SUPERCENTERS/CLUB STORES

JULIE GALLAGHER

Club stores and supercenters have discovered what traditional food retailers have known for a long time - fresh produce can drive customer traffic.

The clubs and supercenters promote fruits and vegetables, among other fresh foods, as a way to bring customers in more frequently.

An official at Bentonville, Ark.-based Wal-Mart Stores declined to comment specifically on the retailer's overall produce strategy, but did elaborate on the company's interest in organics. Wal-Mart is tailoring the size of the organic produce selection to complement local demographics, said Bruce Peterson, senior vice president of perishables for Wal-Mart.

"We've always offered organic produce at Wal-Mart, but certain stores carry a broader selection," he said. "Traditionally, when you think of Wal-Mart you might think of an opening price-point customer, but we're trying to tailor individual store's assortments to the customers that shop in that particular store. Some may be looking for a certain type of baked beans, while other seek a broad selection of organic fruits and vegetables."

Sam's Club, Costco and BJ's Wholesale Club all carry a limited selection of fresh produce.

"They usually don't focus on this area by expanding their selection, but by better managing what they have and eliminating things that don't work," said Michael Clayman, publisher of Warehouse Club Focus, Foxboro, Mass.

In 2004, BJ's trimmed produce prices by 12% by cutting out the middleman, he said. The company "used to use a third-party produce distributor, but now BJ's distribution system is in-house," Clayman said. "This has enabled them to reduce some costs, increase the quality of the produce they offer and increase their margins. They've talked about the positive effect that this strategy has had on sales over the past three, four, five quarters."

BJ's is expanding produce in about one-quarter of its stores.

"We're literally doubling the linear footage of produce," said Mike Wedge, president and chief executive officer of BJ's, in a fourth-quarter and fiscal-year results conference call last month. "We continue to see produce running 18%-20% [comparable-store sales] gains even as we cycle some of the impressive gains we've had the year prior."