Surviving Wal-Mart

The landscape of the grocery business is changing. The entry of WalMart into the food business is threatening grocery chains such as Albertson's, Kroger, Safeway and Winn-Dixie.

But J.H. Campbell, president and CEO of Baton Rouge-based Associated Grocers, remains confident.

To the chains,

Associated Grocers is not a chain; it is a member-owned corporation. The independent grocers who buy from AG's warehousing operation are also the company's stockholders. The company began as a co-op, but now reinvests its profits rather than returning them to the members. Associated Grocers supplies 265 stores in Alabama, Arkansas, Louisiana, Mississippi and Texas.

Campbell says Associated Grocers stores concentrate on doing what grocery chains cannot by providing better service, fresher produce, higher quality meats and a bigger variety of packaged goods. They also concentrate on local products.

"We are in south Louisiana," he points out. "So we carry a lot of regional items, things that local consumers want to have."

Defending a market niche is important in a Wal-Mart world, but so is price.

"We've had to make extraordinary investments in logistics technology in order to keep our costs down," says Campbell. In 1996, Associated Grocers instituted a warehouse - management system to track inventory.

In 2002, the company went a step further, installing "voice selection technology."

Each store's order is received by computer a relayed via radio headset to Associated Grocers' warehouse floor. As workers load items onto palettes, they confirm the ordered item by speaking a "check digit" back through their headset's wireless microphone, allowing the system to continually double-check the order's accuracy as well as updating Associated Grocers' inventory in real time.

Campbell says the error rate dropped by 65 percent when the new system was instituted, "and it was low already."

James Kent, an owner of the Associated Grocers-affiliated Reeve's Supermarket on Harrell's Ferry Road, doubts independents like him could survive without the Associated Grocers.

"We still have the advantages of an independent, but AG gives us the edge of being part of a chain," Kent says. "They have huge buying power, they provide business services and they let customers know that we meet their standards. They make us a better store."