales service

program . . . . . . . . . . 64

Success of the sales service program. . 66

IV. 'P’RTAY STORES, NCORPOR nTED—~A RETI LER-

OWEED COOPER ‘ V3 WAREHOUSE . . . . . 72

 

History . . . . . . . . . . . 72
Warehouse ownership and organization. . 74
Group ea 35 history and trading area. . 78
The ”p rtan Stores cooperative group
plan . . . . . . . . . . . . 81
Merchandise program . . . . . . . 3
Grocery program. . . . . . . . 83
Meat program. . . . . . . . . 84
Bakerglgyaogram . . . . . . . . 85
Frozen food pI ogrum . . . . . 86
Health and beauty aid p o; g‘am . . . 86

Non-foods and special puichas s . . TY
Manufacturing program. .
Services offered by the Spartan

CO
(I)

VIEIREhouse I o I I u I o o I I 88
Advertising assistance . . . . . 83
Store improvement program . ; . . 91

Retail accounting . . . . . . . 93
Company publications . . . . . 94
Warehousing and trans po tation. . . ”5
Fee schedule of Spartan Stores,
Incorporated . . . . 9
Success of the Spartan supezr marke ts . . 9

CHAPTER
V. SUMMARY RED CONCLUSiDN . . . . . .

Summary . . . . . . . . . .
Conclusion . . . . . . . . .

APPENDIX A--Retailer—wholesaler iGA and sales
service plan agreement . . .

APPENDIX B--Cooper3tive advertising contract
members of Spartan Stores, inc. .

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LIST OF TABLES

Per Employee . . 9

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I. Grocery Margins- nd Sale

II. Comparative Sales of Independent and Chain

Retail Grocery sales in 1929 . . . . ll

9)

-~

III. Comparative Profit nd Loss Statement of a
Typical Grocery'hholesale Before and
After Sponsoring a Voluntary Group . .

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IV. Growth of Affiliated netailers. . . . .

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V. Wholesalers Broaden Lines handled

\

VI. How Wholesalers Aid in Financing Jew Stores 3f

Ch
\3:

Fee--$ 7.80. . . . . . . .

IE. Fee Schedule for Frozen Food Merchandise--
Minimum Weekly Fee--o2.;O . . . . . a;

X. Store Accounting Service Fee Schecule . . 68

 

XI. Adve*tising Fee Schedule. . ~. . . . . 68
XII. Freight Rates for Oklahoma City Division . 69

XIII. Statement of Operation for a Typical IGA
Supermarket . . , , , , . _ . 7O

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XIV. Buying Deposit €cnedule--Class B otoc

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IV. Spartan Stores, Inc., Sales Growth . . .

XVI. Service Charge Schedule . . . . . . .

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XVII. «etail Accounting Fee Schedule. . . . .

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XVIII. Advertising Fee Schedule. . . . . . .

vii

IABII AGE
.— TV so -: -~ *:—. » 1 h ‘- '-
xii. spartan otores ire gnt mates . . . . . 99

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in. Statement of Operation for a Typical
Spartan supermarket . . . . . . . lOO

 

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Organi7ation Chart of

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trading A'ea of -pfirt

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Fleming Division Organi7ation Chart . .

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CHAPTER I
INTRODUCTION

In the past few years there has been a new look in
grocery wholesaling. This new look has been of great im-
portance to the nation‘s independent retailers, because
it has played an important part in the progress and growth

of independent supermarkets.

During the 1920's and 1930's the food industry was

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$13

looking on the wholesale grocer as dying for

bution. Banufacturers were bypassing them and selling
directly to the retailers. Chain stores were rapidly

growing by doing their own wholesaling and retailing, and

the wholesaler was too-old-fashio ed to

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it was sai
survive.
Wholesaler prices were often at a level that made
j.t difficult for the independent retailer to compete with
tskne food chains. There was also little cooperation between
tfaee wholesaler and retailer in planning merchandising,
843*vertising, aid promotion events. Most wholesalers
C>ffiifered the retailer little assistance in finding new
PEEtail store sites, in helping to finance new store con-
St3-1—‘uction, in planning efficient store layouts, or in
msarqs, of the other retailing problems where tne wholesaler

CCDIAIAi be of great help.

The independent retailer has often been reluctant to
concentrate purchases with a single wholesaler in order to

1 l "0
lower wholesale operating costs. Also,1ew retailers

Cl]

would take the wholesaler into their confidence and a k
for assistance in the many areas of retail operation where
the group wholesaler could offer specialized retail service.
oday, these problems have been largely overcome
through the growth of voluntary and cooperative groups.

By working together as a team, these groups have made it
possible for both the wholesaler and the retailer to be
more successful in increasing the sales and profits 0
their operation. They have also found that they an work
‘together without jeopardising their individuality. As a

:nesult of this new form of distribution, the independent

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todav than at any

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Ivfaolesaler and r-

and promises to become even stronger

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tzjxne since the 1920'

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.

J_r1 the future.5

 

E’leapose of the Study

 

The purpose of this study is to present a comparison
CDf‘ the voluntary and cooperative group method of operation,

isadvantages of each.

0;

StiCDLving the advantages and

1

so fiobert W. Mueller, "The New Iook In Grocery holo-
C~l.iiag. Progressive Grocer, May, 1955, p. 5o.

 

2 ~ g
[blG., p. 5:.

The firs section describes the conditions which
brought the need for this method of food distribution.

Consideration will be given to operating met.
and present day gioups showing the need for aifiliation
by independent retailers.

The second part of the study describes two highly

successful group operations. The

“L

tary group while the second is a cooperative . Emphasis

is placed on the services and retail assistance offered
by the wholesaler,as well as the cost of each plan.

The final section cf this study is a comparison o

these two methods of group operation showing the advant g

ntages of each.

£13

V

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an

_Ehefinition of Terms

 

r“ ‘2

Terms such as wholesaler-sponsored voluntary group,

iveetzailer affiliation, retailer-owned cooperative, and

c2kusains will be used through this study.

Wholesaler-sponsored voluntary group. This is an

 

afsssociation of independent retail grocers under the super-

m

vlSion of wholesale grocer, who renders merchandising

engineering, accounting, and other services to the retgy

”M3rnk3ers. The group is organized on the initiative of a
WhOlesale grocer seeking o bring about

Combination of wholesaler and retailer functions

a more effective

.1

'9

through affiliation with a select group of retailers.

Retailer affiliation. Retailer affiliatio.n with a

 

voluntary r cooperative group means that an independent
retail merchant has a franchise from a sponsoring whole—
saler to operate his store under the group name, and
receive merchandise and retail assistance from the whole-
saler. The retailer retains complete ownership and control
of his business but he must display the group emblem and

become identified as a member of the sffi li ated group.

Retailer-owned cooperatives. Retailer-owned cooper-

 

satives are organized as incorporated wholesale grocery

(oompanies, which operate a warehouse and do a regular
rhoolesale grocery business, but its stock is owned entirely
:31“ largely by the independent retail g ocery members. The
t>aisic purpose of the retailer cooperative is to buy and
$363:Ll together just as voluntary groups do, with the ware-

l1c>11se serving as the sponsoring headxuarters.

”EBUiZEtion operating

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InC>Z°e than ten retail stores under the same ownership with

cssrltrml management.

a , ,T
JM. M. 71mmc“m n The Supe. Market (wen York: NcGraw-
l 5

}“13—1. Book Company, Inc., , P- 12-

(1 “a. w. Bye r
[Egiisihington, D. C
SSociation,l 195 6

 

ly, The Future of the Wholesale Gro ce er
0 v') S‘

3 pUniEeo Ftates Wholesale Ci: oce

 

k
I

Methodology

 

The majority of the information on the development
and growth of the volun ary and cooperative group movement
was obtained from secondary sources such as trade period-
icals and text books. Information was also obtained from

coarespondence and interviews with leading men in the

K_l

t—J

area of food distribution.
in an effort to show the complete operation 0 a

voluntary and cooperative group, it was necessary to limit

m

this comparison to two of the leading firms in the indu

W1
-1

"me were selected because of the outstanding

(I)

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18

try.

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ch has obtained in the food industry and becau

(I)

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success
<>f their cooperation in allowing a description of their
(operation.

Personal interviews were held with executives from

m

eesacfli firm in order to get accurate information about th ir
(DEDEEPatiOU and the services performed for retail members.

‘

ifkaee iniormation obtained from the interviews was used

 

H

n

iuir:iting the description of each fir.'s operation.

Limitation of the Study

 

The firms used in this study are two of the most out-

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riding and successful in the industry. Their tctal annual

Q’ .__ va‘ ‘~ A ‘~ ‘fi -‘ \ . n I‘ 1 I ~V'xw‘r‘ re "7 ~ « - - ‘-v v
~ 8. l e S plume I arr exceed: the Ufltl.‘n:il .1 je--<L,~,x3 TC: Jo-un UlLJ’
'1 r“: -\ \ rn << W IV I ‘, A» 1 7‘ .: ~- .' .5
rl‘ CCepLFCCl e “Sup wixlb-alpft. ClU: CflQy 'flf leaoP?~ 1m
SalC)fi ”H C: h’q C " ' C‘ ff” ’3 ”I: t ‘7 'f“ vw~n1¥1 Vac:
«c s we we seryicee c 1e1ed o [031-1 memoe1b.

It is not the intention of the writer to compare

these two firms to show that one is
but Lather to give a description of
ative groups showing the advantages

form of group affiliation offers to

better than the other,
voluntary and cooper-

1

disadvantages eacn

L

2111

L

retailers.

 

CHAPTER ii

THE DEVELOPMENT OF VOLUNTRRY

AND COOPERATIVE GROUPS

The grocery wholesalers of today have made great
improvements in their operation in the last forty years.
In the typical wholesale operation in the 1920's,a grocery
product costing $1.00 would be sold to the retailer for
$1.13 and then to the consumer for $1.40. Todav, this item
can be purchased by the consumer for $1.20 because of the

V

ijnprovements that have been made in the field of food
distribution.5

During this early period of grocery wholesaling, mer-

crkrandise was usually stored in a multi-story warehouse and

1.13tt1e use was made of material handling equipment. The

vvricolesaler would get busin ss bv sending salesmen to call

D

<3r1 the retail trade. The retailers purch.sed the merchan-

(

cii_sse on credit and many were slow in paying the wholesaler.
MOSt of the retailers were small and usually divided their

bllESjarass among several wholesalers. This practice meant

,-

SN181]_1 orders that were expensive to assemb1e and deliver.O

1

C 7—1 . ‘
T 2Pau1 Converse, "Twenty—rive Years of Wholesaling,'
_il§i\;gourna1 of Marketing, Vol. 22 (July, 1957), p. 40.

 

Ibid., p. #1.

 

 

This method of wholesaling reguired high margins to

.—

cover costs and return a profit. Before the advent of the
food chains the wholesaler had little incentive to improve
his operation because he faced competition only from other

wholesalers whose high operation expense was much similar

to iio
The Effect of the Food Chain

 

The chain food stores rapid advancement in
the 1920's and began to change the Chara ter of the food
industry. By the 1930's the chains were threatening to
take over a large part'of the food business from the inde-
Ioendent retailers who had failed to keep pace with the
cfiaanges that had taken place in food distribution. Because
CDI‘ the success of the chain stores,the independent merchant
k>emgan to feel that the chains were unfair in their method
c>f‘ operation and began campaigns to push restrictive legis—
1.51t3ion on the food chains. fls a result of these campaigns
f7c>1aty-five states passed some form of price maintenance
]_EiVJs and a number of states had a tax on multi-store
Operators.7 Even‘with this anti-chain legislation th
fVDCDci chains grew from 500 com anies with 8,000 units in

1S9J_Li, to 995 companies with 62,72? retail units in l93o.8

/

 

 

 

Zimmerman, op. cit., p. A.

 

xi)

The early food chains were successful pri imarily
because they were better merchants who were constantly
striving to reduce selling cost. By making direct pur-
chases from the manufacturers, doing their own warehousing,
and selling through their own retail outlets, the large
food chains were able to have a lower cost of distribution.
As can be seen from Table i, the margins in the retail
stores have greatly decreased over the years as efficiency
increased. This lower cost of distribution s arted by the
food chains, resulted in lower prices to the consumer, a d

is one of the major reasons for their rapid p-ontn in food

:retailing.

GROCERY MARGINS AND SALES PER EMPLOYEE

 

 

 

 

 

Annual Sales Margin
Year per Employee Per Cent Remarks
:lEch century $2,000—-3,000 30-40 Service stores
Goods out of reach
of customers
1900 4,000—~E,000 25—30 Mo1e DQCksve| goods
{Gore pe: is he ble
good
1925 8,000-10,000 20—25 3i per cent with
self-service
L1946 M6,000 15-20 76 per cent of
sales mace in self-
service stores
14951 42,000 15—19
\
-~—~‘__, _ __

 

 

Y 1George E. Kline, "How Stores Have Cr enged Over th
‘ y ,_ r"
‘3511753,' Progressive Grocer, Vol. 3l (October, 195;), p.

 

Realizin; that anti-chain legislation alone would not

stop the growth of the chain stores, both the wholesaler

and retailer began looking for some form of organization

which could help them become more efficient. One of the

main disadvantages under which independent retailers were

operating was that their small corner stores were operated

haphazardly and making only between $300 and $400 in weekly

sales. These stores were no match for the more efficient

food chain operation, whose sales were approximately three

<or four times greater. The chains enjoyed another advan-

tage in buying and advertising. With no Robinson-Batman

aw in force in the 1920's,the food chains were getting

niany buying concessions and price advantages which enabled

tflaem to have lower merchandise costs. These cost advan—

tnages were beyond the reach of the average independent

9

kaiolesaler or retailer.

Table ii shows how much more efficient the early

 

9. The

\O
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n l

H.

Ciasains were than the independent retailers

a.y stores

:3
,3

iraciependent retailers had over three times as r
as; the chains but they were doing only twice as much total
bLlESihESS. Also, the chains were able to do

513; Inuch volume per store as the independent

ll

 

 

Item Amount

 

Zlotal number of independent

retail stores 285,6hl
ii"! A," ,' ..

Tkotal volume s4,9r4,440,580
fivverage annual sales per store 17,380
Tkotal number of retail chain

units 62,725
m ‘ d i-n 88:: air“ OOO
.LOtal Jellime WC) ‘/).-)/\J)
AnJerage annual sales per store 46,000

Combined Total Sales $7,849,790,580

 

 

 

 

 

1 \" ” "I ‘Y a ‘

h. h. Zimmerman, The super Market (New Yorx: Mc-Graw—
iiigll Book 00., inc., 1955), p. 5.

in the 1920‘s both the wholesaler and retailer
:wazalized that the food chain competition should be met

Evidth new ideas and mod rn methods of operation. There should

h“? lower prices, cleaner stores, better advertising, and

‘

tflez newer methods of display and promotion. Only by using
tfaease methods could the independent retailer meet the

fCDcod chain competition.10

10

H1
CT
H
DJ

 

F—4
R )

The Growth of the Roluntary Groups
in an effort to overcome the advantages of the

corporate chain, wholesalers and retailers have tried

several forms of group affiliation. One of the first

;forms of group affiliation was buying groups. These
Egroups were formed on the assumption that buying power

tvas the main advantage of the chains, so retailers organ-

(I)

order*

:ized informal pooling of orders. This pooling of

I

ssucceeded in gaining some reduction in prices,and when

c:ombined with pool—cars lower freight rates were obtained.
Even with the lower prices and freight rates,these
iraformal buying groups failed because they could not give

tsrue retailers all the services needed to meet the chain

(0

crcnnpetition. No provision h-d been made in these 5

Cc; improve the advertising and merchandising in the retail

sstjcares. To overcome these weaknesses of the buying groups,

vc>J_untary groups began to be organized. This name developed

 

beecrause retailers voluntarily affiliated their stores with
true wholesaler sponsoring the group. The services provided
try ishe wholesaler for group members were similar to those
FNBITINormed by the central or district offices of the

COITEDorete chains. The main differences between the cor-
pOI“Eite chain and voluntary group is the ownership of the

retail store. In voluntary groups the wholesale and retail

Stc>r¥353are owned by independent merchants. The corporate

P—“
U)

‘ V 1 'l \ I l l
crnains own both the wholesale and the retail stores.

Voluntary groups developed rapidly because they were

ya

garoviding the retailers with much need d assistance and
143w cost merchandise. 0f the several different types of
Kroluntary groups, the wholesaler-sponsored and retailer

crooperative have become the most important. in both of

tzhese distinct types of voluntary groups emphas s is

 

FDlaced on the wholesale operation and the importance of a

crlose relationship between the wholesale and the retail
l2

inanctions.

Fvetailer—Owned Cooperative Groups

A retailer-owned cooperative group may be defined
a. form of business enterprise owned and controlled on an
ecquel basis by retail grocer stockholders who patronize
tfloea business and participate in any savings in proportion
tco their patronage.

The retailer-cooperative wholesalers had their
tfiegginning during the period of informal buying groups.
TWlease early buying groups found it necessary to have their

CWWYI warehouses to store the merchandise until it could be

(sisstrdbuted to the retail stor s. in other cas s, QPOUPS

 

 

Theodore N. Beckman and Harold H. Maynard Prin-
f Marketing (New York: The Ronald Press company,
. 239.

 

CiFDlees-

Ln

m
ET
T30

}_J
R)

Converse, op. cit., p. 42.

 

la

purpose of opeffiting

Q
L .

(I)

(of merchants organized for the expre

7,'
1‘

‘their own wholesale warehouse. in either case, the “are

C);

kiouse is operated by a paid general manager and pai

ennployees, in the same way as if it were owned by a private

igndividual or corporation.
in 1887, a group of independent retail grocers

EDanded together to start the first retailer-owned food

- [A -, R ,‘ ,
’y Ccngrarv. One

F\’

J
(I
0
(D
H

vvholesaler-—the Baltimore Wholesale

1

3wear later in Philadelphia, the Frankford Grocery Company

tveus founded. This cooperative group developed rapidly

Luqtil it had approximately 2,000 independent retail grocer

groups many other

(D

rnennbers. Soon after the success of thes
Cchoperatives were established to help the independent

rneerrchant in his battle against the corporate chain. in

ilEBEBB, there were 195 cooperative warehouses which have

ari annual sales of $2.60 billion.1

1

Membership in these

U)

ncreased to approximately 37,000 retail food

 

Elrc>ups i
14
Stores.

