NEW YORK -- Top Supermarket companies are making it clear that growth involves more than just buying other operators.
Food retailers are focusing on emerging product categories, store labels, new formats and other devices to grow the top line even as the roster of industry retailers shrinks through consolidation.
Executives from companies including Kroger, Albertson's, Safeway and Supervalu outlined sales growth plans at the Credit Suisse First Boston Food and Drug Retailing Conference held here this month.
Some said sales growth was the key initiative for their organizations.
"We took our eye off the ball," said Peter Lynch, president and chief operating officer, Albertson's, Boise, Idaho. "We focused more on integration than growing sales. But that's behind us today."
Lynch said initiatives aimed at reviving growth include enhanced neighborhood marketing, strong focus on pharmacy and improved customer service. "We are shifting decision making to be closer to the customer," he said. "Divisions now have sole responsibility for profit and loss. Corporate merchants are focused on strategic planning and moving the business ahead rather than day-to-day issues. That wasn't the case before."
Joseph A. Pichler, chairman and chief executive officer of Kroger Co., Cincinnati, noted that development of synergies is ahead of schedule in the company's merger with Fred Meyer, and he cited some rapid-growth merchandising sectors, included private label.
"We introduced more than 1,000 corporate brand SKUs during fiscal 2001 just completed," he said. "This includes Private Selection, our new brand for premium quality. We will launch an additional 150 SKUs of Private Selection in 2001."
Other growth areas cited by Pichler were pharmacy, general merchandise and natural foods. Pichler also pointed to fuel centers as "another major source of new business." He said the company will operate 150 to 170 by the end of fiscal 2001.
Safeway, Pleasanton, Calif., is still optimistic about the prospects for its "breakaway sales strategies," initiatives intended to drive volume. "We're not even at the halfway point with the original set of 11 strategies," said Steven A. Burd, chairman, president and chief executive officer. "We are refining the best ones a lot. We don't ever want this pipeline empty."
Safeway doesn't reveal details of these strategies, but Burd stressed the company is "absolutely optimistic" it is on the right track and expects 3% to 4% identical-store sales growth in each of the next five years.
At Supervalu, Jeff Noddle, chairman, president and chief operating officer, said the distributor is increasing its commitment to price-impact retailing, most notably through the Sav-A-Lot limited assortment format. "Sav-A-Lot is the market leader with a strong performance, and we'll be accelerating our openings next year," he said. "It succeeds across different geographies and economic climates."
He said the concept will perform will during the economic slowdown now under way in the country.
Jim Donald, chairman, president and chief executive officer of Pathmark Stores, Carteret, N.J., said the company is moving to "next-level initiatives" following the success of operating strategies in place since 1996. The new initiatives are intended to "drive the bottom and top lines and separate us from the competition."
These initiatives include focusing on gross profit, service, sanitation, stores and workers comp and general liability.
Donald reminded the audience that everything the industry does must have the ultimate user in mind. "At the end of the day it's all about customers," he said.
At Delhaize America, Laura Kendall, chief financial officer, stressed that population growth will work in favor of the company's Southeast operations. "The Southeast has a growing elderly population, so health and beauty care will be a major component in the Southeast for Food Lion," she said.
Kendall also noted that Hannaford will place heavy emphasis in the Northeast on its new Festival format, which puts the focus on fresh foods.
Nash Finch, Minneapolis, the wholesaler that operates nearly 100 stores in the center of the U.S., is emphasizing a few "critical success factors" for growth, said Ron Marshall, president and chief financial officer.
These include providing convenient shopping experiences with good store locations and fill rates of products; outstanding perishables execution, including signature items in produce, deli and meat, and exceptional customer service driven by close interaction between associates and shoppers.
On the wholesale side, Marshall said, "We have a commitment to independent retailing, and these retailers will survive, but not as independently. They must find supplier partners and the right cost structure."
Setting the tone for the retailing conference, Ed Comeau, managing director at CSFB, told a luncheon audience that finding new avenues for growth will be all important. He pointed to options such as new business development, leveraging the store brand and finding acquisitions beyond food retail players.
"At some point there will be fewer companies to buy," Comeau said. "Then everyone will have to consider where the growth will come from."
