SpartanNash Profile
SpartanNash Company (SpartanNash) operates as a food solutions company that delivers the ingredients for a better life through customer-focused innovation.
The company’s core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores, and the U.S. military commissaries and exchanges; as well as operating a premier fresh produce distribution network and the Our Family private label brand. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait, Bahrain, Qatar, Djibouti, Korea and Japan. The company owns and operates 147 supermarkets and shares its operational insights to drive solutions for its food retail independent customers. While the company supports overseas commissaries and exchanges, all of its sales and assets are in the United States of America.
Wholesale
The company’s Wholesale segment uses a multi-channel sales approach to distribute national brand and private brand products to independent retailers, national accounts, food service distributors, e-commerce providers, and its corporate owned retail stores. The company’s Wholesale segment also contracts with manufacturers and brokers to distribute a wide variety of grocery products to 160 U.S. military commissaries and over 400 exchanges worldwide. Together with its third-party partner, Coastal Pacific Food Distributors (CPFD), SpartanNash represents the only global delivery solution to service the Defense Commissary Agency (DeCA or the Agency). As of the end of 2022, the company is among the five largest wholesale distributors in the nation in terms of annual revenue. The company focuses on growth in its Wholesale segment, through expanded relationships with existing customers, as well as new business opportunities.
As of December 31, 2022, the company operated in all 50 states by leveraging a network of 19 distribution centers, in addition to a facility on the West Coast operated by third-party partner CPFD, as well as internal transportation fleets and third-party shipping partners, servicing the Wholesale segment. The company’s extensive geographic reach drives economies of scale, provides opportunities for independent retailers to purchase products at competitive prices in order to effectively compete in the grocery industry in the long-term and includes distribution centers strategically located among the largest concentration of military bases the company serves and near Atlantic ports used to ship grocery products to overseas commissaries and exchanges.
The company’s Wholesale segment provides a selection of approximately 85,500 stock-keeping units (SKUs) of nationally branded and private brand grocery products and perishable food products, including dry groceries, produce, dairy products, meat, delicatessen items, bakery goods, frozen food, and seafood, as well as floral products, general merchandise, beverages, tobacco products, health and beauty care products and pharmaceutical products. These product offerings, along with best-in-class services, allow independent retailers the opportunity to support the majority of their operations with a single supplier. The company also provides a comprehensive menu of support services designed to assist independent retailers in becoming more profitable, efficient, competitive, and informed, ranging from real estate and site surveys to a full suite of merchandising, marketing, accounting, and information technology solutions.
The company also services national accounts through a variety of platforms and has diversified its customer base through growth with these customers. These national accounts partner with the company to centralize their supply of grocery products or product categories, and to leverage the company’s broad geographic reach. Sales to one of the company’s customers in the Wholesale segment accounted for 16%, 17% and 17% of the Company's net sales for 2022, 2021 and 2020, respectively. No other individual customer exceeded 10% of the company's net sales in any of the years presented.
The company is also the exclusive supplier of private brand products to U.S. military commissaries, a partnership with DeCA which began in fiscal 2017. The contract to provide DeCA with private branded products extends through December 2025. In accordance with its contract with DeCA, the company procures the grocery and related products from various manufacturers and upon receiving customer orders from DeCA, either delivers the products to the U.S. military commissaries itself or engages its worldwide strategic business partner, CPFD, to deliver the products on its behalf. The company is among one of the four largest distributors to the DeCA commissary system, in terms of annual sales, that distributes products via the frequent delivery system. The remaining distributors that supply DeCA tend to be smaller regional and local providers.
DeCA operates a chain of 236 commissaries on U.S. military installations across the world that sells approximately $4.2 billion of grocery products annually. The Company obtains distribution contracts with manufacturers through competitive bidding processes and direct negotiations. As of December 31, 2022, the Company has approximately 250 distribution contracts representing approximately 600 manufacturers that supply products to the DeCA commissary system and various exchange systems.
The company’s ten largest Wholesale customers (excluding corporate owned retail stores) accounted for approximately 43% of total Wholesale net sales for 2022. Approximately 90% of Wholesale net sales to independent retailers for 2022 are covered under supply agreements with customers.
The Wholesale segment competes directly with a number of traditional and specialty grocery wholesalers and retailers that maintain or develop self-distribution systems. In addition, the company’s independent customers face intense competition from supercenters, deep discounters, mass merchandisers, limited assortment stores, and e-commerce providers. The company partners with these customers to help them compete efficiently and effectively.
Retail
As of December 31, 2022, the company operated corporate owned retail stores and fuel centers in nine states in the Midwest, primarily under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, and VG’s Grocery. The company’s corporate owned retail stores range in size from approximately 14,000 to 90,000 square feet, or on average, approximately 44,000 square feet per store.
The company’s convenience and community-focused strategy distinguishes its corporate owned retail stores from supercenters and limited assortment stores. This strategy is complemented by e-commerce platforms, including Fast Lane and Groceries to GO, and relationships with DoorDash, Shipt, and Uber Eats, which provide online grocery shopping and curbside pickup or delivery at 142 corporate owned retail locations as of December 31, 2022. These channels are highly valued by customers and continuing to enhance and grow this platform is a key component of the company’s strategy. The company makes investments to support its online ordering systems, the speed and convenience of curbside pickup, and the efficiency and completeness of order fulfillment.
The company’s corporate owned retail stores offer nationally branded and private brand grocery products, as well as perishable food products including dry groceries, produce, dairy products, meat, delicatessen items, including store prepared grab and go meal options, bakery goods, frozen food, and seafood, as well as floral products, general merchandise, beverages, health and beauty care products and fuel. Sixty-five of the company’s stores contain franchised Starbucks or Caribou Coffee shops, which enhance the customer experience and help to drive traffic.