The retail members are required to finance the whole-
Safilea operation and pay cash for their merchandise or

Pe<3eive a week or ten day's credit. But credit is usually

 

 

lQ .
P “Robert W. Mueller, "Annual Report on Fooe Retailing,"
Mssive Grocer, April, 1959, p. ‘5-18.

 

14
Converse, op. cit., p. 47.

pas
\, W

extended only after the members have made cash deposits
sequel to their averag weekly purchases. By opej‘tihg in
ishis manner the warehouse has capital to pay cash for :ll

15
gourchases.

in organising the cooper-tive warehouse it has been

f7ound that at least forty progressive retailers are needed

tzo maintain a volume large'enough to operate efficiently.

blith a smaller number there is difficulty in obtaining

zadequate capital to begin operation, merchandise cannot

large quantity, cooperative advertising

be purchased in
and advantage could not be

r
, lo m‘ ,
ion gnerefore, it has

tvcnild become too expensive,

('0

tsixen of special market condit

toeecmmwanecessaryfor the cooperative wholesaler to obtain

313 many members as possible in order to purchase in quantity

axaci spread the cost of operation over many members. The

fOI“ a COOperative warehouse in 1958

axzeerage annual sales
. l7
weass $l3.33 million.

 

The retail members are usually requiged to prrchase

thus rnajority of their merchandise from the cooperative

Whusilesole by mailing in their orders. This method of

UQJ.

 

 

16 ‘ ‘ ’
Beckman and Maynard, op. cit., p. 2&0.

l7 .
Mueller, ”Annual Report on rood Retailing,” op. cit.,
p- F~18. "" '

ordering makes possible a savings in the elimination of
Even with the success of this form of ordering,

scary to periodically send

L.‘ L, ~J~A

salesmen.

cooperatives have found it nece

salesmen or contact men to retail members. The purpose
of these men is not to take orders but rather to keep
members informed and in contact with the wholesaler.
Cooperative group warehouses have achieved a very

p
l 01“

(1)

low operating expense. The normal operating cost

these groups is around M.6 per cent of sales, which makes
it below the 8.7 per cent cost for full-service whole-

salers. The profit made in the operation of the ware-
}1ouse is returned to the retail members as patronage

mounts are kept as o

{D

ciividends and only small
The cooperative groups began by handling dry grocer—
iess, but as the supermarkets began to increase the number
cof‘ items stocked, the wholesaler also expanded. Many of
handle such merchandise

ers new

blue; group wholesa.,

 

toiletries, meat,and produce. The warehouse

fYDCDds, drugs,
con rolled brand merchand

limited lines of

Merchandise not kept in the warehouse

al.3«o stocks 188

fcxr‘ their members.

c511 'be drop-shipped direct to the retail stores at low

COSt3_
The cooperative group warehouse has been able to

Pecllce operating expenses well‘below that of full-service

\

 

8
Beckman and Maynard, op. cit., p. 241.

Lvholesaler by eliminating many of the services which were

kpeing offered the retailer. These savings were achieved

toy selling for cash, the elimination of delivery service,

:regular salesmen, slow—moving items, and operating capital

tneing provided by members.19 One limitation of the cooper—
ertive group wholesale method of operation is that too much

irnportance has been placed on providing merchandise at

lrow prices and little or no merchandising help was given

rears this mistake

tco the retail member. in the past few 5
ideas been recognized and the wholesalers are beginning to
{orwovide more merchandising assistance.
lfiklolesale-Eponsored Voluntary Groups

During the 1920's the corporate chains continued to

T effort to help improve the position

<3)(;>and rapidly. in an

. K 1 ‘ "\ l‘ r ‘ “I - I
of bctn wholesale and retail

H
(D
in
c).
(D
t-w’
J
m

CDI‘ the independent,

f" f‘, 'V . ”W N v x q . . ‘n r‘ ' - « :—'. ,— v“ ,- 1 we r .\
Clog, niaations began oexeioping a new pol, the whole; in—
Q 'Iq‘ ‘ ‘ fd‘

..pu311so:eo voluntary group.

The firs wholesale voluntary group was started in
1E9EEI , in Buffalo, New York, by Smith M. Flickinger who was
an c>wner of a wholesale grocery company.
I"TI“- iFlickinger was also able to see the lack of efficiency
anci iJiitiative among his own customers in competing with

thee cflqains So,in 1921, he started a voluntary group

\— O

 

lglbid.

 

 

18

which came to be known as the Red and White Stores. This
voluntary group of independent merchants now covers thirty—
four states and has over 5,000 retail members.20 in 19:8,
there were 545 wholesale firms doing $3.95 billion in

21
C

annual sales.

Another one of the pioneers of the voluntary group
movement was J. Frank Grimes. Mr. Grimes was a member of
as he worked

L}

a Chicago certified public accounting firm and

with wholesale grocery companies he was able to see the
:results of the chain competition on the wholesaler's busi-
that improvements must be made

riess. Mr. Grimes realized

111 the independent wholesaler and retai er operations

In 1920, NT. Grimes established

PS

i

tidey were to survive.
true independent Grocers Alliance of America (1G“), The

tfiilliam T. Reynolds Company of Poughkeepsie, New York, was
to be established under the lGA voluntary

f“
\

trier first wholesaler
EI‘Cyup. Under the leadership of Mr. Grimes the national
“lesalers

s expanded to where forty-eight whoi

 

IC}fi1 group ha

FMinHe more than 5,000 high-volume independent reta 1 CC

ers .

H

1€“*€POHSOTBC voluntary group is an organi—

A

ZELtKiCchomposed of a group of independently owned retail

 

\

“O . p

‘ Zimmerman, op. cit., p. 1:.

‘lMueller, "Annual Report on Food Retailing,H o .
0113- 3-18 ~—
x, p. .L o

C‘Gordon Cook, "The Historical Development of the

(A

 

V . m. , .
0;?llirrtary and Cooperative Groups,” ine Voluntary and to-
ereitive Group Magazine, Vol. 19 (December, 19497, p. o0.

\

FA
KL)

sstores, assoc cia ted with a sponsol ing independently owned

'33
Ho
}__1
H.
p)
(.1-
(D
C!)
S
H“
CT
Z)

v”qolesaler. The retailer member voluntary af
tfiie wholesaler for the purpose of buying and selling mer-

clian dis well as special services offered by the whole-

e)?
2%
aler. '

The voluntary agreement between the wholesaler and

g

rwetailer centers around their oe pe ence on each other.
st

Tide retailer must have a low source of su upply as well

Q<= special assistance to insure his success and in addition,

‘tlue wholesaler is dependent upon the reta ile ” as an outlet
.fcor his goods.

When a retailer JOiNS fl voluntary EToup he agrees

Do
(I)

F J

(D

H:
O

h

(D
b

tco concentrate his purchases with the Wholesale“ t

‘I

‘tkre wholesaler is relieved of a large portion of his
sealling expense. The retailer mails his orders to the
lvknalesaler accompanied by si-: gned blank checks for ayment.
'Tklis check relieves he wholesaler of having to carry an
812crounts receivable :ecor d and also permits him to buy
fcxr cash.

The w*holesa1er uses merchandising men, which corre-

I)

SEDCHid to the supervisors of the chain stores, to work with
tkke retail membe1r s in improving their operation. Many
WhLDImesalers are beginning to employ pl oduce, meat, frosen

focmis, and dairy specialists to help the retailer with his

\

Marwqetflfm-p-ninciples and Methods (Chicago: Richard D.
IPVWirl, Inc., @597, p. 196.

‘3Char1es P Phillips and Delbert J. Duncan.

 

 

H)
C)

special problems. With the trend toward larger and more

modern-supermarkets, the wholesaler is roviding assistance

in the construction and layout of new buildings and the

.tance is offered.

(D

remodeling of old stores. Accounting assi
Tiany of the progressive voluntary wholesalers are providing

financial assistance for experienced merchants.

The trend for voluntary wholesalers in recent years

laas been the adding of merchandise lines offered to the

:retailers. Many voluntary wholesalers have added health

51nd beauty aids, housewares, frozen foods, and produce to
isheir dry grocery lines. A few are warehousing cured

nqeats and have agreements to drop-ship fresh meats to

tflaeir retailers. ?ew wholesalers warehouse bread or milk
bnat these items are frequently drop-shipped to member

S tcores. in the past few years,the voluntary wholesalers
FLBJJe been expanding their lines of merchandise faster

1 a
a,

R)

tzrisan the retail cooperative warehouses.
The expansion of lines handled by the voluntary
lvric>lesaler has also caused an increase in operating expense.

D1“l/ groceries can be handled at a cost of aoout three per

(I)
7
H:
J
(D
(0
O
F“
C)
H
:5

id

an

beauty

L .

cearlt, but lines such as health an
srngilfiber quantities and result in greater handling expense.
:I“C>2men foods require special capital investments in refri—

gear‘Elted facilities which add to the cost of its distribution.

\

 

2L4
Converse, op. cit., p. 48.

 

The warehousing of produce is expensive because it involves

special skill in buying and handling, and delivery must be

made more frequently.

Although most of the wholesale-sponsored voluntary

:2

groups vary in many details, the essential basis of the

organization in all cases is working together as a unit
to develop the mutual benefit and profit of both the

Lvholesaler and retailer. This cooperation between the

and retailer is directed toward providing the

Lvholesaler
iéetailer with merchandise at competitive prices, while
same time helping the independent merchand operate

{it the

tmetter stores. In working together although inde endentlv
_J .J , ‘4 U

covnned, retailers and wholesalers direct their efforts

tcyward operating more efficiently.

TYose Operation of Voluntary and Cooperative Groups

In both voluntary and cooperative groups,the impor-
tzcunce of group affiliation is stated in the contract between

 

‘tiose retailer and wholesaler in which both parties agr e to

“NDJrk together for their common interest. The retailer is
the whole-

expected to buy the bulk of his merchandise from

“'s promotions, and to

fiéilxer, to cooperate in the wholesalel o

(3C3T1fknvn to certain operating procedures.

services such as advertising

3é§1”ees to furnish
Q o o 1 a
r43<3<ounting service, supervision, aid in store development

ariCi remodeling, financial assistance, and in general any

h)
R)

assistance a warehouse headquarters can give a retail

2L2
supermarket. /

The wholesaler also must make merchandise available

at prices which will enable the independent retailers to

compete with their major competition. The agreement of

n C) Y7 ‘
1ascs w tn

the retailer to concentrate purch

wholesaler and the wholesaler to sell his merchandise on

a low mark-up basis and offer retail assistance, is the

R). J-

rnain basis of group affiliation.

In retailer-cooperative warehouses the method of

H

goricing merchandise to retail members is a m rk—up system.

TYoe cooperative takes the cost of the merchandise delivered

then a small percentage is added to cover

tco the warehouse,

brie expense of operating the warehouse. At the end of the

;yeaar the profit is paid back to the members in proportion

‘tc> their purchases.

The method of pricing merchandise used by most

 

s the cost-plus

‘) "/3

vn1c>lesaler-sponsored voluntaiy g.oups i

£3121r1. Under this method of pricing,the wholesaler bills

a percentage

C) J

thee Imerchandise to the retailer at cost an
r“ark-up is added to the invoice total. The mark-up ranges

fYRDTn two to four per cent for dry groceries and other lines

(I)

akerv product

.9

Q w '1 1
.nicifi as procuce, frozen fooos, meat, and b

 

\‘

f‘f-

C'Aww * o ‘I' ,- v1
Uh‘ “nowin H. Lewis, "Comeback of the wholesaler,”
‘““£‘781 d Business Review, Vo . 38 (November-December, 1955),

 

3
J
(D

'0
(”D
"3
F)
(D
,3
Cr

1
1";

\U

the mark-up is approximately ten per cent.

rnark- —up decreases as the volume of purchases by the

Iéetailer inc1eas es, thus giving merchants an incentive to

c:oncentrate his buying with the group warehouse. Differ-

(graces in the cost-plus plans among compani 13s are the r sult

c>f varying préctices in charging service fees.
Other wholesalers who do not use the cost-plus plan

D

harging for their services prefer to use a scale 0.

fwees for promotional activities, accounting, and neral

7’1
7..

rn:uaage eme.t services. .or the retail member to receive

rneerchandise at thesc low mark—up figur s, he must conform

two the wholesaler s pls n of operation and accept a reduction

ira expensive services. He pays cash or maintains a deposit

wriish the wholesaler, orders in case lots, and takes delivery

ass scheduled.
Retailer participation in both the voluntary and

ccnsgoerative groups requires certain action on the part of

thee :retailer. These requirements are primarily that the
18133 filler is expected to follow the group promotional pro-

1 from the sponsoring

t):
(I)
(D

ETEHTI and buy the bulk of his merchan

Wholesaler. in addition, the membership in an affiliated

y"

ngOLIID2re11uires the retailer to maintain all standards to

A

113}1£3d by the wholesaler in operating the retail stores.

.1

lflEESfE vmnfld include displaying the affiliated group name.

OpEBI‘aising each store on group standards, me chandi sing the

 

group‘s private label merchandise, a

'\

methods set up by the wholesaler.‘0

Cooperative Group Membership

Q;

4

Advantages of Voluntary an
The independent retail members of voluntary and co-

coperative groups have been able to seize many of the advan-
ate ownership

~./— U V

tages of chain operation and maintain priv
zand control of the business. The success of the many
at the basic

RA

ixoluntary and cooperative groups has shown th

pyrinciple of a wholesaler working with a group of retailers

130 secure buying, advertising, and merchandising advantages

its fundamentally sound.
The success of the voluntary and cooperative group

iciee.can be attributed to certain basic factors. These

of group membership now will be explained to

Not all

W .
aaczvantages

slac>w what they mean to the independent retailers.

every affiliated group

(A
(N

biasese services are provided b

vn1c>lesale, but the largest and most successful groups have
fRoLuad these retail services most important in the growth of

theei;r retail members.

Cost advantage of group affiliation. One of the major

0Q

Efllvsaritages of voluntary and cooperative groups is providin

Imarcrkiandise to retailers at lower prices than they could
get EDIaying from several wholesalers. This lower cost of

 

 

 

[\U
\ I}

merchandise from the wholesaler is accomplished in several

ways. First, lower cost of operation is obtai from

large volume and increased turnover, plus reduced o'

,0.

( \
I

cost. Second, advertising an m

k.‘

. The adv 3rtis ing allow-

CD

are obtained by quantity purc cha se

ance can be obtained because through the affiliated group,

a wholesaler finds himself in an improved position for
nd merchandising service to the m nu-

in
Q.)

selling adver tis in

CO
H

fEacturer. in return for an adverti ng allowance the

vflaolesaler will agree to fee ture the manufactu1er's prod ct
1“ may agree

111 the g oups advertisin13. The whol 1 e

fharther to have members build special displays of the mer-

cekia dise in the retail store This advertising money

cec>llected from manufacturers is then passed on to the

treatail members, which enables them to increase their
2"?

allow sales at lower prices.

a»

pircxfits and still

 

in addition to providing affiliated

rnezrc2handise at low cost, most group wholesalers perform

a IiLnnber of services for members. The rea.

wnxol.esaler offering the numerous services is that no one

ind QEEpendent retailer could afford to have them because

Of‘ 'Clie money, time, or special skills required. Services

T n ~ .
””11<3P1 are commonly oifereo by many affili atad group WNI le-

s. ._ .
gil‘EIrS are: superviSion for retail members, store

\___
2 .
7Phillips and Duncan, op. cit., p. 3,..

 

engineering, retail accounting, financing and leasing pro-

1grams, advertising, and complete merchandising services.

Supervison for retail members. The voluntary and

<:ooperative group wholesaler usually has a staff of trained,

eaxperienced field representatives who call on the member

sstores regularly. These men are not sent out as salesmen,

‘biat are employed by the wholesaler to provide the affili-

Etted retailers with assistance in store management. Besides

true regular supervisors who are trained to handle general

.‘

UMBIrchandising problems in the supermarket, many whol sale:

erngoloy specialists to aid retailers in operating meat,

pyrmoduct, forzen food, and dairy departments. The regular

ffiieald men also provide effective communication between the

wT1C>lesaler and affiliated retailers. While field men give

I...‘ x.»

‘93

aissaistance to the retailer in ll parts of his operation,

‘trne majority of the supervisors' time is spent in developing

programs for the affili-

fir:

SIDeacrial promotions and advertising

28

ate (3 stores

Store engineering. lost voluntary and cooperative

WhOlesalers have store engineering departments which work

CL

C

Wlfbla the independent retail members in store layout an

The store ergi-

eCILliJDment needs for modern supermarkets.
n ‘ .

€63I71J1g department also furnishes plans for the construction
0 v ‘ _ V O ‘

f‘ rieiw stores or remodeling plans for old stores.
§______~__¥

‘8Converse, op. cit., p. 48.

 

 

R)

Wholesalers also purchase equipment from manufacturers

for the retailers. Large savings can be obtained by having

equipment shipped direct from the manufacturer to th

:fletailer and having the equipment billed through the whole-

ssaler. The quantity discount that is obtained by the
:7etailer,buying his equipment through the wholes: en is
29

c:omparable to dealer or chain store discounts.

Retail accounting. The affiliated group wholesalers

for every retail member

H.
‘0

lazive learned how important it

operation. For this reason

(.0

‘tcp have accurate records of hi

rnc>st wholesalers now provide retail accounting services for

:it:s members. The wholesalers have found that they can do

t}1ee accounting work more efficiently and economically at a

ceeritral point than each retailer can do it for himself.

The retail stores provide information sucn as pur-

Clusases, sales, and expenses in weekly reports which are

seerit to the accounting department at the group wholesale.

[Isiirig this information the accounting department period-
1<3511_ly pre ares profit and loss statements for each store.

These statements are also used by the wholesalers to have

343C311rate figures on which to base their recommendations

f1)?“ Inore profitable retail operations.

3

:use of the tremen-

( 1

Financing and leasing programs. Sec

1

0
01453 investment in new supermarkets, most group wholesale-c

\

 

0.

2h 0
jibl

 

 

n i
U.)

. H O S ‘5

0’9

find it necessary to help in financing and lea sin

of‘the financing done by the wholesalers is in the form

(of short loans to established retailers, financing and

Ileasing of fixtures, and leasing of buildings to affiliate;

rnembers.

