RALPHS KEYS NEW FORMAT TO UPSCALE, PERISHABLES

ELLIOT ZWIEBACH

COMPTON, Calif. -- Ralphs Grocery Co. here unveiled its newest format last week -- an upscale, perishables-oriented store called Fresh Fare.

The company also disclosed plans to complete its conversion of the 55 Hughes stores to the Ralphs banner by mid-1999. Ralphs said it has already converted 17 Hughes stores but will pause until after the holidays before completing the changeover at the other 38. Sam Duncan, Ralphs president, said the chain's plans will not be changed by the proposed merger of Ralphs' parent company, Fred Meyer Inc., Portland, Ore., with Kroger Co., Cincinnati. That transaction is expected to close early next year.

According to Duncan, the development of Fresh Fare is an effort to maximize the potential of smaller stores in upscale neighborhoods and to make use of smaller real-estate opportunities that may not accommodate larger Ralphs units.

The itemization at Fresh Fare stores will be different than at other Ralphs locations, Duncan said, with about 25% of the stores' 45,000 stockkeeping units unique to the format, including the addition of gourmet items and home-meal replacement varieties in all perishables categories, plus nutrition centers and a wider assortment of specialty nonfood items.

Duncan said Ralphs expects the Fresh Fare conversions to increase sales by 30% to 35% per store.

The first Fresh Fare opened here last Wednesday in a 29,000-square-foot store in West Los Angeles, about 5 miles from the Pacific Ocean. Duncan said three more Fresh Fare units are scheduled to open this year: at a 23,000-square-foot store in Rancho Santa Marguerita; a 29,000-square-foot store in Villa Park; and a 26,000-square-foot unit in La Canada.

Early next year, he said, Ralphs will convert an existing 35,000-square-foot Hughes in Sherman Oaks to the Fresh Fare banner.

Duncan said some of the Hughes units will undergo extensive remodeling, at a cost of $1 million per store, while those not remodeled immediately will be upgraded over the next two to three years.

One of the major steps in converting the stores, he said, is filling in the split aisles, "which enables us to increase linear footage by 25% and allows us to add up to 4,000 items per location."

Each conversion takes four days, and stores remain open during the changeover, Duncan added. He said the 17 stores where conversions have been completed "have shown very positive signs, with sales and customer counts up."

Duncan said Ralphs made several changes at the Hughes stores earlier this year after Fred Meyer acquired both southern California chains last spring, including adding Ralphs private-label items, remerchandising some categories, changing the front-end equipment, replacing shelf strips to accommodate Ralphs reorder numbers and putting employees in new uniforms.

Delineating some of the unique characteristics of the new Fresh Fare format, Duncan cited several of the store's offerings, including the following:

* Madrage hams from France, Columbus Renaissance processed meats from San Francisco and 80 SKUs of cheese in the service deli.

* A rotating series of new-to-Ralphs HMR items in the hot deli section.

* New varieties of cookies, dough products, muffins and Danish in the service bakery.

* More than 400 SKUs in produce, and a floral section featuring single-stem flowers as well as the chain's usual assortment, plus home floral delivery.

* A service seafood counter with 25% more variety, including salmon imported from Scotland.

* A service meat counter, plus a self-service meat section featuring only Choice beef, plus Ralphs' Chef to Go HMR product line.

* More than 200 SKUs of wine in the liquor alcove, plus expanded selections of spirits and micro-handcraft beers.

Tom Dahlen, senior vice president of marketing for Ralphs, told SN part of what makes Fresh Fare unique "is that it has all the ambience of a specialty food store but a full product assortment that allows the customer to do her complete grocery shopping."

In the store's center, he said, Fresh Fare displays specialty products at eye level to showcase the variety, while commodity products "are readily available in quantity but played down in terms of shelf presentation."

While Fresh Fare is designed to appeal to an upscale clientele, "we had to remain cognizant of the price-sensitive shopper," Dahlen said, "so we incorporated many of their needs into the store as well."