September 1, 2010

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Associated Food Stores

Thousands of Miles Fresher

Heather Stewart

September 1, 2010

In 1999, after nearly 60 years in business, Associated Food Stores took a big leap into a new business venture: owning and operating local grocery stores.

Associated Food Stores was founded in 1940 by independent retailers who banded together to transport and warehouse merchandise for their grocery stores. “Back in those days, grocers were having to drive their pickups to California every week to get products,” says Steve Reich of Associated Food Stores.

Those grocers first purchased a big truck to share, then invested in a warehouse. The cooperative model worked amazingly well, helping to keep local grocers in business as larger chain stores moved into the region. Now, the Salt Lake-based Associated Food Stores supplies nearly 600 independent retailers in an eight-state area.

And, according to Reich, 60 percent of the market is now made up of independent grocers—a market share that has actually strengthened over time.

Even so, operating a successful, independent grocery store is a constant challenge.

“In 1999, some of our store owners decided they were ready to get out of the business, but they didn’t want their stores to fall into the hands of chains,” says Reich.  The owners of Maceys and Lin’s grocery stores and Associated Food Stores came up with a plan: Associated would purchase the stores and continue operating them under their same name and business model.

Associated soon purchased Dan’s Foods and Dick’s Market stores as well, for a grand total of 22 grocery store locations. The company created a subsidiary, Associated Retail Stores, to oversee and manage the new retail operations.

The four store “brands” are operated as unique businesses in order to adhere to the original intentions of their founders, says Reich, who is the vice president of marketing for Associated Retail Stores. This approach may seem inefficient, but Reich says that grouping them all together with one look and feel—and identical product offerings—would alienate the loyal customers who have supported each store for many years.

Associated ventured further into retail when it purchased several Albertson’s locations in Utah in 2009. Those 34 stores, now called Fresh Markets, are operated through their own subsidiary, Associated Fresh Markets.

Through all its growth and change, Associated continues to focus on supporting independent retailers and, as much as possible, local food producers and manufacturers. In fact, the four stores—Maceys, Dan’s Foods, Dick’s Market and Lin’s—spearheaded early efforts to launch the Utah’s Own program.

According to Reich, these stores helped develop a marketing plan, created signage for store shelves to identify Utah’s Own items, and developed radio and television advertising. Harmons joined in the effort, and the new Fresh Market stores are now part of Utah’s Own as well.

Supporting local businesses is important for several reasons, says Reich. “All of those profits stay here and rotate through the community.” Also, it keeps farmers and ranchers in the black—and their workers employed. Customers benefit from high-quality, fresh foods.

“If we keep up with our local farmers and ranchers, our produce is actually fresher. We like to use the tagline, ‘Thousands of miles fresher,’” he says.

Over the years, Associated Food Stores—and now Associated Retail Stores—has been instrumental in keeping local grocers in business. The company has also been a tremendous support to local farmers and food producers, providing them a way to get their products distributed to stores throughout the region.

“Associated has really helped a lot of Utah entrepreneurs make their dreams come true,” says Reich.

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