Before a wholesaler makes any loans the retailer is

tflaoroughly in/estig ate d. Not only is the retailer's

iritegrity and ability as a merchant important but also

brie store's potential to grow mus t be evaluated.
In the leasing of buildings to retailers it is the

{oruactice of most wholesalers to charge a percentage over-

s. In

54

:aixie on the primary lease to their retail me mbe

Q;

iaee].ping retailers finance fixtures several plans are use

'bgy roup wholesalers. One is a plan in which the retail

m

Insanibers pay twenty—five per cent down on the total cost

CDf‘ the fixtures and the balance payable on a certain per-

cearitag ;e of sales. In using this method the retailer

llSIJfiilly pays for the fixtures in three or four years.

'\ ~ '
knacoioher plan used by wholesalers is to lease equipment

1‘31“ supe markets to the merchant. The merchant cai

bllé’ the fixtures at their depreciate value any time before
trl . . . 30
‘ 635’ have been fully depreCiated.

Without .ctive participation bv the g‘oup whole salers
rkets.

t . . . . a
FME airowth of the groups would be severely limited. bor

\
3OByerly, op. cit., p. 7.

 

 

h )
\L)

‘this reason, wholesalers are giving more a‘. a

rwstailers in helping them build modern supermarkets at the

lmowest p ssible cost to the group members.

'v")

Advertising. Today, voluntsry and cooperative g-oup

 

mfiaolesalers are very active in helping the members with

tlieir advertising programs. This assistance is in the form

(Df‘ providing retailers with mat service, direct mail cir-

Ciilars, suggested items for retailer's advertising progr’m,
and window posters, and

sspxecial promotion materials, store

31

_“ V
arcs .

0

cii_splay

The wholesaler makes up the weekly advertising pro-

t made for the retailers at very lost cost.

>17

(I)

ggiaamiand hasrm

Tides retailers do not have to follow the advertising program

dsaajeloped by the wholesaler, but through the service, mem—

beaiss can get an effective advertising program at a much

lc>vner cost than the retailer doing it on his own. Most

Erflcnap wholesalers also provide direct mail circulars and
liaiaci bills for retail members. These circulars and hand
'biILJ_s are used for special promotions and are sold to the
I’6313-Ei.iler at a low cost.

Another most important advertising service the ware-

hOiissez provides for the retailer is the collection of manu-

faCturer's advertising allowances. For the members to

\

 

taj_ 31Harold E. Green, "Sales andHProfit Soar When He-
Erggj‘ears Can Concentrate On Selling, Printer's Ink, Vol.
C (iflovember 4, l9A9), p. 26.

 

i.» _3
(D

collect ad errti ing allow ances on their own, with proof of
adimerti ng having to be submitted to as many as 200 sup-

the cost would be prohibitive. Likewise, all

{oliers,

U2

gyromotional rebates are collected by the warehouse and di -
tinibuted to retail members on the basis of their erformance.
TYuese two items alone, advertising and promotional rebates,

csuq amount to approximately one-half of one per cent of

sales.32
All this advertising service gives the independent

rfeizailer an effective advertising program
01? better than his competition, but through group advertising

the is paying for only a sm ll portion of the total cost.

Merchandising service. The merchandising program

 

txee Pjn found to be one of the most important parts of toe

'vc>liintary and cooperative group‘s success. The reason fo:
tflixs is that the wholesaler, through his merchandising

the ope eration of

 

DIWDEZ:“am, is constantly trying to improve
it:8 independent retail members. Many wholesalers offe:
3VETSEiil members merchandising service in the following de-
rv, meat,

woce ies, non— foods, frozen foods, dai-u

 

pc’“tments: gl

9 ~ . 33

‘r“3 IDroouce.

\

”a J‘Perstnal correspondence With Joseph G. Foy. General
.irlgigiegp, Spartan s 3.95, The orporated, Grand Rapids, Mich—
13am .

Q
3 Converse, op. cit., p. 49.

in each of thes areas of merchandise, the wholesaler

is constantly trying to obtain the best quality of merchan-

9'

‘

caise at the lowest cost possible. After the merchandise is

pLchhased a close working relation is maintained with the

rwetailers to help increase his sales volume.

‘

ldruolesalers Advantages in Affiliated Groups

Most of the advantages of voluntary and cooperative
ggrnoups discussed so far have been from the retailer's point
c>f‘ view, but the wholesale operation also receives many
hmeraefits from the group. The wholesaler's main advantage
its an assured market in which retailers are concentrating

‘

wholesaler.

L 2
t—"
m
(D
H)
3
O
3
CT.
7‘)
(D
0Q
o
C
“U

CPIEE purchase of their merchan«
Aracother advantage is lower cost of operation for voluntary
eraci cooperative group wholesalers. This is made possible be-

CEiLlSe the wholesaler is buying in larger volume and receiving

Elljlcawances from manufacturers because of his control of

3T3132111 stores in advertising and merchandising. The whole-

 

SEiJ_ear is cutting cost in not having to maintain a large
3211.62s force to obtain orders from the retailers and also
bE3CTEruse they no longer extend credit as many wholesalers
haVe in the pas .

An example of how wholesalers have improved their
908- ition in the food ‘istribution industry is. s‘r'iown in
TaEDJ—EB III. This example illus rates how important

1
hole-

vo . .
1'LUTI’Cary and cooperative groups have been to the w

sa M,
:LEEIF‘S. ine wholesalers have been able to greatly increase

 

 

 

 

 

 

 

 

 

 

 

their volume of business and at the same time lower the
<operating expenses.
TABI? III
“MPAHAIIVE PROFIT AND 1083 STATEMENT OF A TYPICAL
GROCERY WHOLESAIER FEPORE [=ND AFTE. SP ”“8 INC A
v01v1h m/3Y GROUP1
1942 (Before) 1952 (After)
Item Percentage of Sales Percentage of Sales
£3211es $627,892 100.003 85,334,720 100.00"
(3c3st of goods
sold 593,221 2.98 5,131,0o2 96.37“
C}rnoss margin p 44,671 7 .02” 8 193,658 3,635
TR313a1 expenses 51,628 8.12% 187,933 3.51?
(Ogoearating p: ofit
(or loss) 3 (6,957) (1.10:) a 6,615 .121
CMEiSh discount
earned 9,568 1.51% 80.832 1.515
Cfbiaer income and
allowances 3,942 .h2% 21,223 ,80‘
I~€3t3 profit before
t3xes 8 6,553 1.037 $ 108.070 2.03;
l O 'V , \fl -A i p _ "
Richard M. Cl ewett, h.rketing Channels ior Manu—
f'Eiicr’cz‘ured Pro ducts (iiomewood, Illinois: “icosah D. Irwin,
Inc . , 1-547. p. 38 7.
The voluntary and cooperative groups have been most
ifnpo‘Ptant to the wholesalers because they have helped them

‘vu "‘ ‘ ‘
€3<DLV .from a low volume m1oole-man to a high

'olume ope 1‘ation.

‘3 ~
‘Dy helping the independent retailer expand his operation,
t I 0 1 I ‘ i

h63 1N’holesaler 1s insuring himself of a marxet f01 his

me ‘ a “
‘ rChianoise and services

(3})
\1 U

Weaknesses of Voluntary and Cooperative Groups

The lack of strong central control is often said to

be the major limitation of voluntary and cooperative groups

v

Often times the reluctance of the independent retailers to

cooperate or to change their method of operation hinders

the ability of the group to compete with the corporate

j

ated

\

p of the affili

cflaains. The lack of cooperation oi many

“31.38 S'

g;roup members in their refusal to concentrate purch

VJith the group wholesaler. The reason retailers give for

Iac>t concentrating their purchases is that they do not like

beeing limited to one source of supply. They also protest

tco the wholesaler about delivery schedules and many do not

The wholesaler

1_iL{e to pay cash for their merchandise.

11218 limited power in foncing members to support the program
txe<2ause the retailers can leave the group at any time.4’

Another significant difficulty which hinders the

Vcolwintary and cooperative group operations is the attitude

nvar1y retailers have toward merchandising assistance and

SLlFNervisors. These retailers feel that the supervisors

aTVE trying to run their business and leave them with no

aLPttlority in operating their supermarkets. It is most im-

‘pOIPTZant that this type of condition be avoided, so that

 

\
Rah "' 1 f‘ r
“ neckman and Maynard, op. cit., p. 230.

as
“’Iewis, op. cit., p. 121.

 

 

the supervisor will be able to sssist the re

improving his operation. Until the retailers are willing

:0

to accept the assistance which is offered, the affili ted

ggroups suffer from their lack of cooperation.
A limitation to the future growth of voluntary and

ccaoperative groups is the difficulty of finding additional

w olesalers who have the lead rship necessary to

qu
“t; rt new groups. This same limitation also applies to

o existing groups. The volunt':1ry

arid coope ;€;tiJe movement will grow only when p: operl y

are developed to build success ul

qulalified wholesalers

zafoiliated groups of independent retailers.«

'Frxe Stmc ss of Voluntary a.d Cooperative Groups

The voluntary and cooperative

y;—

psisssed the experimental stage of their operation. At t-

Ernessent time well organized affiliated groups are a

* .. v ,A . L
no are 1 C13 competin”

méailatain their present markets
Wthfi the corporate chains for new market Table IV shows

groups in 1953 accounted

y

tntat: the voluntary and COOP€?atiVe m~

I...‘

:nocery sales; e even

fozr 45 per cent of the total g-

yeEilész ago the affiliated inde epe nde nt retailers had only

For this eleven

U]

,i
o‘ S

‘9 E362; cent of the nation's food .le .

‘13': . . . 1 . .. ‘ ,
““r~1“ period the affiliated independents nawe shown an in-

CI‘ 7 f 1
63<«53e of lo per cent and in the same perio
\‘

,
30 . .
Beckman and iW Hyna o, op.

 

Cit." p. 2346.

 

in

liave increased their share of market only a pei Cant.

 

 

 

 

:same period sales of the unaffiliated independents ha 3 de-
Civeased from 34 per cent in 19a? to 16 per cent in 1958.3?
IWiese figures show that the affiliated independent retailers
arwe able to compete with the chains,but it has been throufih
ngNDup affiliations that the independents ave been able to
iricrease their share of the nation‘s food sales
TABLE IV
GROWTH OF AFFILIATED INDEPENDENT RETAILERSl
Item 1947 1950 1953 lpfo 1958

c h a 1 ns 37;"? 36:1? 3 6;"; 3. “ 39“:
Uri—siffiliates

jErujependents 3a; 31$ 257 19? 167
AIIfTiliated

Ind ependents 297: 337: 39": my: use“:

 

l 1'" r ' a 7"» v— ‘ v-x v
nobert W. Mueller, 2‘/~;nnua neport on r003 netaiIine--
'— H ‘ _ _ fl‘ _ . _ m ,
19%:53, Progressive Grocer, april, 19:9, p, ;_18,

 

The voluntary and cooperot ve wholesalers have done
“Hiblq work in broadening their lines of merchandise carried
tC) bEitter serve retail members. Table V s‘ows the degree
afrrj¥1.iated wholesalers have expanded their lines. This
VIiCiE? line of merchandise shows how well prepared the whole-

S a j o . a
1‘631i53 are in terms of prov10_ng a one-stop sou: e o:

 

'2 . . .
p ‘15 “7Mue11er, "Annual Report on Food Retailing," cp.cit.,

‘ ‘~£L8.

v

WHOTESALPPS BROADEN LINES HflHbLEDl

A—

 

 

V
|
1

Per Cent of hholesslers Handling

 

Type of

 

Wholesaler Fresh Frozen
Meats Produce Drugs Foods
‘Voluntary Group
Wholesaler 25 EM 78 52

(Cooperative
Wholesaler

}_J
\o
W
\]
-4
\ Tl
\ Tl

Lhiaffiliated
Wholesaler 7 12 8f

 

_..__._ ._—_._. --_ ... ._ ._._-<_ ..__.._—___.. - _ —.

_ _._- .— -_._. - ~,_.__._.

1Robert W. Mueller, ”Annual Report on Food Retailing--
f‘ ‘ r‘ r- ‘ v-1 5’.
1E937,' Progressive Grocer, upril, 1938, p, 5-10.

In addition to supplying the retail members with

listed wholesalers are

«"4‘

f.)
'T’J

:1
J.

H.

‘brnoad lines of merchandise,
FMDVJ giving members aid in financing new stores. Table VI

Sthotvs how much assistance independent retailers are getting

 

 

ffwoni their wholesalers in financing new stores.

The success of voluntary and cooperative groups can
be Sfaown by the fact that in two national studies of whole-
sal-irig it was found that wholesaler-retailer teams are the
Ifiasiseast growing element in the entire United States food

0"“

1 ~ 38 1 P
DOLLSStry. prom 1948 to 1937 voluntaries have has a sales

\

 

181'“ 1 p '- q . ,- ,»-.

vvg “ODGTt W. Mueller, "Food Indu t v's kewest success
_ .—- /

é’, Progressive Grocer, March, 199

‘a.

III
'A
N“!
H

RBI

HOW WHOLESALERS AID IN FINANCING had CTufihu

—— _— -__—_..— *—

 

 

 

 

 

Per Cent Per Cent Per Cent
Voluntary Cooperative Unaffiliated
Aid ‘wholesalers Wholesalers Jholesalezs
C}ive extended credit 52 78 32
emssist in obtaining
lease 6O 63 25
sake lease, sub-let
to retailers 29 ll 9
Phold mortga age 17 6 6
Giiarantee loan 28 20 IO
IPiidd sites for new
store 61 9O 3

 

.. _--—-.___ --__-__-—. -fl -A _

HA

lRobert w. Mueller, unn a1 Report on

Food Retailing--
lSNEB,"Progress ve Grocer, April, 1959, p. R- 19.

Eéiiri of 120 per cent while the cooperatives have increased

A ’ ~— ‘ .- -. ‘ y . ,
C7h4 per cent. ror the same ten year p8?lOG the average

, :9 .
sed 7o per cent.“ These figures

 

SD

ret:ail.grocery sales incre
ilfilllstrate the tremendous growth of the voluntary and co—
Opearuative groups in the pa st few years.

The reasons behind the success story of tnese affili-
ateci ,grbups are due to se v.eral factors. But four fa-tcrs

Q r S m
”LaJTCZ out as the most important. They sge: (l) low cost

 

h 39Addrses by Robert w. Mueller, National American
’ Olfie‘SzaLaGrocers' Convention March 10, 1953, Chicago,

CD

I ‘4)

warehouse operation, (2) mail ordering by retailers, (:1

roup merchandising and p gmgtigng,

’l
one-stop depots.4O

retailer 9

Through the merchandising programs of voluntary and

(Hooperative groups the position of both the wholesaler

811d retailer 'as been improved. The merchandising programs

in building confidence in the wholesaler-

1)

so go a long way

k4.

reatailer team. One-stop shopping offered by the group

wlacolesalers has enabled the retailer to save much time

ir1 buying his merchandise and he ca devote more time to

a retail supermarket.

m

liiss main responsibility of operatin

 

 

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I, ( ~ "v’ . 1 : ‘4‘ h r-)
cnains. On January 6, ljcf, u.

L).

the

1‘3

e

of“ the corporate 'L
Zueadership of Mr. Ned Fleming,the company started a volun-

on the Independent Grocers Alliance (IGA)

)4

C

tarfilgroup base

grwoup affiliation. In becoming a member of the Fleming

IC}A group, independent retailers receive merchandising and

ogxerational assistance and they were assured of a low cost

scnarce of supply. After thirty-two years of group operation

1

.Q
.u

4

(1

t11€ Fleming Company, with 546 affiliated retailers, h

k>enoome the largest wholesaler using the IGA group plan.

Over the years the compa y has established nine cash

es are oper-

(I)

aiaci carry warehouse ranches. These warehou

atzend to serve the small independent retailer who cannot

pLirwohase in quantity and who Cannot be supplied economically

LI

eyzceept by this cash and carry method. There are approxi-

Inaxbealy 1,500 accounts which are served through these cash

arnj carry branches.

Ownership and Organization
Fleming Company was incorporated under the laws

Of‘ PCanisas on December 6, 1915. The company has an auth—

OPiJZEBd capital stock of 15,000 shares of five per cent cumu-

x:
/

stock at $100 par value, and 6; , 000

lati Ve preferred
Shalreess of $5 par value common stock. The outstanding stock
at tffisa present time is 8,000 shares of preferred stock and
3582.1.694 shares of common stock.

’Ihe long range planning and policies of the Fleming

C o , . . - -
mpuar1d, are determined by the seven members on the board

 

of directors. it is then the responsibility of the company

officers to see that the program planned by the board of

A management committee has been

(directors is executed.
to assist the board of directors

‘7

eastablished in the compan,

ija long range planning. This management committee is com-

pxosed of fourteen of the company‘s officers and staff

mennbers. An organization chart for the company's top

msuaagement is shown in Chart 1.
The four division warehouses of the company operate

\
[J

a staff of executives.

V

_(

suegoarately with their own manager an

True division manager is responsible for the warehouse

ogoexration and reports directly to the president The

bllbfing 's done at each division with assistance on special
pI°cwnotions a.d new products coming from the various staff

mearwohandising directors. The home office also provides
ivision staff assistance in the store development and

fwd
S. J

m
w

C a .
aflixzeartising. An organi7ation chart for a division is shown

 

in Chart Ii.

Egzflglggy Growth and Trading Area
The Fleming Company was an early pioneer in the volun-
talééf ggroup movement. Their plan for retailer-wholesaler team-
“KIPLC began in 1927 when the warehouse was doing slightly
The company and

<>ve2r ca million dollars in annual volume.

1 a . . .
ts I estail members have grown tremendously Since the

be i \ ‘ ‘ .
g15r1rjing Of tfle teamworw plan with independent retailers
d a wholesale

th vu - . a
1* t3.:.~’--—two years ago. in 1358, the company has a

conH>Ha--.>ao
LouomLHQII.LQ

'II I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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H 95:5 .

 

43

 

 

 

 

1‘

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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sales volume of $124,892,897 million an,

5;);
Ho
Cf
H
(I)
(D
U)
C t‘
}._.I
.3
C

(D
C

that its 546 affiliated retail members had sales of over

$M220 million. This warehouse sales volume comes from the

L L

rv groceries, produce,

U

ruandling of a complete line 0f|

I

frnozen foods, meat, dairy, and bawery products. Table VI

siiows the sales growth of the company since the beginning

cof‘ the voluntary group in l927.

