Ahold USA plans to close its warehouses in Lancaster and Cheektowaga, eliminating 600 jobs by August, the supermarket company said Thursday.
The company, which used to own Tops Friendly Markets, is shifting its warehouse operations to C&S Wholesale in Pennsylvania and Massachusetts.
Ahold runs American Sales Co. warehouses located at 4201 Walden Ave., Lancaster, and 1 Scrivner Place, Cheektowaga.
“Decisions to transfer facilities are not easy, and we understand the concern that this change will cause for ASC associates and their families,” said Jan van Dam, executive vice president of supply chain and e-commerce for Ahold.
Ahold said the decision to close the local warehouses is all about location. The warehouses now supply nonfood items, such has health and beauty care items, general merchandise and seasonal items to a variety of its supermarket chains.
But after the sale of Tops in 2007, none of those chains is in Western New York. The warehouses serve Ahold’s Giant Landover, Stop & Shop New England, Stop & Shop New York Metro and Giant Carlisle chains.
Ahold said C&S warehouses in Bethlehem, Pa., and South Hatfield, Mass., are more centrally located to those supermarkets than the suburban Buffalo distribution centers.
“ASC’s operations in the Buffalo area are strong, but they are no longer located within the markets served by Ahold USA’s retail divisions,” van Dam said. “Ahold USA continuously evaluates its business processes and supply chain to ensure that we are providing the highest level of service at the lowest cost for our local retail divisions and, ultimately, their customers.”
Burt P. Flickinger III, managing director of New York retail consulting firm Strategic Resource Group, has researched operations at both C&S Wholesale and American Sales Co. It has found American Sales Co. to be extremely high-performing, which could explain why Ahold kept them here for so long, even after selling Tops. In fact, he’s not sure that closing is a good idea.
“Ahold has to look at location and pricing, but it also has to look at support to stores, in-stock levels, fill rates, employees’ level of dedication,” Flickinger said. “It’s going to be very difficult for Ahold to duplicate that anywhere other than with American Sales.”
The most successful retailers are those that control their own distribution, Flickinger said. Kroger, the most successful grocer in the country, controls its own distribution with its subsidiary Peyton. Budwey’s and Dash’s do it with Olean Wholesale Grocery Cooperative. Tops also returned to that model when it bought its Lancaster warehouse back from C&S Wholesale in 2007. Ahold is doing the opposite by outsourcing its distribution to C&S.
Flickinger noted the blow to the local economy, which will lose what he called well-paying jobs that provided good benefits.
“During all the blizzards and ice storms when other suppliers shut down, American Sales worked late in the most difficult conditions to get products to the merchants who needed them,” he said. “It’s sad to see that tradition end.”