L.A. wholesale market copes with business slump

07/16/2012 02:19:00 PM
Tom Burfield

Los Angeles-area distributors are doing their best to cope with a stagnant economy coupled with rising prices and an increasing number of produce buyers bypassing the market.

“No one’s celebrating in the L.A. market,” said Jin Ju Wilder, founder and president of Status Gro, a South Pasadena, Calif.-based consulting firm.

“It’s been a tough couple of years in terms of sales.”

Wilder said companies are seeking her help as they strive to reinvigorate sales.

“Chain retail business is not picking up at all. It’s decreased instead,” she said. “Everyone is competing for the same independent customers.”

Some distributors are examining their business to see if they can “diversify and get creative in terms of their business models,” she said.

“To survive is really difficult,” said Steve Cantor, director of sales and produce and a partner in Produce International on the Los Angeles Wholesale Produce Market.

“Wholesalers have to be real careful now.”

One of the main problems distributors face is that customers and purveyors who used to source from the market now go direct to suppliers, bypassing wholesale distributors.

“You don’t have the chain store buyer walking the market anymore,” Cantor said.

There was a time when Cantor dealt with four or five major chains on the market. That number has dwindled to one.

Business has been OK for Consolidated West Distributing Inc., Commerce, Calif., said Joel Young, one of the owners.

Distributors should be thankful for any business they have, he said.

Many companies are trying to eliminate “fluff” without having to lay off employees.

“It’s a lot tighter than it has been,” Young said.

“The idea that someone can still work and not be productive doesn’t work anymore.”

Business in the region “has not been tremendously strong by L.A. standards,” said Jeff Weisfeld, owner and president of Fruit Distributing Corp. of California in Commerce.

“We feel the overall economy has not yet bounced back to the level that it should,” he said.

The produce industry felt somewhat immune to economic downturns because of the “everyone has to eat” mantra, he said.

But the industry soon learned that people were not eating out as much, or they were “opting for mac and cheese versus a nice, healthy salad.”

“We’re just not seeing the same business that we were in the past,” Weisfeld said.

Although melons sales have been good for Scottsdale, Ariz.-based Pura Vida Farms, overall business has been “fairly quiet across multiple commodities,” said partner Wes Liefer.

People are saving and watching where they spend their money, he said.

Meanwhile, transportation and other costs are on the rise, creating higher retail prices.

“It’s a very difficult business right now,” he said. “It’s a tough situation for everybody — producers, retailers and truckers.”

Also contributing to the woes of the major produce houses are small stalls and docks surrounding the market that may or may not comply with regulatory codes, Cantor said.

“They carry everything we carry,” he said, and they “are taking away a lot of business from this market.”

Weisfeld said he’s managed to stay around by keeping overhead down and running a lean company.

The firm’s seven employees handle $15 million worth of product, he said, a feat some say is “borderline remarkable.”

“We can run about as cheaply as anybody in the city,” he said.

Wholesalers are going to have to face reality, Wilder said.

“The retailer business isn’t going to increase if you’re a wholesaler/distributor on the market,” she said.

“You’re going to have to pursue other types of business and diversify — or become specialized.”

That is something that’s doable.

“Here in the L.A. market, there are so many options,” she said.



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