Grocery Industry Sees Supply-Chain Sense

Smaller grocers benefit from updated systems as strike sends them business
Since the United Food and Commercial Workers Union in Southern California declared a strike against Vons, Albertsons, and Ralphs supermarket chains in October, smaller grocery retailers such as Gelson's, Stater Bros. Markets, Trader Joe's, and Whole Foods Market have seen store traffic spike. Some stores are scrambling to keep shelves stocked. Others say supply-chain and logistics systems are helping them keep up with demand and reel in profits.

Stater Bros.

Traffic at Stater Bros.' stores is up 20% recently.
In a Securities and Exchange Commission filing last week, Stater Bros. Holding Co., operators of Stater Bros. Markets, reported that the strike sent first-quarter sales to $1.0 billion, up from $681.5 million in the year-ago period. Gross profit in the quarter ended Dec. 28 rose to $304.9 million compared with $184.2 million a year ago. Store traffic at Stater Bros. has increased more than 20% in the past four months. "Without the flow of information that helps keep products in the stores, there would be no way to stay up with our customers' needs," says Jack Brown, president of the 68-year-old company.

Stater Bros. is upgrading its procurement system but declined to provide details. The company uses procurement software from AquiTec International and warehouse-management tools from OMI Triceps, and it has sales data in an internally developed data warehouse.

The strike has made it clear to some grocery retailers that their business-technology infrastructures aren't ready for the stress of a big sales boost. "Everyone knew the strike was coming, and many beefed up their IT and logistics infrastructure going into it," says Scott Van Winkle, managing director of research firm Adams, Harkness & Hill. Trader Joe's has steered clear of a tech-heavy infrastructure, says AMR Research retail analyst Paula Rosenblum, but in the past year began upgrading its point-of-sale Triversity Inc. platform and its regional distribution systems.

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