 

 

Year Wholesale Annual Sales
192/ $ 1,382,552
192: 1,766,210
1931 1,529,161
1933 1,M20,977
1935 2,861,160
19,7 4,167,410
1939 0,791,783
1941 6,468,u28
1945 10,744,650
leE 12,909,903
1947 19,011,092
law) 2',383,662
1951 43,838,199
1353 62,474,954
19,: 87,598,270
1956 100,002,787
1957 112,706,113
1958 124,892,897

, /

The 54o affiliate retail stores serviced bv too

O.

iFlern;irig Company cover a four state area. Chart iii shows

fine fSIaading area of the Flemin'r Company and the location

(D
L.)
:3
C);

o ‘ . , _ , .
f t3rl€3 four division warehouse nine casn ano carry

W311“

831011395,

CHART ill

TRADING AREA OF TH:

i:

\ ll

WING conspwy

 

 

34‘

 

 

 

 

 

 

Texas

*Division Distribution
Centers
Topeka, Kansas
Wichita, Kansa
Kansas City, M ssouri
Oklahoma City, Oklahoma

s
i

 

     

 

no". ~-
Fugsso1L71

 

 

3’

r, (,4 I ] V,‘Yflv]
h cinu K, -..i 4. U.
l

Topeka. Kansas

Hutchinson, Kansas
Levenworth, ansis
Witchita, Kansas
Atchison, Kansas

Salina, Kansas

independent, Kansas
Ka sas C ty, Misscuri
St. Jose ' :

The company‘s marketing area is centered in Kansas

. J

afui Oklahoma with a concentration of affiliated stores in

Western

')

\’

J
(D
('1
l
U)

tkma Wichita, Topeka, and Oklahoma City a.

northern Texas also have many affiliated

C);

Ifiisssouri an

stcxres. in each of these states, except Missouri, retail
stcxres operate under the TGA franchise. in Missouri the
gyrcnap name for franchise stores is United Supers. in both

he: ISA and United Supers, there are certain requirements

('1‘

n

x 4.

standards that the retailer must agree to before

m
Q

11
frsamlchise is given. These retailer reguirements are shown
111 .Appendix A. The company also has retail stores which

arwe served by the warehouse but cannot use the group name

0:“ tauy the TGA label merchandise. These stores ar called

Ccnfitaract stores and pay the same prices

b5? ‘tkie warehouse.

Tales Service Plan

(0

EEE§__§fleming company's
an early pioneer in retailer—

 

The Fleming Company was
WrUDILeasaler teamwork when they began their voluntary group

plzari in 1927. For the past thirty—two years this plan,

n ‘ 1

(DVV kcnown as the sales service plan, has been constantly
1 1 ‘ 1 \ o W '1

n1F3i‘<>ved and enlarged to help its independent retail mem-

beh a 1 O o
o 53 grow and make their operations more profitable.

The Fleming Company feels that their sales service

M“ an has made it possible:

1. To lower cost of distribution at the retail

level.

a

To lower merchandise costs so retail members
can be competitive on every item with major
competition.

[0

3. To eliminate all unnecessary expense.

with tools for accurate

0]

4. To provide retailer
store control.

C To provide retailers with complete serv
some better chains provide their 01

Under the sales service program all dry groceries,

.frc3zen food, non-foods, and health and beauty aids are
Sc>lci on a cost plus basis. Cost is referred to as the
nuarnafacturers total invoice billing price delivered to the

and less all trade

F“
(I)

Ccnngaany warehouse, less any free dea ,

, A . . '2 . . . , - ,.-
aLLafitity discounts. Tne company also reserves the right

a o scount less than two per

F.1-

tc> sudjust all items carrying

Carat; to a two per cent basis. But in most cases this right

13 that used. Other merchandise such as produce, me;

OaiPyproducts, and bakery items are sold to members

pelécmentage mark—up bas s.
In an effort to eliminate all unnecessary expense

irl ‘bfae wholesale operation The Fleming Company has certain

pi53<313ices which the retailer members must follow in buying

m T. . . . . ..
€3*-C?F1anoise. Orders must be made out in the weekly pre-

‘r”!
p‘ILI1‘ted order book and mailed in on the pre-arranged sched-

u-L m. 1 u . . '1
63 - signed blank checks muSt be sent with the orders for

\

#1 fl . .
{“113 ”A Plan for You," The Fleming Company, unpublished
EBPial from company files.

 

Q;

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ACT
I ibi"

 

Eriyment of all merchandise and weekly fees.

eyqoected to help unload the wholesaler's trucK to speed up

delivery.
true retaileis

zretnhfii of merchandise.

are expected

To help reduce the cost of return merchandise

to cooperate in eliminating the

The warehouse gives an allowance

of‘ one-tenth of one per cent on dry grocer‘es to cut the
ccast of return of these items.

While the Fleming Company provides its retail members
vxith.a low cost source of supply, this is not the only

:uivantage of the sales

service plan.

The company management

fexsls that their responsibility to the retailer does not end

uritil the merchandise
true merchandise

8311138 but rather
Stora
Iniicii assistance is
pILaua.
fc>r*
leen1ing Company's

Of 526 per cent.

mandise Program

 

The Fleming Company warehous s

18
sold to

transikna
To help the member
offered
To illustrate the success
retailer-wholesaler teamwor‘, in the past ten years

warehouses have snown

sold to the consumer. Therefore,

retail members is not considered

and sales result at the retail

(D

stores increase sales and profit

to them through the sales service

vice plan

”3'

of the sales se

1

an increase in

offer the retailers a

COWHDleate line of merchandise in groceries, meat, dairy,

horn-fracas, health and
panCiLlC ts ,

t 7" 1 ‘
h‘cyuésrl the wholesaler

beauty aids,

‘ - o
and bakery

produce,

frop shipments can also be made by the retailer

\

for products not carried in the

Ewarehouse. The company believes that they are able to
saapply around seventy-five per cent of all mercaandibo
rueeded by the retailer. The mercrancisin program for all

pinoducts supplied by the warehouse will not be described.

Grocery program. The Fleming warehouse provides the

 

retoail stores with a wide variety of fast turnover adve:
tifised brands plus controlled labels on key items. These
ccnltrolled TO A labels permits the retailer to meet or be
bmalxow competition on competitive items. The iGA label mer-
ckiamidise is sold only to member stores. The grocery items
al.0or1g with the health and beauty a'ds are or red fro.

wlicfllesaler on a pre—printed order form. This order form

fl

Plficrvides the retailer with such info rmqtion as the pack
arui iw ight of the mercha.dise, its co
prsicoe, and the per cent of profit if sold at this price.

True: suggested retail price is offered to the retailer to

 

heel}: him in having his merchandise competitively priced.

fil.l health and beauty aids are pre-priced at the warehouse
to 8a ve the retailer the time and expense of doing this
JOt>. Grocery merchandise is ordered once or twice a week

on 51 gore-arranged schedule. The grocery department now
Off31753 the retailer approximately four thousand items and
YEVV Flrwoducts are constantly bein og added. Sales of these
groeesrfiy products account for more than fifty per cent of
the WaI‘ehouse total sales and a greater shale of the mer-

e.“ *o o _
hanglee inventory.

'1
C)

\.

Produce program. Produce products are purchased by

the Fleming Company and stored in their warehouse. The

order forms listirg all items and

J

ily

C

retailers are sent dv

their current prices. The retailer phones in his orders

to the warehouse and receives daily

glroduce buyers keep in contact with
trrrough field buyers. This enables the warehouse to stock

1 w {3 war/\‘J'Y'l ’q
‘ V«._‘. y' A ‘J 0

(U

a. wide variety of merchandise the ye:
The whol saler provides the retailers with a weekly

sold by major competition. This

plaice survey on produce

:seervice is provided to the retailer so he can be competi-

t:i_ve on all produce items. The retailer also receives

Lvezekly market analysis and information so in planning

ESEDecial promotions the store owners will be able to take

aacivantage of special prices and seasonal items. The sales

C)f‘ the product department are increased by consistent
CLd‘JeTtiSlng each week.

‘

Frozen food prcgram. Frozen foods are purca..

 

tine: retailer from order fo ms sent out by the wholesaler

eeactl week. This order form is very similar to the one

UENBCi by the grocery department. It gives the retailer the

q

COEVC of the merchandise, a s1~gested retail price, and the

\

per= (rent of profit if sold at that price. The retailer

phorlezs his order in to the warehouse on a pre-arranged

SCkKECiLAle and delivery is usually made with the other

perifisiiable products. The retailers are assured of

 

 

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receiving their frozen foods in goo

the modern warehouse fc cilities and careful attention to

the handling and shipping methods.

The warehouse offers the retailer a complete line of

fafiozen food products in both nationally known brands and

ccnatrolled labels. The T.V. control label is available in

tvwenty-one items and it offers the consumer top value but

8i: minimum prices. The national brtnds are stocked in all

itxems but have a s1' ightly higher price than the control

torwands. The frozen food items have four weekly adveitisin"

pxrcnnotions and many special sales are conducted each year.
Meat progr m. The warehouse now has a complete meat

SLipqoly program for retail members. Under this program an

c>rwie¢'form is sent to the retailer listing the types of

nuaext available and the approximate price. The retailer

tiaena phones in the order to the warehouse at his scheduled

V
r'W

tzirnea. The retailer can specify the packer he wants his

«kw

ileSESh meat purchased from, but the warehouse recommends

' (J

tquLt; they do not follow this because it hinde rs the buyers

1 .

irl ‘tcaking advantaze of special buys. Since the warehouse

CCNnkDiJies orders from its many retail members into quantity

"esh meat is purchased at the lowest possible

U
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would be able to receive these

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ppi43€353 in doing his own buying. The central buying pr ogi a”

to spend

:5
UQ

Offers the retailer the advantage of not havi

ti . a . .
””3 8310 eifort dealing with the many meat pac ker salesmen

eatfia week. This Job can be very time consuming for the

Iwabail store manager and central buying relieves him of this

rwxsponsibility. Central buying also offers the advantage

of experienced meat buyers at the warehouse and the mea

selxectors at the packing house. The job of these selectors

is ‘to maintain quality of all meat sold in the TGA group

stcxres. This quality control program assures the retailer

Q

tr1a13 he is getting controlled quality meat at the

to the retailer

C L

pc>sssible price. All fresh meat is shippe

billed through

C IQ

111 'the packers trucks but the merchandise i

true warehouse.

An inventory of prepared and brand meat products is
k€3§>t in all Fleming warehouses. The retailer can order
truesse items from the order form that is sent to him and

it: ‘is shipped to him with the other perishable products.
True warehouse offers the retailer a complete competitive

Pr‘icring program for all meat items and the per cent of

pruni‘it made if sold at these prices. The meat department
recsecives weekly newspaper advertising and store promotional

rt this advertising.

0

matxelsial is offered the retailer to supp

c 1 . 1
rpeC31£il meat sales are also held throughout tne year.

L om -

L 'w

.Dairy program. The dairy program of the Fleming
panyz IWCNN offers a complete line of the products to the
P 1 W I ' " ‘

etsaj leer. .0 supply retail stores with most dairy products

the C<3nTpany select . the leading dairy company in each of

its . . . a
maJf‘keting areas. This dairy company supplies luA member

stores with a complete lire of dairy merchandise and the
T.V\ brand control label products on a cost plus basis.
This merchandise is billed through the warehouS' but

<fielivery is made by the dairy.

1

-'€ C2 o T}: i S

The dairy supplies eleven
to

(1')

TF.V§ brand items whichare sold only to
alfrangement helps the member store receive dairy products

al: a lower price through group purchases and i also gives

truem a quality control label.
The warehouse carries an inventory on other dairy

)

fi.tenns sucn margarine, cheese products, lard, and other

U]

riaizional brand dairy products. These items are purch sed
tsy' the retailer from an order form and are sripped with

tfloez other perishable products. The dairy department gets
vueeakly advertising support along with special promotions

tndi’oughout the year.

Balery program. The Fleming Company owns the Certi—

 

fixeci Bakery Company which provides mo:

 

wigtri bakery products. The puppgse of the wnolesal
true bakery is to have a quality line of control label pro-
Chacrtss at the lowest price. The merchandise is delivered
frensri daily to the member stores by the bake y but the
Dalkrijslses snma‘billed.tflirough the vrmmsnouse.

The company has recently started a new program of
helF>i_r1g the larger supermarkets develop baking departments
“1 tkléé stores. The warehouse assists tne store owner in

his A ' ‘ 1
EEKiLiipment selection, mercnanoising programs, and the

\H

I
u.‘

:selection and training of personnel. ln-store boxeries are
laced in supermarkets only after a survey shows that such

U

iiivestment will result in a profitable operation.

Manufacturing program. in l948, the Fleming Company

 

3

,A

ffe Compa.y and the name

(D

C)

pturchased the Golden Wedding C

ted. This sub-

U

, lncorporr

C);
CI)

5.))

1’1 .

S

weas. changed to Certified Br
simiiary company is engaged in importing, roasting, and
psacl<ing Fleming brand control label coffee, The Fieming
{honqpany also has a packaging division for control label
IDI‘CKjUCtS such as ixxi, candy, nuts, drfixxi fruits. dried
<Jezrxatables, macaroni products, and popcorn. The purpose of

t?1i.s manufacturing and packaging diviSion is to pro? de

rezt:ail members competitively priced merchandise as wel
‘b

E§3t351il Assistance Offered by the Fleming Company

While the Fleming Company is a wholesale organization,
itSEB Inanagement feels that the growth of the company depends
OVX ‘tiae success of its retail members. in an effort to help
the aretail store owners improve their operations the company
Stal7tied retail assistance in igus under the sales service
pleuq.. This assistance is in the form of special services
to 'b}dea retailer such as retail operating guidance, adver-
tifisiriég, training schools, retail accounting, and others.
The* 15“Zl.eming Company feels that these services have played

a O ‘ V 1 fl
mC>STS important part in the growth and success 01 botn

t —m ,
Pm21,_ \Narehouse and the affiliated retail members.

 

Retail operating a.

4

x
(I)
p.»

stages. The Fleming Company has
a staff of forty—five sales service men who spend their
tine entirely in the stores helping the owner with his prob-
lenns and assisting in future planning. Since retail mem-
bears voluntarily affiliate with the group they cannot be
fkorced to follow all company programs, but members are

P?“

e)cpected to cooperate with the sales service men. inese
ssales service men are very similar to the supervisors used
by! the corporate chains. These men usually have between
ffiifteen and twenty member stores for which they are respon-

sible. The exact number depends on the size of the super-

rtain

0

Ho

SHOC

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1,) .—\
.L C

CD

Insarket and distance between store . Th

(

scjhedule these men keep in calling on the stores,but the
ccnnpany believes these men should call on every member at

"v“: E}
4.

LL}

lesast once every two weeks. In most cases the visits
rnLuoh more frequent than this.

The exact assistance the sales service men are to
"e:43

Eii‘Je the retail members ar

1. To counsel store owners in effective methods

of retail food operation Ior maximum sales
and net profit.

2. To assist in sales and merchandising planning.

Q To conduct sales training meetings for store
personnel.

4. To keep owners informed on competitive pricing
policy.

 

 

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’- A ’ ‘ . 1'; I' d W') v ‘. IN ‘V: "- 1 ' 3"
rr lp -aiu .niiu mice .1o. -eiuileiixig
1
”J ‘ 4— . 4. x .
n Luture planning
.sion.

7. To report to the warehouse all suggestions
by store owners for improved service.

‘- .‘ - v , A ~ ~,- 1' ‘ 4- !a . \
Tne sales service men are thaineo to give seeistance

’/

‘ r 1" ’ r“ ' . ‘ p ’N -\ ~y-. r‘. _ ‘3 . u b “'7 , ‘ r~ .
iri tne general operation oi a supeim;_xet. But saoulo any

spmacial problem arise the sales service men can call in

sgmeciali ts in produce, moat, engineering, frozen foods,

(I)

arud dairy. These specialists work with the retailer untl
‘tkua problems are solved. The specialists also work with
‘btua retailers for special promotions throug.ott the veer.
The sales service me. give assistance in the entire
Estcore's op ration, but they also spend much time in plan-
rrirlg special merchandise programs. This retail operating

+—
U

f U

Eallixdance is offered to member stores at no additional co

J

loiit; their cooperation is expected in the program.

 

F ’1
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33
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Retail accounting. The warehouw

 

Ireatsail accounting program for retailer members. This pro-
é§321n1 gives the stores periodical operating reports which
gi-V%BES the owners an up—to—date picture of his financial

DTYDE§IWass. The accounting service provides tne stores oper-

‘1

at3ilqéi reports, balance sheets, payroll tax records, sales
tajc, 21nd income tax service.
’The reason the warehouse began this program was that

t “ 1 ‘ 1 1
hag; Flap found that many retailers were not able to Keep

9 (7.113 17".”11 Q {G -

‘ . te operating records to be used for ta.

1
ment purposes. Also, the accounting work took much of the

owner's time which coubdhave been better used in planning

the operation of his store. The company also found that in

choing this work for all the member stores, the cost to the
accounting

sttailers would be much lower than having public

firmsck>theank.

The operating reports play an important part in the

. From the reports

U)

ailer

d

opmsrating assistance given the re

alyse the store's

m
3

tfiaea wholesale management is able to

copxaration and make recommendations for improvement. it is

'tkieia the job of the sales service men to discuss these

fVBEDorts and recommendations with the retailer. The

Cicrccounting program also gives the retailer a comparative

other :GA supermarkets to show him

(Egoexrating report of the

lacotv wellhis operation compares to other successful stores.

E%1.1. information is kept confidential and no retailer knows

used in the comparison.

“I.

wiasat: supermarkets are be n:

H.
01

Advertising. The advertising program offered affili-

 

atkeci :retail members is a most complete and effective service.

Thug tvholesaler provides the members with a mat service,

WETELC ‘” direct mail circulars, radio and televeision adver-

tiLSliiogg, in-store promotion material, and the collection of

advesletzising allowances.

'The theme and roducts featured in the newspaper

ad ,. . . . .. .
V631“tlisements are determined by tne merchandising committee

 

V,“
L

and the advertising department. After the mats have been

made they are sent to the retail members usins this service.

The stores' owners in each city have the right to add some
items to the advertisement but none of the major featured
items can be changed. The lGA retailers are not charged
for this mat service but each retailer must help pay the

cost of running the weekly double truck or full page adver-

tisement in the leading paper in the trading area. Each
retailer will pay his share of the newspaper advertising
based on the per cent of the total business done by his IGfl
store in the area. Each week the Fleming Company provides

7

rnat service for advertisementSin 284 newspapers which reacn

‘4

;five and one—half million homes. ihis illustrates the
caffective use that the group is making of this most impor—
tarm;advertising media.

