BUILDING THE AVERAGE RING

David Merrefield

Is it possible to focus on external competitive threats to the point that a retailer loses sight of the potential inherent in increasing the average ring yielded by customers already in the store? It's quite possible, according to Richard King, president and chief operating officer of Albertson's, Boise, Idaho, and he said so during an interview with SN Senior Editor David Orgel. Results of the interview form the basis of this week's front-page news feature.

"I think we got hung up with where the business was going. We got hung up on worrying about [alternate formats] rather than on what we could do for the customers we have coming into our stores every day," Richard King said. "If we just sold one more item, at an average cost of $1.50, we could add about $1 billion in [annual] sales."

Albertson's is a big company with nearly 800 stores generating a top line in excess of $12 billion, so a little incremental spending from each customer rains money. But some of the ideas he has to build dollar volume from the existing customer base may be capable of forming a rain shower over any sized company. Let's take a quick look at some of those ideas:

Tweak the food-service offerings to avoid offering a great number of bland products. Instead, concentrate on a smaller menu executed with flair. Such a strategy will give the store a shot at competing with home-meal-replacement providers.

Use cross-merchandising to underscore the importance of selling meals since finished meals are what shoppers envision while moving through the store. Build end-aisle displays around meal ideas and what it takes to make full meals. Making suggestions to shoppers pays off too; ask, "how about Parmesan cheese or mushrooms with that?"

Recognize that everyday low pricing can become a boring approach. If that's your core strategy, salt some aggressive promotional activities into the EDLP humdrum.

Use a store-within-a-store approach to compete with vertical category killers. Sweep together products related to, say, baby care or pet supplies, and offer a good mix at the right price. Make the store a destination choice.

Make sure private labels haven't proliferated uncontrollably in number. Consider whether it makes good sense to reduce the number of labels, perhaps by putting all under the store name. Let a store label work full time for the store banner.

Finally, don't forget the most basic aspect of all: Make sure the parking lot is convenient and handy to use (and I would add safe). Make sure store access doesn't require solving such a complex set of problems that it won't be used by any but the most motivated shopper.

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