As of December 31, 2022, the company offered pharmacy services in its corporate owned retail stores (the pharmacies are owned by the company) and operated pharmacy locations not associated with corporate-owned retail locations.
Supply Chain Network
The company’s distribution network consists of 19 distribution centers, in addition to a facility on the West Coast operated by CPFD, which are utilized to service the Wholesale segment. The company warehouses product through approximately 8.9 million square feet of distribution center space. The Company operates a diverse fleet of owned and leased transportation equipment, which includes 570 over-the-road tractors, 253 dry vans and 1,130 refrigerated trailers. In addition, the company operates 14 over-the-road tractors, 258 dry vans and 123 refrigerated trailers through short-term rental contracts. The company carefully manages the approximate 64 million miles driven by its fleet and third-party carriers annually servicing military commissaries, exchanges, independent retailers, national accounts and corporate owned retail stores.
The company continues to execute its comprehensive supply chain transformation initiative. The initiative is focused on executing improvements to supply chain operations across the company’s network, which continues to result in sustained efficiencies and cost reductions. The supply chain initiative focuses on making investments in people, process, and technology to support long-term growth and maximize operational efficiencies. The company is investing in its workforce through an expansion of its onboarding, training and career development programs, and is working on several initiatives aimed at improving associate engagement, customer experience and overall supply chain performance.
The company is refining its sales and operations planning process and optimizing its network to enable more effective and efficient operations across the supply chain. The company plans to continue to enhance its inventory management and control policies and procedures, including item assortment decisions, while also developing dynamic slotting capabilities, to improve order selection efficiency and maximize space utilization. Process improvements are also underway in other areas of warehouse operations, including enhanced labor planning tools and analytical capabilities to improve productivity.
Marketing and Merchandising
During 2022, the company leveraged data and insights to develop and implement strategies to respond to changes in consumer behavior impacted by the post-pandemic rise of food at home consumption, as well as inflation. In 2022, the company completed extensive market research to gain a better understanding of the meaning, importance, and equity of each retail banner brand. Shoppers revealed deep emotional connections with the company's retail banner brands, including the feeling of a hometown store with hundreds of local products that provide a consistent, positive, and personalized experience.
The company’s retail growth strategy focuses on building in-store and digital engagement with shoppers to better personalize offers and highlight local assortment, while increasing customer satisfaction through quality, service and convenience. Key focus areas include improvement in customers’ perception of Company pricing, product assortment and increased penetration of the company’s private brands. Although value-seeking behavior is increasing, convenient food indulgence in grocery stores is a way in which consumers are shifting away from dining out. Building on the strength of the company's flagship brand, Our Family, Fresh & Finest, by Our Family, a premium fresh brand, was successfully launched in 2022. Additionally, the company launched the first phase of a merchandising transformation initially focused on enhancing category management, including a new cost policy and better promotions planning. In 2022, the transformation leveraged advanced analytics to enable more customer-led category planning and promotions to benefit corporate retail and independent grocery customers.
The company has developed processes to measure the activation of these strategies as well as their impacts. These measures are reviewed continuously to refine and evolve the strategies
Suppliers
The company purchases products from a large number of national, regional and local suppliers of name brand and OwnBrands merchandise.
Intellectual Property
The company owns valuable intellectual property, including trademarks, trade names, and other proprietary information, some of which are of material importance to its business.
Technology
In 2022, the company focused on foundational IT hardware and digitization efforts across all business segments, including the continued transition to Software as a Service (SaaS) technology, where production environments are hosted in the cloud.
Supply Chain: The company continued its transformational effort to replace existing transportation systems, including standardization of processes and rationalization of disparate systems into a single integrated application stack. Additionally, the company developed process automation improvements, as well as data analytic solutions around workforce productivity. These automation and data analytic initiatives, combined with the workforce investments noted previously, are expected to contribute to improved hiring, retention and productivity.
Retail: The company continued taking additional steps to modernize its retail applications footprint, which began in 2021 with a comprehensive effort to upgrade and digitize its point-of-sale (POS) environment. The upgraded POS application includes an integrated feature set which enhances the retail experience both for SpartanNash and its independent customers.
Marketing and Merchandising: In 2022, the company completed its implementation of a cloud-based pricing and promotion automation solution. The new technology provides a vendor portal and aids workflow management for promotional activities, as well as the management of associated vendor billings for all of the company's customers. In addition, the company further expanded eCommerce capabilities, including integration with leading marketplaces including DoorDash, Shipt, and Uber Eats.
Administrative Systems, Infrastructure and Security: The company has implemented tools to improve both the efficiency and effectiveness of internal reporting and administrative functions. A centralized cloud-based data analytics solution was implemented to consolidate the company’s analysis and reporting platforms, which supplies it with advanced data analytics capabilities to provide better business insights in real-time. During 2022, the company also took significant steps to improve its information security. Lastly, the company made several enhancements to its foundational hardware infrastructure, including upgrades to the production storage environment and network servers.
Regulation
The company is subject to federal, state and local laws and regulations concerning the conduct of its business, including those pertaining to its workforce and the purchase, handling, sale and transportation of its products. Many of the Company’s products are subject to federal Food and Drug Administration (FDA) and United States Department of Agriculture (USDA) regulation. The company is in compliance, in all material respects, with the FDA, USDA, and other federal, state and local laws and regulations governing its businesses.
History
The company was founded in 1917. It was formerly known as Spartan Stores, Inc. and changed its name to SpartanNash Company in 2013.