Weekly direct mail advertising is provided to the

Imatailer at a very low cost. The warehouse determines the

L);

the retailer can

CL

¢

tflieme and main items to be advertise‘ an
amid some items and set the prices on the feature items.
Tfliis advertisement is printed by the warehouse and mailed

1 7—.
{,4

'mo the families in the store's trad na area. nach retailer

._x

getmslqis own name and address printed on the direct mail

advertising that will be mailed to customers in his area.
The warehouse has a radio and television advertising

program for its retail stores. Under this program the

waretmnwe prepares spot ratio commercials and one-half hour

\H
\L)

teleWJi ion pr ograms for the TGA g: oups. The trading area

using this advertising pays only the actual co st of the

piwog1”%mns.

The warehouse tries to take ad/antaage of ai

the manufacturers. When these

. V

tising allowances offered by

zallowances are earned the wholesaler collects them from

tflde manufacturer and ays the retailers the amount they

kuave earned.

The main advantages of the advertising pro"”am is

truat the retailers are receiving a Jell-planned advertising

'pjwogram that has proved to be most effective. Also, by

Egrwoup advertising each retailer is able to advertise on

51 filarge scale while paying only a sm”ll portion of the

tcytal cost.

Store development program.
Sear“vices the Fleming Company offers to the independent re—
t511.1xers is their store development program. The compamr

\ 1 ‘ ‘ - o ' ' .. 7
(1353 found that store development is most Vital because tne

” ew and remodeled

ETTDIAIJs tremen not us arowt h has been in the

IGKX Esupermarket. The goal of the store development p: o“am

Q . . .
iv TIC) insure the sound development of maximum volume super—

n~ie - 1 "
mel“rxezts With modern facilities.

The services of the store development includes:
0 determine the

1. Scientific market stu‘ies t
ra‘ing areas for new

potential of specific t
stores.

 

 

r O
c I

2. Maintenance of sound relationship With realtors
and shopping centers' developers to insure
availability of potential locations.

3. Location surveys which will estimate the poter-
tial store sales accurately and scientifically.
These forecasts include:

a. A determination of the market area.
b. Population density and characteristics.

c. A comprehensive analys s of the amount and
types of food expenditures in the area.

d. Economic rating of the area.
e. Determination of competitive supermarkets.
The store development depar ment is located at the
Sisaff office in Topeka and each ‘ivision warehouse has men
vfiao spend their full time planning new supermarkets in
trieir area. The responsibility for store development does

r1c3t rest with this department alone because the planning of

Iqeew stores takes the work of many people. The sales ser-

(D
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(D
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‘vi_ce men play an important part in int

iri new supermarkets and they a so assist in finding good

 

SLuoermarket locations in their territories.

After the site for a new supermarket has been selected
it 1J3 the job of the store development department to help
the? iretailer finance his new store. Fince the modern supe -
mBJTLCEBt of today requires a tremendous investment most
independent retailers are not able to raise the c pit l

TeqlliLPements alone. For this reason the Fleming Company

3‘
5L)

“S f‘ lt it necessary to offer retail members financial

{1)

<3
Ssiqt ~ . n... '1')“ g a l
w ance in developing new sto.es. hlbO, in tn

+31

(development of shopping centers the independent retailer
iias difficulty in getting a location, but with the support
of" the wholesaler these important locations can be obtained.

The financial assistance offered the retail members
by] the Fleming Company is to lease buildings to the re-
tsiilers. The Fleming Company will take a lease from the
ovnaer of the building and then sub-lease it to the retailer.
ffkue leases normally run for fifteen years and the rent is
LiSiially based on a flat fee plus a per cent of total sales.
'frue only charge the wholesaler places on the retailer for
triis financial assistance is a small override fee on the
leaw.

in selecting retailers for these new stores the com-
EDSJIy feels that an owner must have proven that he has the
cak>ility and leadership to successfully operate a modern
ssuuoermarket. Most new stores are leased to men who pres-
eerrtly own one or more lGA stores in the group and hav
IDITDVGH their ability as store owners. The company requires
true <owner to have the money for his inventory and operating
canal tal to get the new store started. The owner must also
be- alale to pay twenty-five per cent down on his fixtures.
iBeczaLise of the importance the company places in the store
deVelopment department, all of their services are provided
to leue retail members free of charge. In 1958. this depart-
ment; tvas responsible for eight new supermarkets and seventy-

four“ lfiemodelings of existing stores. The company expects

Cw
R3

the 1959 figures to be much larger as store expansion

continues.
Working under the store development department is

tflae store engineering services provided for the retailers

Tfiaese services include complete construction plans for new

snapermarket building and equipment and layout plans for

rwnnodeling or new stores. Each division warehouse has the

stxaff to prepare complete store remodeling plans for the

rwata ilers. 'he plans for new supermarkets are done by the

erugineering department in the staff office. This is done

SC) the company's of Hi ers can assist in planning these new

stxores. The engineering service also includes

EDaizterns for all mezcrm1di e. By u. ng this mercha

(D
t-‘o

turnover is achieved in all depart-

].agyout system, better

nuerits. The eng neering service is offered to the retail

Unanibers at no cost to them.

The com any can also save its retailers monev in our-
J u .

 

ckiaising equipment in quantity direct from the manufacturer.

can be large when equipment is being purchased

s,
(I)

The Se saving

fcnr Iaew supermarkets. The equipment is shipped to the
retzaiiler*but is billed to the wholesaler. In buying

thru3143h the wholesaler the retailer is getting the same

CiESCTCNants given the corporate chains.

Training schools. The compa.y offers a complete

 

tr retail stores.

ii)

ilfiaing program for all personnel in the

”“3 Sales service men are experienced at conducting training

 

C '
i N

hi the stores. The company has prepared training manuals
if] retail accounting, frozen food, meat, produce, and
gyrocery merchandising, which has proven to be most suc-
cmassful in training store employees.

To supplement this in-store training the company has
set: up training schools at each division warehouse. These
scflaools provide checker, meat, froien food, and produce
rne17chandising training. in an eight month period last
yeaacé.fifty-one training schools were held for 287 people

ffiécnn retail member stor s.

Company publications. The Fleming Company furnishes

eaéacrh.of its retail members with the national IGA magazine,

$1163 Grocergram. This magazine is issued monthly and con-

 

}_J

t3e1111s merchandising and sa e suggestions, and news of
aggrieral interest.

The company also has their own magazine, Tne Food

 

Cjiiacflle, which is periodically mailed to the retailers. The

pllrmaose of this magazine is to give advanced information on

(0
Cf)

Cwaniirig sales events, sugse tion on store operation, price

)1

1
fin.
L~U

ition to these magayines

k-1
:3

C

trueraCis, and crop conditions.
98M3F1 (division warehouse prepares weekly bulletins on all
mernrkaelndise lines. These bulletins contain information on
UGW’ FDI“oducts, price Chang s, and special promotions. The
puPE3C>Ehe of these publications is to keep retail members
inFCDIVTHad and promote a better understanding between the

war ~
EEFICJLlse and its retail members.

Warehousing and tra.sportation. The low operating

cmast the company has been able to maintain at its four

Vivision warehouses has been an important service to retail

nmmnbers. As a result of this low cost of operation, mer—
cfiaandise can be sold cheaper to the retail members. Three
of‘ the divisions operate out of modern warehouses which

herye modern storage facilities for all merchandise sold

byr the company. Early in 1959 construction was be;* on

51 rnaw warehouse in Topeka. When completed this warehouse

Luilhl be one of the most modern grocery distribution centers

in. the area.

The company owns its own fleet of trucks for the

deal:ivery of merchandise to member stores. All deliveries

arwe 'made on a pre-arranged schedule with the retailers.

ha niost cases the retailer receives about two deliveries

0f Ciry groceries a week and perishables are delivered three

to 551x times a week, depending on the location of the stores.

Ans! sstore can get a special load any time they purchas a

StI‘Eljaght load of merchandise. The trucking department is

‘HK3I”Eited most efficiently and the rates paid by the retailer

kl

are ITHach lower than those charged by the public carriers.

The Fleming Company operates their sales service pro—

wqa I R W _ 1 '
g‘ nn (Dri a cost plus basis. All cry gnccery, dairy, meat,

find ——‘ a 1 w
a ffil~ozen food merchandise is solo to member retailers at

COS ~ ‘ » '1" V'
t W'ith a low fee based on dollar volume. iable vii is

 

TEQLE VIII

{

FEE SCHEDULE FOR DRY GROCERTES, NoN— 20 000s, END NENLTN
AND BEAUTY AlDS--MTNIMUM NE? NLN FEE—-E17. 80

 

s after minimum:
65¢ per week for each IlOO bracket of purchases
(2. 6:) up to :50, 000 per period
43- 3/42 per week for each 8100 bracket of purchases

7—fl

1.,36) on all oJer $53 ,000 per period

 

 

Purchases (4 week period) Weekly Fee

 

E 000.00 -- 999.99 $17.80
1,000.00 -- 1,099.99 18.45
1,100.00 -- 1,199.99 19.10
1,200.00 —— 1,299.99 19.75
1,300.00 -— 1,399.99 20.N0
1,900.00 -- 1,999.99 21.05
1,500.00 -- 1,599.99 21.70
1,600.00 -- 1,699.99 22.35
1,700.00 -- 1,799.99 23.00
1,800.00 -- 1,899.99 23.65
1,900.00 -— 1,999.99 29 30
2,000.00 -- 2,099.99 24. 5
2,100.00 -- 2,199.99 25.60

200.00 -- 2,299.99 26.25
2 ,300.00 -- 2,399.99 26.90
2,900.00 -- 2, 499.99 2 55
2,500.00 -— 2,599.99 2 20
2,600.00 -- 2,699.99 2 85
2,700.00 -- 2,799.99 2‘ 50
2,800.00 -- 2,899.99 30 15

 

1
These few figures are given to illustrate the fee

‘by the retailer for this merchandise.

ari example of the fee schedule for dry groceries, non—
fcxods, and health and beauty aid s. Table 11 shows the
fees schedule for all frozen food merchandise purchas
by! the retailer. All produce and fresh meat items are
scild on a mark-up basis. Reta ile:s receive a weekly price
lixst on these products showing the price they will pay.
For the many services offered by the wholesalers,
'ka3 retailer has to pa y only for the retail accounting,
Paclio and televis io nadvertising, direct mail advertising,
aruj transportation. All EGA member stores must pay $1.20
peer= week for the national TGA membership fee. No charges
a1763 Inade for store development and ex 121 inee1ina services,
weaeaicly news aper ma services, weekly window posters,
aci‘Jeartising and decorations for special promotions, and
tflea assistance of the sales service men. Table X, on
pElg :E2 68, shows the fee schedule for the store accounting
86317<Jice. Table X: on page 68, shows charges for direct
mCii_l. advertising. Table III, on age 69, illustrates th

crlaariges to retailers for transportation.

Service Program

EELELEL§§ES of the Sales
The success of the Fleming Company's sales service

ppc>é§1 am is indicated by the tremendous sales growth the

CEWnEDElriy has had since starting this wholesaler-retailer

t :1 9 hr" ‘ i
er~n1¥V<>rk in 192{. also tne success of the pro 3W m is

in‘ , . .
C11-C-‘c1teo by the number of high volume model n superm71kcts

TABLE 1X
FEE SCHEDULE FOR FROZEN F000 MERCHAKDISE—-MLNTMUM WEEKLY
“hr 1” :01
PLEA-’14»: /

 

 

 

 

 

Sales after minimum:

25 per week for each $10 bracket of purchases up to
$200 per period

20% per week for each $10 bracket of purchases up to
$600 per period

15% per week for each $10 bracket.of purchases up to
$1,000 per period

15% per week for each $10 bracket of purchases up to
$1,000 per period

Purchases (A week period) Weekly Fee

00.00 -- 100.00 2.50
100.01 —— 110.00 2.75
110.01 —- 120.00 3.00
120.01 —- 130.00 3.25
130.01 -- 140.00 3.50
140.01 -- 150.00 3.75
150.01 —- 160.00 $.00
160.01 —- 170.00 &.25
170.01 —- 180.00 4.50
180.01 -— 190.00 4. 5
190.01 -- 200.00 5 00
200.01 -- 210.00 5.20
210.01 -- 220.00 5 #0
22 .01 -- 230.00 5 60
230.01 -- 240.00 5.80
24 .01 -— 250.00 6.00
240.01 -- 260.00 6.20

 

1m
1hese few figures are given to illustrate the
fee paid by the retailers for frozen foods.

”131: X
_1_1"‘.' i.__.

,, - 11 111
OUNTIJJ EEFVL CE Ls 530E; DU1.E

r I)
13
O
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8
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(‘-

Monthly sales Up to Pee per Week

:5 000.00 —- 7,500. 00 $
7,500.00 —— 10,000.00
10,000.00 —- 12,500.00
12,500.00 -- 15,000.00
15,000.00 -— 17,500.00
17,500.00 -- 20,000.00
20,000.00 -- 25,000.00
25,000.00 -— 30,000.00
30,000.00 -- 35,000.00
35,000.00 —- 40,000.00 10.00
24 ,000.00 -- 45,000.00 10.
145,000.00 -- 50,000.00 11.
550,000.00 -— 75,000.00 12.
"75,000.00 —- 100,000.00 l2.
1130,000.00 —— 125,000.00 13.
1_25,000.00 -- 150.000.00 14.
11‘50, 000.00 —- 175,000.00 15
1T75, 000. 00 -- 200,000.00 15.
?:(30, 000. 00 an over

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x
l‘ D

 

NIL

 

1

Membe1s ma e billed fo r the cost of jour.11, 1ed_
WEEEelily st o: e 1epo1t binde: s and pads, :10 other suppliw
LH3€3<i in keepi ng the 1eco1ds

 

 

 

RE
DJumber Pee Number Pee
—\
250 333-85 650 $7.55
300 4.50 700 7.9o
350 5.10 750 8.26
400 5.60 800 8.6:
450 6.10 850 3.95
500 (.50 900 9.30
530 6.85 950 9.65
600 7.25 1000 10.00

 

’/

/

1$6.50 per 1,000 for all :jua ntities. Newspaper
~11 3ervic e-—no cha re; Weekll window Posters--no
Promotion Materill--no char,ge,

PM
\L)

‘ I" ‘V—‘
TABL: X11

FREIGHT RATES FOR OKLAHOMA CITY DIVIEEON

 

 

City Rates

 

Items Charge
Grocery and meat items 11¢ per cwt
Frozen food 15¢ per cwt
Produce No charge

 

fl—gu—_——~—

 

 

r 1

 

Sack rrosen
<3Lclahom3 City Groc.—Froduce Goods Food
To Mileage Meat Rates? Tate Rate
EZChnond, Okla. 12 19 15 22

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131. Reno, Okla.

Piirrell, Okla. 36 21 15 2,
Elgmiro, Okla. 62 31 15 37
Agosiche, Okla. 85 31 15 45
Biackweiipkia. 107 33 15 52
Sherltinel, Okla. 123 36 15 “5
llicfiqital%flls,

Tkeycas 155 41 15 51

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Whe e 1e17, Texas

:2. C3c>ffeyville:

Ilarlsem: 210 “9 15 ES
Cl arendon,

Texas 251 “9 15 55
N A

 

 

lF‘I . .
f inese few cities were chosen to illustrate the
163113?1t rate paid by member stores.

2 . . ..
Per hunoreo weight.

4— . .0

which are owned by members of tne aifiliated group. In
Table X111 is shown an operating statement for a typical
lGA member supermarket. This statement shows that
the retailer has a low cost operation and his sales
service assistance is costing him a small per cent 3:
total sales. These two facts can be listed as the reasons

for the success of both the Pleming Companv and its inde-

pendent retail members.

STATEMENT OF OPERATION FOR A TYPICAL IGA SUPERMXRKE
From 12-27-58 to 4-11-1959

Per Cent
1‘.

 

 

 

 

 

Department Sales Q Total
Groceries $231,538.19 68.16
Meat 82.310.03 24.23
Produce 25,85u.u6 7.61
Total ales £339,722 68 100 00
Average Weekly Sales 0 22,648.18
Gross Profit
Groceries $ uo,618.13 17.54
Meat iu,ao3.27 17.30
Produce 8.192.50 31.59
Total Gr ss Profit $ 63,213.90 18 31
Controllable
Expenses
Advertising $ 5,753.33 1.69
Bad Debts (91.03) ( .03)
Charity and donations 27.QO .01
Delivery expense 221.67 ,0?
Dues and licenses 1&4.00 .04
Insurance expense 579.19 .17

. '--\ 7’" ' "‘ ' ,-‘\ ‘ z .
TALL; X111 (pontinuedi

 

 

Controllable Per Cent
Expenses of Total
Utilities $ 1,521.55 .45
Repair and maintenance 1,524.63 .45
Salaries-~Groc. Dept. 9,336.94 ]
Salaries-~Meat Dept. 4,299.71 ] c 29
Salaries—-Produce Dept. 2,827.41 ] ’
Salaries—~Proprietor 1,500.00 ]
General expense 912.7” .27
Store supplies 3,131.22 .92
Total Controllable
Expense $ 31,688 28 9.33

Uncontroll ble

—-— r -\ :\.
It k1- en: 0,

(f) (,1)

 

Depreciation and

amortization 3 694.2 20
Freight 3,212.04 .94
Rent 5,524.39 1.63
Store accounting 192.00 .06
Taxes--Personal Property 232.3: .07
Taxes--payroll 553.98 .16
Sales Service fee 5,865.71 1.73

 

.\\

Total Expenses

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NET OPERATING PROFIT 8 15

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Total Inventory 2.90;

*Enventory turnover per m :
7 produce 9.10.

groceries 2.25; meats 7.

/

SPARTAN STOnES, 1NCORPOHATED--A PETAIL-OWRED

COOPERATIVE WAREHOUSE

liijstory

 

On December 27, 1917, a group of Grand napid
iégano, independent food retailers pooled their resouices to

<oirgganize a cooperative grocery warehouse. By having their

c>vrr1 warehouse these retailers were trying to increase their

1""
e o Lne

l

13Ll§7ing power and thus lower their cost on mercn

‘3

C).
H-
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n
(Draigginal warehouse was a freight car on a siding and an
c>f‘f‘ice with two employees. The warehouse began operation
IJliciEBP the name of Grand Rapids Wholesale Grocery Company.
The cooperative warehouse began its operation under

tines leadership of the late Frank 1. Marty, who was president

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anxj greneral manager from 1918 to 1939. Despit

COIJIltSPy'S fluctuating economy in the 1920's and 1930's:

thfe cnompany had a steady growth and development un;

Mar“ 8 .y ' 8 leadership.

