CHANDLER, Ariz. — AJ's Fine Foods, the upscale gourmet food stores operated by Bashas' Supermarkets here, has had to work harder for sales as the economy has slipped over the last few months.
“We're seeing a slight downturn in customer counts, with people buying less-expensive items and buying less overall per trip,” said Mike Proulx, president and chief operating officer of the parent company and the 13-store AJ's chain.
Although most of AJ's customers are high-income consumers, “everyone, regardless of their economic level, is always looking for a value. Our challenge as merchants is to continue providing values that appeal to customers, and as long as products are moving, that's a good indicator.”
Toward that end, AJ's is doing more cross-merchandising “to provide more of a treasure-hunt appeal and make the shopping trip more pleasurable,” Proulx said.
Tie-ins include cookware with pasta; platters and hors d'oeuvres-related items in the wine section; and decorating accessories in the floral section, he said.
The company has also gotten more aggressive on ad pricing, Proulx explained. “In the past, we might have reduced the price of a [USDA] Prime steak by $2 or $3 a pound, but now we're going down $4 or $5 in this price-sensitive environment we're in, and that's helping sales.”
AJ's stocks private-label lines in select categories, “and while we're not a high private-label market compared with conventionals, we have seen some increased movement,” he said.
The chain is also running a series of “Taste of Arizona” promotions featuring locally made products — similar to the “Taste of” programs it's run in the past featuring items from various foreign countries, Proulx said.
“Throughout the stores, we feature items like Southwest relishes, sauces, marinated meats and chocolates geared to outdoor entertaining, including some new items but mostly items we feature on an ongoing basis. What we're trying to do is appeal to customers' tastes, and if we can do that, that's half the battle.”
AJ's started the cross-merchandising and Taste of Arizona programs around the first of the year, “and there's been a subtle reaction so far,” Proulx said.
He said AJ's views Costco as a prime competitor for middle- to high-income consumers, along with conventional operators like Safeway, Fry's (a Kroger division) and its own Bashas' stores; specialty operators like Whole Foods and Trader Joe's; and restaurants.
While a handful of customers rely on AJ's for their full shopping trip, many others shop the store primarily for special occasions, he pointed out. With some customers coming in less often, it's possible Bashas' is picking up some of those sales at its conventional stores, he added.
AJ's operates self-service bistros at all 13 stores, “and what we're seeing there is that consumers are downsizing from prime rib to lower-priced entrees like stuffed lemon chicken, salmon or pastas. But with restaurant dining down, that's definitely an opportunity for us,” Proulx said.
Proulx said the current economic downturn is different from the one in 2000-2002, “because this one happened all of a sudden, starting with the housing market, and we've been able to adjust to it more so than in previous downturns.”
Asked how long it's likely to last, he said, “We need to ride it out a little longer. I think we'll see more drops to come before we see an uptick.”