(July 28) CHAMPAIGN, Ill. — Not too many startup companies can boast the kind of growth W. Newell & Co. had in its first year.
In its first week of operations in August 2005, the Midwestern retail produce distribution center shipped about 65,000 cases.
That’s just a fraction of what the company ships now.
“We ship 65,000 cases on an average Sunday night now,” said Gary Gionnetti, W. Newell’s chief operating officer.
As it nears the end of its first year in business, the company has grown much more than was anticipated, said John Aune, vice president of national operations.
“It has far exceeded our expectations,” he said.
W. Newell, a division of Eden Prairie, Minn.-based Supervalu Inc., serves more than 500 retail customers with an inventory of 2,000 stock keeping units of fresh produce, floral and hardline products.
The Champaign facility marks the first in what could be a national produce distribution network.
Aune did not specify a time frame for Supervalu’s expansion of the distribution format, but he said the company is studying areas for possible expansion.
“We plan to make it national in scope,” he said. “There really isn’t anyone who’s doing it on a national level. This first facility is phase one of several phases to come.”
Aune acknowledges that Newel started with a core of customers from regional Supervalu distribution centers in the Midwest, but he said winning their businesses wasn’t easy.
Newell’s singular focus on fresh produce sets it apart from the Supervalu distribution network. Previously, Aune said, produce was shipped on the same truck with the rest of the grocery items.
He said the company has been able to provide fresher produce than was previously available from Supervalu distribution centers because it handles produce at a greater volume and a wider variety.
The company’s 155,000-square-foot facility is not full to the brim with pallets of produce, and that’s by design, said Hershell Reveal, warehouse manager, during a warehouse tour that was part of Newell’s inaugural expo July 24-26.
“We turn the product so fast that we don’t need all the storage racks except during holiday rushes,” Reveal said.
Turnaround for fresh produce shipments is about a day and a half, compared with an average of about three to four days in a standard produce warehouse.
An automated storage and retrieval system that replenishes pallets as they are picked facilitates turnaround.
Newell’s warehouse is equipped with three of the automated storage and retrieval systems. The company also established an “ad volume” section stocked with the items that are on ad from retailers or are particularly fast-moving during the week.
This section is closest to the docks where pickers can access it at the last minute to add to orders.
In late July, it was stocked with cherries, melons and strawberries. For the July Fourth pull, it was stocked with watermelons and corn.
Higher volume helps keep costs down, Aune said.
“The cost of goods equation is favorable because we’re buying products at full truckloads,” he said.
An expanded variety of produce also is a personal mission for Aune, who is on the board of the Wilmington, Del.-based Produce for Better Health Foundation.
“In order to get consumers to eat nine or more a day, you’re going to have to offer more,” he said. “You can only eat so much broccoli, lettuce, green beans, etcetera.”