H. G. Stanton, a pioneer food retailer in the Grand
area, served as president of the company from 1939

,\

iljgs
to 1-E9i+l, and at this time, Matt Heyns became general mans; r.

I"!

L. \7 . _. - . . . .
- - .Eberhard, a leading independent retailer in Grand

Jla fi' 3 g 1 w z-‘I
pi.czs; serveG as the company‘s thlf“ president from 1341

3

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xaritil 1955, at which time the board of director,

IRCMhan C. Peldo ausch. the current president.

In 1947, Joseph G. Poy was appointed General Nana ' ,
earl office which he holds at the present time. Since being
from

UU L.‘ L.)

sapwoointed, gross sales of the comp f1ny ha e increased

alocnat seven million dollars annually to the present level

cxf sixty-two million dollars.
Six years ago the members adopted the‘”Sign of the

£31321rtan” as the group svmbol. Because of the tremendous

pnakolic acceptanc of this trade mark the board of directors

cieacrided to change the name of the warehouse to Fpartan

t;cxres, Incorporated.

m

"S

C artan Stores, incorporated operates as a retaile -

k

covvriexiggrocezy wholesaler for the independent retailers who

511763 owners of the company. The warehouse serves only those

I‘eet:a1il stores which are members of the group. In becoming
a. naennber of the Fpa1tan Stores group, the independent

ZKBtZELile“ is getting a low cost source of supply and special

.ffered all members. Also the retailer
has; 51 voice in the operation of the warehouse. miter 1o-ty
0n€3 ”wears of operation the warehouse now serves
i“dependent retail members.

In addition to the warehouse, Spartan Stores, Incor-
903851TSEM3, owns the Grand Rapids Coffee Company. This is a

subslCiiary company which p: oces ses a control label coffee

Wh ‘ . e. .
1C3r1 is solo only in stores which are members 01 the

- n ~ ‘ . ~ rr' - "m .. 1 .. -. L, , AD . 1 . : ._
Z O -..£-L’Ur:13 1'” L‘OLLO . 1 I16 (I Otto Bil -." 3.- S o .r‘x-Ii’l S $1.1 Co C r1511 3;sz} c - _ .1
L .

-’ o 1r _ rx I «‘4.» v M ".,‘, I, .-f\ r‘ .r“
rxoi: members oi the opaT a. izttp. .hese wa-enodses a_e

_ I r“_” 3 ‘ er - ' ’V“ O ._ 7-0 ,7 1’ g ’_
’3 "\ "1‘: ’\ " {\Q ll (-r -1 -\ ' \ , < ’N 1 a , arr/‘4
10L. Qteq 1n LI- s..‘ "_, .LVL . I» 1 1.131-\}L), nu 71.1.zb, 1‘..'L_-.-.‘.'-L‘-'» V1.1.

 

 

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owned ‘.A.-a_.enouse 113 15 01-3161) CI". 131.8 18071-1 2.01%; .c. _,I‘.

-. ' .1.“ ”a. .4—9 ..-.- —.i
r to become a nembe- o1 tae g-otp a etaiie/ must mawe

o o a r 1 n w _ _ N

1 dinectors o .p :txn taxes.
PV“‘r" -{ '7 ,4'\ l r‘\ “(We L’ D 'V ‘— ‘v' ‘ 'A7 I +- l‘) be r. (3 f— 5 7’ ) '17 '9 l ’I- ‘7'. "\ '5 Y'\Y‘\ ‘ ’1
_L Lie 0*1egtpl-~ 11-118 bfle px-’.~e- L111 “egoepJ Li- GJQL u vile ”.5 1-21-

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“* “ ‘g mu‘u '. e - l g l n)?!— p 4 \_) 2:. 1 Can v‘ - U [ 18 F- - gt; 1.- . - 1 L, 131.03-; £1 __ C.- k. z- -. x: k-’ _._ fie .'
2-; __, __. § 0

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t l 1’11; StQOA C; J GSlCfl membe- (148 uhe ‘. Ute . r31? {1.8.3.1283 .1‘11’113

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3::
X’IWQ_ ‘_‘_ , . - . < .. .. «3....r .—.‘
‘9 Theare than one retail at~ye mast -urcnase additional

IE stock which is non-voting. Ln addition to the

1

Q ..
Clarrss A stocw, every member must also have a buyirg d posi
i n 1 7 ‘ 0 ‘ ‘ r“

t3k163 warehouse which is called class B. stocx. 1he

u“) 1 ‘ ‘ ‘
p LEDCDESe cd'tnis buying deposit is to give tne warehouse

' «1

\TI

crapital to purchase merchandise and pay the cost of oper-
atzion. The minimum buying depos sit a retailer can have in
true warehouse is 3500 and if his “ve1ag e weekly purc1lce
eo<ceed this amount the required buying deposit increases.

”Yrs average weekly purchases are computed each Decembe:1

‘ “ "" ’ l" ‘ r‘ A W‘ .‘ n- 1
fcyr every retail store and 1 e consiba ed constant for tne
‘. I“ "‘ ’1 I n ‘ ‘.."T"f 1 "\ r‘ ' 1‘ 3 * ‘m
ensuinzP yeai. fable x1: sntws the SChthlC ucod

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1337 the warehouse in determining
eaacfia retail store must make. A new member can buy me chan-

i.sea from the warehouse only alter he has been accepted by

Q:

t1163 board of directors and he has purchased his required

TJCDCk in the retailer-owned warehouse, ‘

(0

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.44.

member oi the Spa tan warehouse i

}_J
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Eveflv retai

tzc>ckho1der in the company. At the annual convention in

(a

M5157 the stockholders meet to elect a nine —man boa:d of
di.:%ectors. Ihe directors elect the company officers and
EIDEMDint a general manager who is responsible for all can—

98313' operations.

The long nge planning and policy formulation of
mWEB (oompany are determined by the board. These policies

33%? eexecuted by a general manager through whatever personnel
he <3€3ems ecessary for the proper and ex ficient operation
Of 'tiie company An organization chart for the company is

Shown in ChaZt IV.

 

F“ , “- r YT
—- kaDII-E )5 .1: t,

 

 

 

amt-JG 012130311 ffCEHEDULE-w’lAC‘S’ a 2:501;

Averag Weekly Required :equirec otal
Purchase Buying. Deposit (Class A s“: E)
000— 500 :1: 500 :1 ,500
500— 1,000 800 1,800
1,000- 1,500 1,000 2,000
1,500- 2,000 1,200 2,220
2 , (300- 2,500 1.2100 2,400
2,500- 3,000 1,500 2,500
3 , 000- 3,500 1,600 2,600
3 , 5,00— 11,000 1 ,7’00 2,700
1, _, 000- Z1,500 1,800 2,800
:1 , 500- 5, 00 1,900 2,900
5 , 000- 5,500 2,000 3,000
5 , 500- 6,000 2,100 3,100
6 , 000- 6,500 2,200 3,200
6,500.. 7,000 2,300 3,300
’7' , 000- 7,500 2,1400 3,900
7‘, 5:00- 8,000 2,500 3,500
8 , 000- 8,500 2,600 3,600
8,500- 9,000 2,700 3,700
9 , 000— 9,500 2,800 3,800
9, Boo—10,000 2,900 3,900
10, coo-10,500 3,000 21,000
10, Eco—11,000 3,100 11,100
11 , Goo—11,500 3,200 4,200
11 , Boo-12,000 3,300 14,300
12, GOO-12,500 3,1100 14,2100
1;. foo—13,000 3,500 11,500
15, Goo—13,500 3,600 11,600
13, Eco—111,000 3,700 11,700
1?, 00o-1u,500 3,800 11,800
1:, Boo—15,000 3,900 1.1.90
3, Goo—15,500 4,000 5,000

 

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.2... 5229:. 2 22 22 2 22 22222 22.222.22.230

> .2. B m< E U.

Group Sales Histo v and Itadinq Area
The annual sales volume fon the Fpg ten LEO es wane-

teadily but Slowly fbom 1917 until 1946. Until

U)

house grew
that time the warehouse had an annutl volume of a little
over six million dollars. Since lgfié the warehouse

experienced a rapid gfowth in sales each year, and in 195o

(/2

this volume w: almost sixty-two million Collins.

(0

3". - ‘V l\ 1 - V‘, 3‘ y .A 2", ~ ‘rox‘ IL", .\ . ‘ . - fa O r" ‘ -\ 5
walehouee sale volume comes 5-3m the m»noling oi x com-

,;.3

z .' fl, ., ‘ L! 2 '1-
o_y groceries, melt. inozen ooos, LBLlCJ

plete line C

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bake y p ooucts. gfitle my snows the

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rise in s les yolume begin.

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e Annual Sales

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.000
.300
.000

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194
leg
194
195
195

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house has consta.tly expe ded until now almost the entire
state as Epsrten membevs. Gosdon Cook, e

A

tavy and Cooper:wti.e GWOUD kn;

 

MBA retail members do an annual volume of 265 million

L).

dollars. ’ Chart I? shows the tne in; a: a co e‘ed by
retail members of the {p12t5n warehouse and the locxtion
of the three cash and cafiry warehous s.

The largest number o1 members in the Spartan

te

H-
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organization are the independent zet'
under their own names in their own local co mnmunities.
There ape, however, some of the retail members vzho

operate undef franchise groups sponsored by tne wane—

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‘ r‘ 1 ‘_\ , ._ _x ~~ a._A' C‘
QOUee. Examples of these groups ire the :oodtoxn store

the AG Stores, and the 7nop mite htrkets. A few of the

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independent retailers Who are
multi- -unit opelfitOFS. However, the single store owner

is definitely in the majorit ty among the _ps ten members.

 

 

 

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“Gondon CooK, ”The 958 Retail To ume of ' lung -.
and Cooperitive G: oops ' The VoluntEZE and Cooper» i e
Groups fingerine, Vol. 29 (RDJil, 1939), p. 62-h—_

 

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ai'e given to the membe s, not on the basis of stockholding,

but rather on their contribution to the gross profit of the

COmDEny through tnei: pnschtses. Since it is the obligation

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foods, and giocerv and meet dfiop shipments.
In an e-:o: t to have the lowest possible opeW tin:

retail Silesmen end all

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cost the weiehouse has eliminate
OPGEPS are sent to the warehouse by mail. Since the ge-

tsilers own the company they send a signed bliuK checx with
their order, thus, eliminating a costly accounts receivable
pyoblem. To keep ffiom incrensin; the cos o
dise the vrnmfliouse pays CHflYlPWVW’D‘ one-tenth

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zhiniuillgy vxitti tin: pw1311nisixe iszbsiues.

When the ”‘WTUW‘V“‘er se v“.s i2) dzed forty—one .ee s
ego, the main sdven age it offeied to the retail members
was a low-cost Source of supply. But. over the veers the
warehouse hes :dded hetflil sefivices whici dssist the mem-
bers in imp;%o. i their operatic . The warehouse is now
offe'ing its members low-cost retail lccountingy ow—cost
insurance through the werehouse, individual ’nd group
sdwrerti in:. store eh;irmx3 hmz service, and sales service on

non—foods and hi h- p: ofit Iood it ens. Lconomies :re 7180

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$13

vailable to the members in tie pu1cl13sing of e uipment

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supplies through the warehouse. ines savings of col-

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will be sent to the {pirtin stores. It is tne responsi-
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in quality and meets the group‘s StflndfiTdS. Tie meat is

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The retailer no longer nust @871 with the m*nv

‘packec salesmen in tfiyin; to buy meit eacw week.

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owneo cooiezitive eno mend oi tie letailec owners oi the

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;:part n waleflouce l-e xlso owners In Univ b-K343 coope.-
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atlve. ime bxchj lS cuxzentlg m niiea t; QQSGQJ :05.

PM _ “1 -., l “mm , - m .A. C . —-

lJlFOUEfl tnis 'Eleement tne b n81; pRoJioes tne spart:n

sstoces with 2 sm ll line of controlled lgtel products is

amell :8 “:3 p oeucts h'lCh re pvozucej under tfieir ”*“3-—

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tuitionel tafinvis and F~ifixv contrcfl. label bifiumxs on hi=

d-nndise w exl" on tie orie? form which lists the p?

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pe' cent on ll flozen fooo pu-c1 see by tie Detaiie
he lth and beauty sis: pbosc m. _peci;l ne‘w
.‘ A l-, I"- ‘l .1 - , — . a: o 14 v 1 - . 1 — ‘\

is places on he lth ino be utg air; by the wirenouse

of their high profit msrqin. The weTehouse circles
plete line of health and be at; Lid items for tne re
he retailer orders this mecchindise out of
weekly ores? book and delivery 's made on 2 weekly t”

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:id items. To help increfise the soles of these pro

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on all health find beauty Hid pucchsses. Foo netnilefs who
seyvice their own depflntment there is an addition l two

per cent rebate. All health and beauty sid ioems are pie-

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priced at the we? house to save the retailer the expense

and time required to do this job. To further assist the

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retaile? in his operstion, excise tix is computed on esco

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hon—fooos -nd SpECldl puncnsses. ine w;-ehou:e doe:

 

not carry an inventory of non-fooo items but the buyens
make eccdnsements fon retailers to obtain this merchandise

direct from the manufictu ens. The retiilers ire infcomed

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warehouse. ihe veteiler places in

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dise is shipped direct to the yeteiler and i‘
through the warehouse.

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imsiehouse, the :etsiler can get the warehouse to puhchese
it on a dcop shipment basis. Pricing policy. on drop
sfliipments, is arrived it by deduct n2 xll discounts 1nd

t~ er cent to the bslsnce. One-half of this

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Spirtfn coffee h's obt ined Videsire d ,u

and the ret‘il members profit by h 'ing c

libel.

"arVices “ffered by the "p rt'n 'trohousg
ihiile tune moiri “eiscxi for cszWiiYin

operative wfs to :sve economies in

dise, members
ussistonce if

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services

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ttma gfiowth of their retail membe
Advertising assistance.
psrfinnent provides members with

weefl<ly newspiper mot service,
ifisdixo find television d/ertis

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itive publication;

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sllowonces from minufzcturers, end T weeklv shoppe s news-
PEPE?-
For the weekly newspaper service the idvertisins

department prepares the theme and items that will be edve —

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elect some of the advertised

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ize . The retailers csn

item and have the sight to change some of the prices. ihe

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advertising plons ore p-ocenue to the retsilers two

weeks before they are to be used, to get thei: sppiovsl,
and to give them time to prepare for the promotion. The
ccvertising department preperes mats for three different
size groups. Group A is composed of the lgrge supermvrkets

which usually use one or two full p::es for their weekly

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ewspsper advertising. Group B is compo
stores and will feature different items than the Group A
stores, and will not use as much space for their weekly
advertisements. Group C is composed of the smaller stores
indich are not in one geogrsphicol ares. lhe weekly tdver—

tising s sce used b

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advertising specials co not have to be xs competit ve.
:lfter the retailers have approved hese mats the fidvertisin:
<depsrtment has the m: s msde for fill the newspaper usei by

‘the retail members. The wocetous charges the retfiilers

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ifiist use tlii service for the cost of preparing find dis-'

tnsibuting the msts.
The 737€Tt181né - epl rtment elch wee< prepsres the

1

;§hcu3pers' Review whicn is a weekly newsp per that 19s 2

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circulation of over 100,000. This newspaper carries tems

of interest and also buying hits to the consumer. lne

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nside of the news sper is a double page odvertisemen

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for the individ*:l spartan retsil member,

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store nsme is printed on the piper which is mailed to fill

homes in his trading ores. ihe retfiilers ire charged for

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the cost of prepdring, printing. msiling of tn
papers.

Direct mail advertising is tlso provided to the
:Wet ile rs by the advertising depirtmsnt at ; very low cost.
The theme snd mgin items ire selected by the werehouse

subject to the retuilen's approval. The direct mail tdver—

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customers by the warehouse. Lech retuile. sets 41s own

identificetion pieced on 111 the direct mzil sent out to

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consumers in his t s lfib me . - e ul ect n 11 p-o:r,v
lids been used most effectively by retiilers in rur l one 8

said s molii tCAnis.
The were .ous e provides all ret ile‘; s with in-stcre

gyromotionsl material such

(I)

‘talkers. Thi. meteriil is offered to the retziler Lt a

awe ry low cos t andfollows the Ljenersl theme of the newspdpe

‘

r dio ncJentisement for the week.

(L

on

exiveitising program for its retail members. Under this

\.

:fiidlo program, spot redid commercials see used tc p: omote

the “Lhweioute. 1h3othe11123ii3 33ve133isina gnmxgrfim frrfiilible

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to members is spot commerci3ls on loc3l re”'
The W3? house p3 ys one- w} if of this cost While the ret3ileu

pays the other hslf. The combined r33io sovertiting

the SpittEn group is cscfiieo oven twenty-six r3oio stations

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0’4
0;
0
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in Mictdgyni. The televisic31
is confined to institution3l advertising over four ststions

in the western Mich; lg3n 31 e3.
‘ The advertising dep3.ftment semi-innu3lly sends 3
list of items carrying advertising allow3nces from m nu-

f3cturess to help the fietaiier 3' lifv for these retstes

in planning aoxe1tisinng tne dep 3tment t1ie to t3xe to? n-
tsge of these ”llo*1nc but the retailer must snow proof
for the Wllo¢ nces.

Te3r sheets, the retailen's pTOOI of sovertising, must be
submitteo to the adventising dep3rtment within seven divs
after public3tion. The W3Pehouse then collects the e fined
seventising sllow3nces, 3nd pigments 3re m3oe qusrterlv t3

0 l

Inembers in sccord3nce With the member's indivio‘il 3dve1-

1.3.
(D

tising penfo‘; :n3nce. Tn Appendix B is shown the coopenfitpw

3dvertiSing contn3ct wnicn members 3?} requi ed to sign if

ifl3ey she to qu3lify for the one wti ing allos3nces.

Store improvement progr3m. The stone improvement

 

(mapsrtment is one of the newest sehvices offered‘tv the

—‘

vyinehouse. This oepsrtment includes fietsil 3ssist3nce in

- o "- . A r m ~x- 0 ~ 3 -\ ‘-' ' n": 2 "‘ ‘ ‘1 " T; ‘ ‘ ‘ "z ‘ ‘ ' V
thgee WLJJJ i-:as. stole enlinee inf, veilt to C; ut,
ales, an: S”les secvice.

