CENTRAL GROCERS CO-OP COOKING UP TEST OF KITCHEN BOUTIQUE

JOEL ELSON

FRANKLIN PARK, Ill. -- As part of an ongoing effort to increase the general-merchandise mix in its 260 member-operated stores, Central Grocers Cooperative here is pursuing a new kitchen boutique concept for a possible test in the fall.

According to Bob Schaeffer, general-merchandise buyer, the boutique would offer medium- to high-end-quality products in an 800-square-foot display area, including some cookware and gadgets priced up to $50, which would be supplied through Central's 800,000-square-foot warehouse.

"We would set aside some space at a retailer for a test of the boutique to explore the idea of making housewares more attractive and inviting for the consumer," he said.

Central Grocers' goal is for the boutiques to become destination stops, Schaeffer said. "The mass merchandisers and fast-food operators constantly go after supermarket traffic. What we must do is sustain sales and try to present products creatively to recapture these general-merchandise sales."

The idea is part of a larger, two-year plan, begun last January, to expand general-merchandise selections and to grow retailers' general-merchandise sales.

"This will permit our retailers to be more competitive with the discounters and mass merchandisers," Schaeffer said.

Some 8,000 to 10,000 general-merchandise items are now slotted in about 50,000 square feet of Central Grocers' warehouse, supplying about 60% to 70% of retailers' pet supplies, housewares, hardware, stationery, lightbulbs, baby items and seasonal programs, said Schaeffer.

With the increased general-merchandise mix in its warehouse, retailers "will be able to source as many of these products at the best possible prices, instead of relying on outside rack jobbers," he explained.

Expanding the amount of merchandise offered through Central's in-house nonfood program "will reduce retailers' product costs 20% to 30%," Schaeffer said. About 70% of Central's retailers use a service merchandiser for at least some general merchandise, he added. Avoiding third parties will raise margins to about 38%, Schaeffer said.

As the general-merchandise expansion approaches its year-end completion, "retailers will probably expand space in those categories as sales grow," said Schaeffer. General merchandise now accounts for about 6% of total store sales among the co-op's members. Store sizes are in the 10,000- to 90,000-square-foot range.

Central also plans to expand its offerings in cameras, picture frames and lawn-and-garden, and to beef up in-and-out and seasonal shipper promotions, which will include disposable aluminum foilware, stationery and photo products.