NEW YORK -- Grand Union Co., Wayne, N.J., has been reincarnated into a "maniacally customer focused" company that is "paranoid about becoming an efficient, low-cost operator," said Chairman Roger Stangeland in a presentation here.
Grand Union, which emerged from Chapter 11 bankruptcy protection last summer, has developed a three-year-long strategic plan that focuses on improving its overall business processes as well as the public's perceptions of the chain, Stangeland said.
The initiative, which the company calls Grand Visions, touches all aspects of in-store
operations, from enhancing personnel training to significantly upgrading perishables with a goal of becoming "the best takeout restaurant in town," according to statements from company officials. Stangeland and three other Grand Union executives made presentations at Donaldson, Lufkin & Jenrette's Annual Food Retailing Conference here last week.
Grand Union plans to open two stores next month that will exemplify these goals. "These stores in West Nyack and Monroe, N.Y., will be dramatic departures from previous renovations and will showcase our new Grand Visions," said Bill Louttit, executive vice president and chief operating officer.
Joseph McCaig, president and chief executive officer, said the chain expects to reap multiple benefits from the plan. "When we implement all these Grand Visions, we expect to increase annual sales per square foot and selling space in our stores, drive our annual compound sales growth, reduce nonstore expenses and meaningfully improve customer perceptions of Grand Union," he said.
For more on Grand Union's approach to its dry grocery department, see Page 31 in the Center Store section.
The executives identified eight individual Grand Visions. The company plans to:
Improve its pricing image by matching prices with the recognized price leader in each market.
Create the most powerful and appealing produce displays in the Northeast.
Make prepared foods departments the best takeout restaurants in town.
Position itself as the leading food authority in a variety of areas, from food safety to good-for-you products.
Generate higher sales per square foot and utilize space more efficiently through its M.A.S.T.E.R.S. program, which stands for Maximize All Space, Totally Expand the Right Stuff, by taking advantage of category management.
Improve customer service and maximize labor effectiveness.
Build the franchise by strategically investing capital.
Reinvest the savings from all these programs in more consumer-oriented improvements.
Shortly before emerging from Chapter 11 bankruptcy protection in June, management worked with board members to craft this plan. Hence, the chain is at varying stages of implementation with each of its visions.
For example, Grand Union initiated this image-enhancing plan by introducing its More Lower Prices campaign in its 128 Northern Region stores in May, then in 17 Long Island, N.Y., stores in November and in 25 Bergen County, N.J., stores in January. Currently, 65% of the company's volume is achieved through lower retail prices, Louttit said.
After preparing to fulfill its first vision, the chain implemented sweeping changes in both the produce and prepared foods departments, Louttit said. Produce, including organic and fresh-cut products, is being merchandised better while variety is being expanded. The company is rolling out several new developments in prepared foods, including a hot pizza program and individual ready-to-heat meals.
Grand Union is undertaking an ambitious capital program, spending some $225 million over the next three years on 83 store projects, two-thirds of which will be completed in the profitable New York metro area, said Ken Baum, senior vice president and chief financial officer.
However, Baum said the chain can likely raise only $135 million to $150 million of its proposed capital budget on its own. It is currently searching for additional sources of funding. If a resource is not found, the chain will proceed with the planned projects but with a longer time-line.
"We are currently considering options for raising the additional capital resources that will allow us to proceed," Baum explained.