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A Shelby Publishing Special Section • DECEMBER 2014
THE 2014
ROFDA Chairman’s Report
Arter Takes Up Collaboration Mantle from Predecessor Affiliated Foods Midwest (AFM) is living proof that collaboration helps a business grow. The Norfolk, Nebraska-based company has been working with its suppliers to build custom programs for many years; not as much for the co-op to build profits as it is for its members to be better able to compete in the highly competitive retail food marketplace. They need the pricing and products to be able to compete against the big boxes, dollar stores, drug stores, price-impact formats, and the list goes on. Its proper focus on members has allowed AFM to grow into 16 states and operate three warehouses in Norfolk; Elwood, Kansas; and Kenosha, Wisconsin, the newest of the three. Martin Arter, president and CEO of AFM since 2001, is a longtime proponent of these mutually beneficial relationships with CPGs. But why limit it to CPGs? Arter and Bob Ling, president and CEO of Unified Grocers in Los Angeles, another member-owned grocery co-op and fellow ROFDA member, figured out a few years ago that they could work together on specialty food distribution and benefit both companies and their retailers. AFM buys specialty items for its retailers through Unified’s Market Centre, which increases volume for the warehouse while bringing costs down across the board. AFM has a similar relationship with Topco Associates, which specializes in the private label side of the business, along with others. As chairman of ROFDA for the next two years, Arter brings this spirit of collaboration and “co-opetition,” which also marked the tenure of his predecessor, J.H. “Jay” Campbell from Associated Grocers of Baton Rouge. Because more than half of ROFDA’s 13 board members have been in their positions for a relatively short time, he sees an opportunity to support them in their efforts and to focus on creating “co-ops within the co-op,” such as the relationship between AFM and Unified. Following are excerpts from The Shelby Report’s interview with ROFDA’s chairman. What are the duties of the ROFDA chairman? My duties are to take direction from the board (made up of the member company presidents/CEOs)…It’s a privilege to serve. I’ve been a part of ROFDA for many years; been going to ROFDA (conferences) for probably 20 years, but this is the first time I’ve served in this role. We have four solid strategic initiatives, but at the end of the day, it’s really about serving the independent retailers, and when I look at my role in that, it is to bring together the vendors and the CPGs. On our end, honestly, we’re looking for industry alliances. We want to consistently partner with like-minded organizations, co-ops or not, that are going to focus on the retailers and what their needs are for the future. I believe there is a resurgence in that because the vendors and the CPGs have dealt with the mass (merchandisers), they’ve dealt with the dollar stores and they realize the bread of America truly is that independent retailer that’s able to be part of the fabric
of the communities. So I’m pretty excited about this. Not excited, necessarily, that I serve in the chairman role; I’m excited that I’m able to be part of it. It’s servant leadership…it’s really giving back. I’m also excited about the forward-thinking CEOs within our group. Some of them have a lot of tenure, a lot of experience, a lot of knowledge, and other ones are newer coming into it. But, again, I think the purpose we’re there is that we’re a like-minded organization and we’re looking for ways to harness and collaborate. The other term I use is “co-opetition.” What are the resources that we can use together between our companies that will help our retailers grow where, individually, we’re unable to produce the same kinds of results? Francis (Cameron, ROFDA president and CEO) says you have an action-oriented style. I believe that “vision without execution is hallucination,” a quote from Thomas Edison. When you look back at America and how it was built, it was built by entrepreneurs that had a will to succeed and they believed in something and had a passion. And I am passionate about the business, passionate about helping the retailers. It’s great people in this industry. Just like your company. There’s just good people in our industry and I’m glad to be a part of it. Francis is well spoken and a great leader, and his wife Teri; Teresa (Pope, in ROFDA’s Alabama office); and Ferrell (Franklin) and the leaders before. I’m more of the mindset of a little more quiet—under-promise and over-deliver. I’m glad to serve. Is there anything you’re looking to change or enhance during your chairmanship? I don’t know that there’s any one thing. I think in the past there has been a lot of discussion about the opportunities we have to work between our groups. I think that time is here. We’re actually doing it; we’re not talking about it any more. Whether it’s relationship with Market Centre or it’s Randy Arceneaux from Amarillo calling up or me calling him and saying can I help you with some turkeys or do you need some Hispanic product? It’s truly happening, it’s not just (talk); it’s very transparent. I think that’s what really can get a lot of us excited because each one of us can’t do alone what we’re going to be able to do together. I think it’s letting your guard down a little bit, not really caring who gets the credit. And really being able to help the retailers survive in a very competitive environment where we all need to reduce our costs. The CPGs and the vendors are looking at us in a very positive way as well. Yeah, I think there’s going to be some opportunities for aggregation between us, some opportunities for best practices, opportunities for the share group side of it, and
Martin Arter, president and CEO, Affiliated Foods Midwest
it’s going to be for our staffs within our companies to work together. So I think we’re probably starting to see a little bit of a seed going to develop, and the results we probably won’t really know for five to 10 years, but I do believe they’re being set today. The ROFDA Advisory Council—will you have a role within that? Will you attend their meetings? That’s a great question. We have some wonderful people on that; Denny Belcastro (RAC chairman, see page 11)—what a great leader, all the knowledge and experience he has. I have had a few discussions with some of the people that are on that council, and some of those discussions have been how can we position ROFDA to be on a Kroger-type model to help our retailers. It’s really looking at ways to, whether it’s Kraft or Pinnacle, reduce our costs and be very transparent with the CPGs and make sure the consumer has those opportunities the CPGs put in front of us. It’s not a way to make margin; it’s a way to get it in the consumer’s hand to keep them from walking to the mass, and I think Denny is going to lead that group and be a huge part of it, and I am very open-minded to it.
ROFDA Board Member Perspective
Bob Ling
President and CEO Unified Grocers Commerce, California ROFDA provides a great forum for dialogue and creative problem-solving among co-ops. An example is our growing business arrangements with Affiliated Foods Midwest (based in Norfolk, Nebraska) concerning specialty foods. We’re working with Affiliated Foods Midwest directly with respect to their access to what we call our Market Centre, which is our specialty foods division. We work very closely together so that Affiliated Foods Midwest can bring those products to
their members in a fashion that makes it their program, but we collaborate in terms of procurement and category management, etc. It lowers the cost of goods to Affiliated Foods Midwest members, makes the process more manageable for them and puts them in a better place to compete every day. That arrangement was hatched at a ROFDA meeting and has led to a broader exchange of ideas and examination of how our companies can work together in
various ways. By accessing ROFDA programs, we’re able to bring opportunities in terms of both products and services to our members at a price that we might not be able to get without that collaboration or aggregated buying power. As a relatively new director, I’ve been impressed by the openness and willingness of other members of ROFDA to openly and aggressively share information in a way that
allows us to service our individual members more effectively. ROFDA is a forum for that dialogue and a facilitator of that dialogue. It serves an important role.