U A n th” nm'n c'n“ Q “W'ce “a ‘ tm Ft wr' ac
noel .e eiailee-i-5 -e ,ic tre ue 1e. 0-x idol

embe: ssistince needed

to remodel o:

supermirmets. ror new supenminxets surveys are mice ti
I

n * 1" fl 0 ‘-‘_'_\ V 1’. - ‘ .3, , A Z

lino the best loca ion. :-om CJlS suixeg c.n \lso be

determined how large the store should be
merchandise should be Stockef. T1e oep’
complete plans for the tuilsing constrnc
equipment for new or Temoielcd stoves.

purchase his eouipment neers throuzh the

fnom equipment fixture compfinies.

completed, the depantment will

1m, Ac
.L.~~-‘;V U'.

ut me chzndise

,‘\
/

sales of high profit items. 7tone pl’n"
offeced to the :etiiler members it no en
The heilth and teiuty eiis depattm
ibilit" for the szle and promotion of t

C vie :I‘Tflls ’ j-nd

l l Ini‘ix‘ie

4—’ .l -
l_tion, loyout. find

The fl‘et ile“ can

wifiehouse direct
+1 - q '—
tie s7,‘e h'S been

an

l incre'se the
in «ToiQ’P firm: {:3
. - 'kL‘LJ b-V .L‘A
r“')~vg
”4.- r~‘_/O
ent h's the respon-
me C-anetioc
L Van Lou,
ls that the soles

of these ligh pfiofit items is most lmpo-t1nt to the suc-
cess f all supermarxets and 7'his oepautment cmn :ct out
of control without careful nc constint eupenvision. retril
field men fHom tELe warehouse work with the retlilefs to
inuyrove the sales of health lnd tefiuty lids. Zhese field
nmnl go into the cetail stores requesting this se12ice e%-.

“ all merchandise thfit is

R

86383.

all merchandise on the shelves and set up special sales
and promotions that will increase the sales.

The third retail service group within the store
improvement department is the sales service group. These
men serve as coordinators between the warehouse and the
retailers and assist them in planning special sales and
promotions. The Sflles service men also have the respo.-
sibility to see that high mark—up items as light bulbs,

 

olives, pickles, spices, gloves, and other similar items
are merchandised to increase their sales. This service
has been of real help to retailers in their operation.
Retail accounting Three years ago the warehous
established a retail accounting department that keeps
books for member stores requesting the service. Because
of the highly competitive position of supermarkets the
warehouse felt that its members needed assistance in
keeping accurate records. These records tell the retails-
how his business is doing and why, and it is most helpful

in preparing tax

More important than Just keeping

statements.

3‘. C C‘ UI‘CE‘. te

1‘63 C 01°C S

the Emcounting department is able to compare one retailer
ivith another in his volume class, and to analyse the re-
txailei‘s strong and weak points. This is done to help

the

able.

retailer improve his operation and make it more p

“at"

J; K"

it-

4-.
""o. co’" 4 ‘ Q Hi“! ‘ t1 ‘ QWCQ} “war“ ‘ i‘i"' ’1 “:PY"~>"’ ""AV‘
.Iie Lvi JLLeL. fJ.l.1.Cfl :18 up.... A“; xDLL.Lc/ll L: ‘_1V:--J--l C.h~_,.lt
effe: to the retailer are:
T'r‘ ~ A! , “ . f. I. ’1” 4.‘IW
l. nzintenance of pezmanent bookkee in; -eccflio.
A v. p . ,, ' .7 ~ ' n ‘ ~ A
c. Piep ration of opezatiné statement and C;1Jnte
”n . . 4" v I 3”, ,3 v‘ I r ‘7 a ‘ . ‘, " v .
sheet every fou. weeks-—toi:teen times per ,ea .
1 ‘ ~ "" » 1" . r‘ ‘ "."o ‘ '3 . x'.
3. Prep iation of pay-oll tax -etuins.
4. F eo; atioo oi montnlJ and unnu l s les t;k
. D
:e‘u’ns.
'r- :x "J ’ A 2 1 ‘ k ‘. z“ p (‘1 Q ‘ h ' '7‘! A 1
_,. - ‘VC\)ILC 1..“ 4.1.01“). k); b;.n:( *LCCOL/lnt C JETS] pe- i\,‘30
-- ”A...“ ,m a . — 4— . ‘ .- ~ 1,
.. ioas consult tion no inolysis work.
I; 1'
7—7 F: x Y". r‘ v T— 1. ' 3 '\ p ‘ ' f) r“ -"v ’v’: 1 y IC‘ t—f U
1. --epl- ,ioa .i ~xiise tax -eta-sn.
"" ~ r 2 1 A . .- ' a ‘ r. “l. ., . , - ,3 a 1
-.e -et l- :ccaunoir.a oepaitment pfio ides perana_
7“ ’fl . f. N 2 V ’ 3“ '3 'fi " ‘ ‘ . ‘. ‘ -‘ 7': "‘ '“\ , . .a‘ "x ‘. \
ano conlioentl ; assistance to membe’ sto-es, '13 consult;
., . Q " . “ .— r :1 . .‘. v 1 r5 ~ r: ,— . . r\ £_ 4.. r. . —‘
x.ita them on -lRafClil gal ,peiational may e_s. suc ."u
securin‘ imr gvvvont l“‘n:. haloin7 to mix? the best use if
n r\ A \ u . j . ‘I . ‘ .fi lax" -,~-, AA
linarces. gnc counselin_ on p-ope- insu'ance CqJe- xe.
lflls SCI :73 . 5 demonstrated how p.oper pgapa;ation 1n:
—,—~ , - - 3 -_ . q ‘ - - r‘ 2 - f" w ". ‘ .- ‘, r. V." - V ‘ I ,"‘
inte:piet *ion o: ie+ailer's :tatements. together nit»
_ .7 y‘. o- . \ f ' .‘ r“ ,' '- VA fl Q ‘V-x fl A 1‘ ! 'a. 1 L-. ‘ -‘ D '
p ompt dC‘lwn on the p:1t o- t.e :etaile- makes tae oijler-
"‘ " ‘ ' F‘ "~ I“ V ‘vfi I" 1 r“ .‘\ , r A D '
ence between 1 membe; s.c*ini a loss o- 1 prolit.

" ..
24mm

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the retail

1

ications. To keep the retail members

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f"

tout all new products, market conditions, promo-

s ecial buys, a weekly mime information

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ent out by the w us

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er 1 able to plan his

 

,
~H.~ ,M, __ a - . ‘,,,,_. w n ,

AU spartan Stores Retail hCCQuflUlNfi e-Jice, unpub-
iisiuaa material from .oertan itor s, Inc., Grand Rapids.

1‘”
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ichis3n

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plan for the orderinr of merchandise needed. _n l}

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they bega. publishing Behind The Shield, which is a news-

 

letter for the retail members. The purpose of this by-
monthly publication is to build a better unoe rstanding

between the waIehouse and the retail members.

i- '2'.)er
J- -«.'.t..

ortation. :ayly in 1959,

rr)

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Warehousinj
Spartan stores moved into their new two and one-idlf
million dollar warehouse in ura d Rapids. This food dis-
tributio n center is considered to be one of the mos t modern

in this area. The buildirg covers an area of seven and

one-half acres and contains 325.000 sou: 3 feet. it is
estimated that this new warehouse csn supply between 525--

affiliated stores, with a maximum wholesale volume of

U7
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0

L

5 million dollars. "he main purpose for building this

H
R)

new warehouse was tc have facilities to serve the retail

Inembers with all the merchandise needed ior

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operation. Also bv ha in: a more iciently des i ned

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‘warehouse, a lower operating co t

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Each retail member receives . .a , deliveries from
ttma warehouse as store volume dictates. The truck fleet
i£= owned and operated by the Jtar Transfer Line of Grand

Fenoids, wr liCh h a contract to make deliveries for tne

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Iqareflaouse. Not having mon<
taixion equipment the a.ehou has been able to reduce the

nggitnl needed f:om the let il members to operate the dis-

tritnation center. All deliveries are made on a pre-arr n:3,

q
’\
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schedule and the retlilezs are expected to help unload tie

trucks at their store.

Fee Schedule of Spartan Stores, inco "oo-dte

 

[1’]

very retail member of Spartan Stores warehouse has
an investment of one thousand dollars in class A stock and
the class 3 stock is equivalent to the average weexlv pur-

chas es of the individual membe-

‘I 1 , ..~.v 1 .~ '., -,- P P:‘r ‘, ‘ ,3 r‘ 7| "' r
is a weexiy se.vice cnl-ge oi live dollais. Table AIL

1'0

1 n \ ,~ v 1 ‘ 4" 1 'v‘ ‘ 1% r~ ‘— f“ -,-‘, ' f‘ . 1 -,' v ‘ y
shovs tne actaal service cniise that each letaile- p«5

(\v—‘D-o—v .- n7 - fl!“ -q C: F‘L ’_.D.I
k..|r:JAK" l_L/AJ G01“ INK}; K—LiIL 'beu

 

u:
U1

Service charge is . per order. if total investment
is three times aver ge weekly order a.d 1verage order
is in following br acxe s, service charges would be

1

according to thissrnedul .

 

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Average Weekly Service Charge

 

5;: l-
501-
EOl' )
001- ,,500
501- 8,000
,00l-10,500
EOl—lu,000 .00
001-17,000 1.00

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1—11—4
J: O QMWKA) F4

 

 

 

lAs ave-aq' weekly purchases are comput d each
Decsnnber and are considezed constant for ix1e en~rin~ year,
an»! chaiges in inoi*idual serxice charges would be cons: ant
f3 t' 83

 

sold to the

All merchandise is

mark—up to cover the cost of operation.

7’)
avg

each six months each member recei

direct proportion to their pu1chases.

0

the retail

For services of er

retailer has to pay for

mat service, window poste ers, direct mail

transportation. For the retail

health and beauty aids department the

L1

two per cent of the total purc,

There is no chaLge for the compl.

the fee schedule for

accounting

,5
.1

ill

'2 A
LVLK.‘

made by the vertising department

Q
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u

Table XIX how the charges fo

Jupermarkets

 

see how profitable its

\7 ra>r

1-4-»

frl’fable

(I)

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artan supermarket. This ore wa

the best stores in the

‘2

an operating qtatement

retail members.

retail members

pat: on

2#93311 accounting,

assistance OffeTe
Wholesaler

thi
ate enEineering
the

Table XTiil can be

ways to determine the
retail

an operating statement for s

Eroup_

C
L.

p r—c
r

J |

'3

Oil

to

at the end

0

f“ :r;
*r—V

rebates in

company. the

QJWEL tis inf

ad'elti sir g, and

.
f‘
bl

in the
charges

8

merchandise.

service.
st'

0.9

retail

S en Cf‘;?li"éfr33

Q

~.

SUCCBS

members ar

88

imil.

 

 

 

 

 

 

 

 

 

 

 

 

FETPIL ACCOUNTING FEE SCHQDUZ-
For a Four-Meek Period
Group No. Store Sales Charge
E Up to $5,000 $22 00
it $ 5,000 — 10,00 27 00
iii 10,000 — 15,000 32 00
:V 15,000 — 30,00. 37 00
V 30.000 - 50,000 e2 00
V: 50.00 — 75.00 43.00
VI: 75,000 -lOO,CV 5% CO
Vii? 100,000 —l50,000 00 00
IX 150,000 —200,000 70 00
X Over $200,000 90 00
ll? 3 store is not liable for unemployment ta.3s,
lbove rates are reduced 02.00 per period
i.!3i£i )YJT [‘
ADVEPTIIING FEE SCHEDUZE
Group Size Fee
Weekly Mat Service Fees
A . col. x 20 in. $lf.00
B 4 col. X 14 in. 5.00
C 4 col. x 14 in. u.oa
Radio Commercials
Retailer pays one—half and the warehouse p'ys
one-half of the actual cost.

 

 

 

 

 

 

 

 

 

 

 

 

Q... m“
9 1 e u e
W .2: 00 m dc r30. ,Qc/OC.O:/.O:,OcLOOnuz/O£111.11er
n J C Q .l r. 1.6. . C. .éQ. .7 1 2.- r3 7 «.0 O 1 :3 n. 1,0 70/10 2 :1 C
cal. Q a o n a o . n o o o o o n c a - n o o o o o
Uh 333 .lh QZJQIQLQJ -9 A. 4 4 Av .4 E,Cefizt/C/LJZCCTUSU7.,Hf
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0 GO 11111111122222222C:/:CEQ.J:
”yr. Ad 140 "a P . . . . . o . . o . . . . o . . . . . . . . .
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H b t 0 C 72.0 «,7 O 1 2 3 -4 51,0 7(Q0 9 O 1 2 o) i... c 1221.3 1 ._.U
G P 1 d... n AU. 1 1 1 Ac 3,. ma pd A: n: n: p. 9.. 9,. 33?), 3} 33 o.) 0333 a: A? .9
vi 8 P U 9. u u o n o o u I o o o o I o o o n o o o o o o
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in IJG VJ B 11nd ACA<:J.JL Q Ezra/rid... ruml7lnfafijhu/OnCr/fid
w l a S 3 S 1 112
R Id .C i .O .G e
1.. .0. nu1 .15:..__._._______.__.___._
UL e O uh. r p a
E V MULF 38 15017511 0101,01/01 0.1 016001: 1,01
.1 P1 1122311Aorc7r110 UV--./bOQUQ/..70nCE/
l 1 1|. 1 l
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STATEMENT OF OPERATION FOP TYPECAL SPAPTAH SUPEPMAPK
For a Four-Week Period

Per C
Department sales U1 .c
Groceries $ 5,69F,oo bl
Meat 1.020.80 2i
Produce 3,255.20 o
Total Sales 7A0,000.00 100.

Gross Profit
Groceries $ #,09E.94 15.
Meat 2,§25.j9 21.
Produce soo.35 E“.
Total Gross Pnofit $ 7.227 68 18

Sa aries

Wages

Advertising

Sales promotion
Stamps

Coupons

Rent

Utilities

Supplies

Freight

Linen

Grocery service cha
Accounting and leg;
jBank charges

Office expense

Dues and subscriptions
Donations
Interest
Fepairs and
Insurance
Employees' welfare
Property taxes
Payroll taxes

rge
l

maintenance

 

‘perating

Expense
6&8.0o

2.104.00
232.00

12.00
12.00
88.00
92.00
$8.00
10.00
72.00

2.00

 

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1.19
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I 14-} L- ._J 4‘14 ; I \.- g.“ . A I; n LAC/ k-‘

F‘ r‘, ’ N
operatina
Expense

 

Other tixes 0 134.00
Depreciation 4i2.00
lravel expense 20.00
Miscellaneous 1 .00

 

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Net Operating Profit 3 795.e3
Adi. Pebate income 52.00
Prom. Petate Income 63.00
CPsh over or snort ?.00
0“her Income 2’2.00

 

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ELWUJARY'idfil b01tlflL--0uq

Summary
While both the voluntary and cooperative wholesale

firms described in this report ore similar in th.t they

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aroups, there in»

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variations in their organization and method of operat io

The Fleming ompany, Mp8 -ting as a voluntary whole-

saler, is a p ivate corporation owned and controlled by
5&3 stockholders. in becoming a member of the affili? ted
group, in epenoant -etailers rre not ”e Mlle to pircn se
stock or make buying deposits, therefore, they do not
become wholesale stockholders as in the case of retailer—

owned cooperat-ves. The Fleming Company operates its
voluntary group in a four state area under the national
independent Grocers Alliance gr up name. To become a mem-
ber of the volunt.ry group, independent retailers must be

approved by the company officers and sign a contract to

in

(I)

support the :roup prcgr ams and maintain high standard
their supermarkets. The ind ependent Grocers Alliance name
is used by all stores affiliated with the company with the
exception of stores in Missouri which are called United

Supers.

’4
C)
lA)

Under the sales service plan which the Fleminr
Company established in 1927, merchandise is sold to retail
members a wholesale cost,plus a small fee to cover the
operating expens . Retailers are expected to concentrate
their purchases with the warehouse and cooperate with the
merchandising program planned by the company. Retail mem-
bers are further expected to support the sales service
plan by following the suggested retail prices established
by the warehouse. This hes been done to stablish uniform

ll TGA stores. Retailers Fecalve

Q]

and competitive prices in

elivery of dry grocery merchandise two to three times a

CL

week and perishable product s are delivered four to six
times a week. 'The exact number of deliveries depends on
distance of the store from the warehouse and the size of
the order.

Because of the large a ount of capital needed to
open new supermarkets most independent retailers have been
handicapped in keeping pace with the store development of
the corporate chains. To :ss is t the independent merchants
in de ve lopi1ng new supermarkets the co Hmpanz has established
a store development department. It is the re Mp nsibility

of this depa1tment to plan end finance the construction of

modern supermarkets. Upon completion of new su,e rm«*«euo

it is the policy of the companv to lease or sell these

0']
CT

.to1e

(D
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stores to independent retailers. Thbs ecome

privately owned but operate under the Fleming voluntary

 

group plan. The retailer is not chsrged for this service
but it is expected that he will support the complete sales

service program.

To assist the affiliated group members in their

ales service

(0

operation the warehouse employs a force of

ilitv

Iv

#1
O4

men to work with the retailers. it is the respons'

of these men to assist the retailer in improving his

P.)

operation by incressing soles und profits. The sales
service men also serve is a communication link between
the warehouse and the retail members. Experience has

shown that the retail assistinc' service men

0)
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plfiy on important part in the success of the group.
ine Fleming Company also offers its retail members

i

other retail services sucn is

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tising, 1nd retail employee training schoo
services are performed to assist the retail members in

improving the profitsbility of their supermarkets.

(I)

:‘ -.»" r . ‘ I -, 4‘. , ‘ r r‘ F‘- . . ', v ‘ v ‘
spartan to-es, incorpofiited, being i ret-ilefi-owneo

(

cooperative wholesale, is owned and controlled bv the
retsil members. mach group member is 7 stockholder in the
warehouse because of the stock and buying deposit he is
required to invest in the cooperative. These retailer—

members elect a board of director of nine members who

U)

have the responsibility of running the company. Thev
.appoint a general manager, who is the operating head of

the company, and he is responsible to the board. Policies

set by t
through

v—w
'1

must be

“ofit n
the memb

.
and

q

..\

tot

DVD de l 1
schedule

{15.3.7188
the g:
are:
members

but all

group emb

house
g r o w t h
member

but is

I.O‘

1“ 3’“:
- KI

...u

17’
,_.

xecuted p

23113

('0

he board by tne

the warehouse personnel.

r a retailer to become a member of

anproved by the boaad of Mir ctors
minimum of $l.€30 wcith :f stock.

