ANAHEIM, Calif. -- Ralphs Grocery Co. is making a major bid to improve its value image as southern California competition intensifies.
The company is launching a major marketing program, improving its buying stance and heralding its perishables focus as it sets 26 new stores for the marketplace.
The moves may be an answer to comments by some observers that Ralphs has fallen behind on pricing competitiveness since the merger that combined Ralphs with Food 4 Less.
Ralphs executives discussed their strategic plan here in a panel before a dinner honoring the Compton, Calif.-based chain. The event was sponsored by the Combined Food Sales Clubs of Southern California, an amalgam of sales representatives that honors a different company each year.
The cornerstone of Ralphs' renewed strategy is sharpening its price identity under a new slogan, "Extra Savings Every Day." The focus "will be a back-to-basics marketing program that will effectively communicate a positive price image" and will include shopper testimonials, more Sunday ads with double coupons, in-store stock improvements and an emphasis on perishables, said Frank Lazaran, group vice president of sales and merchandising.
In other highlights of the panel and subsequent speeches:
· Ralphs executives discussed a "best practices" effort among the various companies controlled by Los Angeles-based Yucaipa Cos., which include Ralphs; Dominick's Finer Foods, Northlake, Ill.; Smitty's Supermarkets, Phoenix, and, shortly, Smith's Food & Drug Centers, Salt Lake City.
· Dave Kuri, group vice president for nonperishables, said Ralphs intends to improve its in-stock position by intensifying its category focus, eliminating redundant items and seeking better coordination of promotional efforts with its suppliers.
· Al Marasca, president and chief operating officer, said Ralphs plans to open 16 conventional Ralphs stores and 10 Food 4 Less warehouse stores this year -- "more new stores than all of the other major southern California chains combined."
Explaining Ralphs' price-image effort, Lazaran said, "Double coupons are still a strong value to customers, and our goal is to build momentum in our program with Sunday ads that highlight the extra values they offer.
"And we'll use customer testimonials to stress the message that double coupons save money, because while consumers may not believe what an ad says they do believe what other consumers say."
As Ralphs has converted 112
former Alpha Beta, Boys Markets and Viva stores to its banner in the last few months, Lazaran said, "we've added hundreds of items that some consumers may not be aware of, and our challenge is to highlight that fact to shoppers near those stores and to make sure we improve our in-stock conditions."
He noted that Ralphs aims to trumpet its fresh offerings to keep pace with rivals like Vons Cos., Arcadia, Calif., and Lucky Stores, a chain of American Stores Co., Salt Lake City. "We need to highlight the quality of our perishables departments. The dominance Ralphs once had in that area is not as great as it was, and the three-horse race is getting closer as competition has closed the gap, with Lucky concentrating on fresh produce and meat and dramatically improved service departments and Vons focusing on good floral departments."
Ralphs also is upgrading its ads with a new look that highlights perishables and eliminates clutter, "with bolder headings for perishables along the bottom of the ad," Lazaran noted. He declined to say when the new ad campaign will start.
Besides bolstering its fresh selection, Ralphs is fortifying its grocery, specialty foods and general merchandise variety to compete with other retail formats that are siphoning business, according to Kuri. "Our goal is to create departments and categories that make a strong, positive impact on customers," he said.
Regarding best practices, George Golleher, Ralphs chief executive officer, said, "We are in the process of combining our purchasing power with Smitty's, Smith's and Dominick's through our best practices project, whose goal is to combine over $12 billion of purchasing power into one sales call.
"This sales call can result in your potential success to leverage your products and services to Ralphs and our sister affiliates."
Tom Dahlen, senior vice president of Food 4 Less, said the best practices effort is "a bottom-up approach because there is no infrastructure at Yucaipa Cos. and no entity empowered to make decisions for the various chains Yucaipa controls, so ideas are generated from the companies themselves to determine what is in the best interests of each one."
Representatives from each chain are members of various committees looking at such areas as marketing, advertising, management information systems, warehousing and transportation, real estate, legal matters and procurement, Dahlen said.
"We have 35 or 40 projects at some stage of development right now as we attempt to facilitate bringing all the companies together," he explained.
To improve Ralphs' in-stock position, Kuri said, "We've organized an out-of-stock task force to identify opportunities to improve the situation, and Ralphs will be calling on suppliers to evaluate itemization and delivery schedules to help improve our out-of-stock position."
Out-of-stocks are costing Ralphs 3.1% of sales, according to Kuri. "Our goal is to reduce redundant items in all categories to provide greater holding power for the better sellers in an attempt to reduce out-of-stocks and increase sales," he said.
Ralphs also plans to reduce the number of items it sells, he added, "because the proliferation of new items has created a vicious cycle in the stores, which results in lost sales and more out-of-stocks."
Furthermore, the chain aims to develop long-term relationships with suppliers in the area of promotions. "We don't want to plan promotions week-to-week but to develop long-term calendars that meld your plans with ours," Kuri said. "And we don't want to force products into promotions that don't excite customers."
