SYRACUSE, N.Y. -- Despite pressures from wage and benefit expenses, Penn Traffic will continue during fiscal 2003 to stress cost reduction/containment while fine-tuning long-term emphasis on capital investment, merchandising and store operations, Joseph V. Fisher, president and chief executive officer, told investors and employees at the company's annual meeting here. Another goal is to reinvigorate customer service.
"Our business strategy is working very well," Fisher said, noting "steady progress in improving our key financial results, which is our best measure of winning or losing."
For the fiscal year ended Feb. 2, the company, which operates 216 supermarkets in the Northeast under the Big Bear, P&C, Bi-Lo and Quality banners, posted increased revenues, decreased losses and same-store sales increases of 0.8% over 2001.
"We are proud of our modern store base," Fisher said, citing about $160 million in capital spending during the past three years. "We plan to invest approximately $65 million in our store base, distribution system, bakery manufacturing operations and technology infrastructure."
Fisher said the focus is shifting from existing stores "toward growing our business through the construction of new and replacement stores." Scheduled for fiscal 2003: completion of 20 major store projects, four replacement stores, one expansion, 14 remodeled stores and two incremental new stores.
Specific goals the company is focusing on include reducing perishables shrink and supply-chain costs. Fisher said Penn Traffic had specific ground rules in reducing costs and "No. 1 was we cannot negatively impact the customer. Nevertheless, when we came through reorganization, I felt that we lost some of our focus on the customer," Fisher told SN.
To that end, Penn Traffic appointed Kathy M. Allen to the new post of director of customer services, serving as liaison between store operations and corporate departments. Allen joined the company in 1994, managing P&C stores in Baldwinsville and Pulaski, N.Y., before becoming labor scheduling manager.
"Kathy has a real sense of what it is customers are looking for, from coming up through the ranks," Fisher said.
As a resource for store managers, she will reinforce customer-service goals, resolve issues and remove roadblocks so stores can better serve customers, he said.
Six stores are piloting an IBM ACE point-of-sale system; companywide implementation starts later this year. One customer-service feature of the system is the ability to offer receipts sorted by department in alphabetical lists.
The system also is expected to impact labor productivity and shrink control, expand customer behavior data and foster additional merchandising programs. The company also is introducing computer-based training for the point-of-sale system and to augment traditional one-on-one training procedures.
Other information the company presented at the meeting included:
Penn Traffic's 10-month-old loyalty card accounts for more than 70% of retail sales. More than 3 million customers use the cards.
Merchandising programs allied to the loyalty card include Baby Clubs at all stores and soon Kids Clubs, with others planned. Club customers redeem points for gift certificates.
Product variety and special promotions should increase private-label sales.
Programs targeting lower supply-chain costs include reducing vendor delivery costs to company distribution centers and implementing phase one of warehouse labor standards.