1 m n’33-

n- rh“ ‘f
:{L'vL/LD 310

the
and then pur-

fill me: -ndi

to the retail members on a mark-up basis. This
is laced on tne cost of the merchandise to cove
ns.e of operating the wa; eho so. Merl six montr
ot needed for operating capital is passed back t
ers in the form of pitionage dividends. Liese
s ure pwid tXD‘Ehe retfiilxn’ in di‘WC” 33“?“ftl‘F
l purchases. Most retail members -eceive one or

V ries of merchandise each week on a pie—ar'wnje
.

e sp-?ti warehouse sponso s four affiliated gno

oer ich the members operate T'embefis ' e .ssi

p n”ne they will use according to thei- geogrfiph
else of supermarket. The coope ative .lso has

1

who do ot operate un er one of the
members are required to place the

lem on the s

."~' p ar t an

f anchise n2

.

buying

e group adveiwti ing se17vice provide d by the ware
r its members is most important in the success
f the group. Through the grouo ad.ertisirg etch
s receiring a mo .t effective adveitising pro: 7m
ayinq only a small per cent of tie tot.l cost.

“.3
‘—“.I

Q;

t—Jo ‘ ‘r‘
:3
(T)

(-3

(Y
( 0

{VJ}

Q.

i J

'1

The cost would be prohibitive ior most retailers to d
this Amount of admr rtis ing on their own. The il *~
tonce offered by the warehouse in the non-foods :no heal
and beauty :id depE.:tment has been most helpful in in-

O

(.0

creasing sale f these profitable lines.

The store engineering sezrice provided

members is most essentifil in the development

the group. iis service includes o~i”in
for new r remodeled supermsrxe‘s end the ec

equipment thro :h tne

l Eccounting,

f—Jo

uch ret:

q

and retail emplo triining is

,3. -/"'r"m
C; - -.s... ,

p

L Q

wsrehou e min. ent eels that th

DH]
v1

7
The

rtsnt if the retail members fire

impo

 

411‘“ cf.” "3
., w J\/ ¢ ._/

Chain

A‘ r‘ lr‘)
x k ‘_,

resli7ed

(D

(I)

"N

\u’

must be met with some new method f

to ir de ependent retailer

groups which have been

solution to their problem.

:3

V-

The function of the moon

wholes si eIgtsto supply affiliated

al to off

(0
O

Inerchandis and

'"1

:retailer to help improve his he

omplete plans

n?"
\4';

O n O TI"; 3

grtnvin:

pur-

 

Ho

Pequ

investment

H

fintncial and

1'). (R
i at

(J
5

¢_
um

(I)

t

'—-l +—
‘v \J

,-\
\.,I

f

e

T ne

C‘ Y1'
we; J

saiefs of pnime importance.

r‘fl
ifle

groups is sh

doing fortv-fi e p
47

1‘ I- ..l \ .
these 4-0op wnolas

‘. 4— - -. .
aflfinu {38 they 0.

voluntery snoups 1
‘ 1 y 1 ~ ‘4‘ r‘ H
tne nee/y enp “sis

opens ionol assist
-q . h ov‘ ’ .N I
serxices ¢“e t e-t

the post

the importance of

 

pnoviding aSSitt‘
es the voluntatv g
a H

7
Nuellery
cit., p. F.18.

own by

'1 0
es in
e? cen
ETQWL

3110

slens

2 v

coope"

these

AnnUZl

W i.

But experi

the to compete

.7 (T
.- _%

stpength and importénce of

ice

w supermirkets his

’3 ,.
8 011838

voluntery :no
1e success of the plan aid
stnl. n 1953, these affili
ontfince to where th y one n

indepenoent~

ll

).

in'

(

s have been

~tive

V31 t h

the impo

_‘
L— O

u ' 1‘ I"
on bovin; in;
~. ,f‘ '- m 3: -
amount oi rmE’cn nsi:
lIKI- ‘ . ‘
ence n s SQJNH

the independent
the corporfite cr

wholeSGiers ntve fie

services and fire n
4,- .4 '. i -1

s ores in nucn the
W . i n .

t on :coo net ilin;

the total iefiyiil jiocerg!
tition in the food ind

TC nce of

I
‘. ‘ n:
'.J,A.L/.
(3117

(I)

increflse tec use of the mfiny
epenjent :etailen.
rnoce stxn.:ssflfl_ thin
g ccot, tec5use e

M
94)

I“
.1»;

 

'U
(I)
.4
2..)
("f
’- o
(1)
Y8
H
-)
C
'0
(f)

7
H
(D
,J
.5
C)
F]
(3
'U
\D
L)

The voluntary and coo

in their oper1tion bec1use of the reluct1nce of menv retail

31)
CT
H.
O
:3
‘ )
:5
C)
d
C)
C.)
(D
d}
H
C)
0
3
(D
‘2.

members to imprOJe their oper
stores. The wholes1ler‘s responsibility is to overcome
this problem :nd offer incentives for the group to improve
their operation.

fino ther cisrcv.ntrge which must be overcome is the
l1ck of cooper1tion by m1ny retail members. 1f the groups
1:e to oper: te 18 they should, it is important th1t the
wholesaler have full cooperation from the ret1il members.
This is important not only to enable the wnolessler to

F.

have the economy 01 quintity purchases, but 1lso to support
the speci1l services made 1v3il1ble to the retailers. in
the future there will be an incressing decree of wholesaler
control over the group to eidble the w:oles¢ler-ret1iler

to become mo:e efficient in their operation.

The voluntary 1nd cooperative group movement has
played an important 1rt in en1. tling both the wholesaler
and ret1iler to improve their position in the Food dis-
tribution industry. The future growth Oi these 1ffili1ted
g oups will depend on the ability of the wholeseler 1nd
letiiler to work together with mo e coop eration. In doinr
this the volunt1ry 1nd cooperative groups will grow and

become more profitable to all members.

 

B

m
0
CD

04

Alexander, Ralph 5., Nroe Alderson, Robert F. Eld
Frank M. Surface. Marketing. New York: G
Company, l9uO. 740 pp.

 

 

 

Beckman, Rieodore E. and Nathanael H. En: . Wholesalink
3 1nd Practices. New Yo rk: " d
Press Company, 1919. 736 pp.

 

 

 

 

W‘ .‘ r T . ‘ ”rw~ We ‘
pecxmur, -neodoxe h. and n11o d H. Ragnaro. P incip 18 3 cl
rrr‘ ‘* A I I ‘7 7‘," 7‘1 , ’1'; ’:‘ ,__
P1lksting. new ioJK: lhe nonald ress C‘omp1ny,
oI7—““FE
l J: - {/9 pp °

 

 

 

Clewe tt, Richard N. Narketing Channels for Minufactu ed
Products. HOflcHO d, lllinois: Fichigd 9. lruin,
inc., 1959. 502 pp.

Converse, Paul D. and Harvey U. Puegh. fhe clements of
Nirfetin” New iork: Prentice—H111, lac., 1993.

 

Charles P. and Delbert J. Duncan Marketing:
1

p , .
Principles and Nethoos. Homewood, lllinois: richard
D. Irwin, inc., 1999. 714 pp.

 

 

EZhnmezmrM1, M. if. The fh1per‘lfiirket5. NevJ‘forK: IficGrruw-hil
Book Company, Inc., 1955. 220 pp.

 

Periodicals

____——_—_—— __-—._‘

’_ ‘ fir-7" .' -—10_ fi_
Converse, Paul. 11 entJ—piJe ”e;
T

1 r o Sci aling," The
Journal of Na: keti n:, IKE. (dulV, l9

2 pp° 4L-52-

 

8
'_7
I

V”)

\W '34

 

Cook, Gord' ca oe.ilopmeni of Voluntafiy
‘ Q

N ha

-. in clu1tary and Coopec—
. 111 (Decembe ., 1949), pp. 29-

 

 

”“ ENG \QODnFSC

L . id
pel'a‘iti re G‘WWQW1pQ-I‘,‘L'l'f

Mk*

-~ - 9 H F~ A '
:leming, Ned. L w-Cost Wholesaling beets ie . 1
- J! " V? a“~ r“ ‘ 7‘ t“ v - \
Prosperity, The xolunt_ry anG Lcoperdti.e Group
-5 _
“C

gaga71ne, Kiri (:lAu w;, 19557. pp. 2*

 

 

 

 

 

‘ - r— ~- A ‘ "1 H r- , h ‘ f1 ’\ . '-\ , 1‘ 7—, ‘. .- h '- ' «,-- (a

Green. Hirolo a. $1 es 1nd Piofit Co11 when retaileqs
H y-s . _ _ ~‘ .-

Con C ncentrate On Selling. Printefls Tnk PCLfl.Y

 

(October, 19:9). pp. 25—69.

Kline, Geor se E. How Stores Have Chenged O”er the le 's,
rosressive Grocer, HXXI (Octo*e:, lPEEl. pp. EM-Ee.

 

a

Lewis, Pdw
i

ltllS-

H. "Comeb1ck of the wrolesaler, .
iew, XXXill (No Jember-December, ljii),

 

 

‘ - "i n r v 1 "A A ‘\ n . “Cr ”
Mueller, Robert W. nnnu 1 report on root P-i ilin;--l-,.,
rfiorressiVe Grocer, XXXVil (April, 1958). pp. ?- -—
5-23.

 

. looo Inad ustfi1r s newest
‘ k’“. V 7‘ PT '- r ~ ‘0 r‘
s e oce; M‘ l (1:

,JLJL‘HLV

 

. ,. $'_.. . l 1 .3. ' '1,

. 1J6 new Look in Grocety who v
we, a. 2' . . 1,- " . 1,», \r‘J-‘rf? ET A , k E C: Q "C;

P‘ ‘jg‘jeESi ’8 (‘1‘.006‘ 9 a"‘-.’I...& 1'1 (L‘l'LQI o 19/[—: ) 9 pp ' "IQ—<- / '

 

 

_ T“. H ‘v‘1 fl --« _r_ A . .1 ‘ m
Byerly, r. w. lhe :uture of the Wholesale
United States Wholesale Grocers‘ Asso

i

I..._J

H
>3
(1

v A“ h ‘l v ‘A‘ .3 fl "' F,
Lewis, Morris. MOGCDU WflOlBS; C . c s
Unite d States holesale Grocers fissociation, l9io.

‘0 “(2) h' '- 37 .fi V" 'A 3 _ H F‘ A“
Stroup, D. P. want to. tie .etlile:Q United .tat’s
Wl lole sale Grocers' Association, l9Eo.

1 literature

ine :leminq Company:

 

 

lne rleming Company 1953 Annual pepoyt_

f1

The :leming Company's sales

(I)

ce Plan.

H

era
lGA grL1nciis e .g; eement

Cost of Merchandise '_1nd Reta il Services Under the Sales
Service Plan.

Weekly Merchandise Order Porms.
Opera ing Statement for an :GA Superm11ket.

 

~ I
b. ;1".C.1

 

-———-——

Spirtsn Stores Retail Acc

Operstin

.~
0.1
r—

t

Behind th

Sta

tement for A

, 4 ha i
.lelq. lhe j

 

wiew. A Week

 

prepsred by the Spa

Written

I

k

“ommunications

 

Fleming,

1?

Tow
b

4

C
/

v ‘
1.8 C .
.5

y.

, Joseph G. G
April 23, l

President.

I

I Q _ :\ 1‘: g ‘ ‘< T“
ounting oe:Jice and -~e

./

y—monthly Newsletter for

ly Newspaper udvertiseme.

rtln bknxfliouse.

ihe :leming companv.

llE

v—\ ,\ H rfi
L. I . p -.
’ , ‘g/ .__A L-

y?
._J-\

. i—

. Hpt~
L

[a

JLJ—J - .uizLiu

ELL—in LE: LE? IGfa“W)‘EM;iJ SERViCE PLSQI‘W(} .ENEXT

-nis ogreement, entered into betwe een Th. "leming Com-
DZUJ, inc. (wholesaler) 3r d the unde sign
retaile r. ,

Whe1e-s, the wholesaler s duly franchised by the
lndepeno ent Gro1s' Dist: ibuting Cdmptny ( GR) ind

‘wher e15, the Wet ile 1 desi;es membersrip in 3J3 IQA
and Tales Service Plan.

Now, therefo”e, in considerstion of mutual promises
it is hereby ozreed as follows:
T35 WHOLE ALE? PROLISE: AND AGREES
FLRTT—-To enroll the retailer as an IGA store under the
Sales Service Plan and obtain for him its benefits
1nd ad'anteaes.
SECOND--To coo peiate with th retailer in furnishing stc:e
' a s. t end

enginee: ngr service ,brin fin; the retailen lw'
best stole arrangement pli ns, and sues s n
time to time such chlnges is to Keep h
up-to—dite condition.

THIRD--To furnish or make availaole to the retailer, E'A
products, me chandise ind st.pplies with the under-
standing that :GA brand p“QdLLCc will not be sold
to any retail stores other t lGH s ores.

?OURTi-—To mike 1J1il: ble to I A
tising prog:1m,unifo1m as

DJ

C.) G) (D
.3 C u
C) H' m

a complete sdvern-
‘ lTyout so

(1 3
(J (D

3
{Ln‘

I c o
as to give LGA members the "filu f unifo.m Love:—
tising .ind th e savings of miss productiwn. -ne
:dJertisi ng material is es follows:

1. Mi h week included in the

ndow po
GA membe:

R)
O

Epeci 1 st -
for ms .301 sa
Christmas, e
ship fee.

Newspaper mat
included

IGA sndbills
at the lowest

Q'IO
‘A\

Fl?TH--To fUZ‘fllSl 1
t0 be C‘C’Je T4515 Gui,
price, percentage

COS’to

bulletin, TEE
advance as to
to store opera

oming
ion,

ish retailer
issued mont
sujjes tions.

SETENTd--To furn
,_, \ r v \ .
GPOCEHGRnM

and

e

Q
L.‘

se
ock

it

1- .-
\f.,.

‘ {ruff r-~
in .CLN Y I —-

.n .0
make
need

”‘77
.Lll

D

Joilsble, it
accounting service whi
current fixu on his
separate accounting se

--TO mwe

Cu. ‘

“es

q-T—q “Ta
.4 r4 '4
1‘4 A4 -,

Ii

"ij
H

-_O CO
{DOVE
EC OHOITL

mo
JHV

SCOTT .D--To disp
name and
.2110 un - pC‘ll'
ment submitt
Retailer

Q
L.

CHI RD--To mTil orders a per
mail per schedu e,
payable to the Dieming
tronesfers and weekly
keeping. collection
nited.

.—
L’. S

in the

current

Cnfl

k-)
'g

\ll

QQU’WVIV

Lg;

ice
r lGA memoer‘
will be
possible

ocn weew
r I .
retailer
how

9

tin’l 3.1 (F.
containiig

news 0? :enont

a.

.vv

n1:

('1‘

pri
lling
ed.

’W‘
‘J
D “."J
h -
r".
1

C

rv—v
‘

H.
O H m H- O

PT

Q
t.‘

ems di c

(I

~-~

ch

1
i

w
Hid

cf (D

(U

F—J

I"

‘

I’lC’I'T

”ll
bUSln
P'che

1'71
1” e

,-

1
.a
.o

S.

H":

I3

\_'

i c
1 /e
e 3

(A). ('3 T3

QC
kik’

, ll
ignee ne

>-v

C.)

E.‘i)|1

+-J

schedule esttblished

signed incomplete che
Compsny, in p yment
fee, so th t unnec es

credit expense moy be

\.A

 

 

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TOOPE RATIVE

The Spszr

signed memte?
s lentised Lv

iSt OJ. the

1
ed ze tis in:

J
5
U1

1.

2. Che advertiser shall maintain an sdequste
of each of the items advertised.

3. These items snull be made Peidily eccessi
customers.

34. Items must be imhxsctised during Time UJETC
chased and proof of su h advertising suLm
to Spartin Stores, inc., advertising deps
not later than seven days after putlics
advertising.

5. Memtee Lffl%a?t0 promote and display
advertised suppliers in behalf of Spirtsn
inc. lotice of such zdze*tisement--with
of items to be advertised--wili be sent t
bets in sufficient time for udequste memt
sretion. Such advertisements are supplem
to cegulu' memtet ads and ire essential t
success of the GUST—Eli Spartan adve1tisi
prrggfism.

Q. Memte; sg ee to displiy the jpthtii decal
store window or front dos; 1nd to use fps
identification in his sdvertising at less
times exc‘ gu “t8

7. Memten agrees to these fully to this con
as well CH3 the prwmxadures .Jui -vitiflrmnent
tion lly listed in curl ent Control Bock f
cooperELtiJe ad ertising pro; sm—-3theqwis
pilment will b; made und the terms 0: t

9'
t”’°C

fi‘
”'1 i.” K‘JI I:

”wqu r‘r

I --'..kj

G

r mm?“ :4 |_f

--.L\..’..

fll

gto L,
”dveztisiig
the member

t.

[ETIDI FJLJ ,
qut 4.1— ’—?‘;:\.ACT
,, lNC
inc., 3
monies
in newsp
ll be me

FOR

U

rrr;
-Jl'jx.‘ '1 FL.

s to pa
ertsin
and/ed
l

.1
id to
1‘) 73’7—

9L-
‘4 LIGkA

merchandise
‘tores
prices

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1

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; VA '33
UA-- VV
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8. Li‘l::‘ ‘5 (Befrient lS LSUbJU'C‘L L0 3.1]. le'dc- 1; ”:Tlu

Cite Ewe new and hereafte? in force fni ”W
rules ans regulations pursuant to 12w.

- ~ .-: I“ ~ -, ‘ a ,--x '1'}, fl ’1 - ~ ~ , r‘ ya
ement is ; staneg_c 1v-fi oieeeea to ;Hy
f\ - r \ V ,— > f v. ‘ g , ¢ ‘ \ v‘ 7
an etores, an., ans may be te-menauec L;
- - «. ‘ ‘ v ‘ " V ' 1
any time KQ’LW91tD3n notice a ‘fifli'SJJS

be of intended termination.

membe? 0
either p
pvior to

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