CHAINS BID TO LIFT SALES DESPITE LOW INFLATION

Elliot Zwiebach

Without inflation to give sales a boost, retailers around the country are seeking more creative ways to strengthen their top lines.

While shopper loyalty programs seem to be a primary method of choice for keeping sales up, other operators are using continuities, meal solutions and more directed advertising efforts to combat the effect of low inflation.

At Furr's Supermarkets, Albuquerque, N. M., the one-year anniversary of its frequent-shopper cards has given the chain an opportunity to re-emphasize the program in ads that proclaiming, "Extreme Savings 2." -- a followup to the Extreme Savings the company trumpeted when it introduced the card program last summer.

The ads promise "5,000 deeper discounts" and show sample checkedstand receipts that indicate how much can be saved using Furr's frquent-shopper card.

According to Patrick Totman, executive vice president and chief financial officer, "It's a fairly straightforward effort, based on our initial ads, that offers a second round of all sorts of special offers."

Totman said the program has resulted in "significant sales improvements" for Furr's, although he noted the chain's overall sales have been up and down over the course of the year as a result of several factors, including a move by H. E. Butt Grocery Co., San Antonio, to lower prices; the introduction by a major competitor, Smith's Food & Drug Centers, Salt Lake City, of a loyalty-card program of its own; and ongoing competitive openings.

D&W Food Centers, Grand Rapids, Mich., is also using its Values frequent-shopper card program to build additional sales.

"As we experience a lack of inflation, particularly in groceries, we're attempting to reinforce our loyalty-card program and monitor customers we may have lost -- to entice them back -- at a time people are getting back from vacations and gearing up for back-to-school," Jeff Gietzen, president and chief executive officer, told SN.

"Our intent is not necessarily to build traffic but to drive profitable sales by reinforcing the Values program for our best and better customers."

He said the chain has been running a combination of institutional messages and item-and-price ads since mid-July to promote its D&W Values card.

The program, scheduled to rung through the end of September, includes run-of-press ads and newspaper inserts on alternating Sundays, Gietzen said. The ROP ads talk about the Values card, while the one-page inserts devote one side to an institutional message about the cards and the other side to item-and-price features for cardholders.

The chain also talks about the Values program in its regular weekly ads and uses its regular raidio spots to deliver an institutional message about the cards, Gietzen said

Food Lion, Salisbury, N.C., has enhanced its MVP loyalty-card program "by adding more focus on products customers by most," Chris Ahearn, the chain's director of communications, told SN. In addition to the basic MVP program -- which offers graduated discounts based on the total level of purchases of designated items -- Food Lion has added a Bonus Buy program, which offers flat discounts and special prices to cardholders, "which makes a significant difference in the total register receipts," Ahearn said.

The adjustments in the card program were necessary, she said, "because the marketplace has become so competitive that we felt we needed to add more value to our program by coming up with a way to enhance our cards after two-and-a-half years at a time when other operatoros were introducing them."

Rosauers Supermarkets, Spokane, Wash., is trying to combat the effect of low inflation on sales by increasing its promotional calendar, using more continuities and featuring lower prices, Larry Geller chairma, presient and chief executive officer, told SN.

The chain has been running more frequent continuities, including dinnerwear, stuffed animals, book-on-tape and bakeware, he said. At the same time it has gone to more promotional pricing with special-event sales every four to six weeks -- e.g., truckload sales, 12-hour sales and 24-hour sales.

"The continuities and special sales have enabled us to maintain our sales levels," Geller said. "Without them sales would have fallen off."

Rice Food Markets, Houston, has seen volume nearly double when it runs one-day sales in various categories at its eight Epicurean Markets. Gary Friedlander, president and chief operating officer, told SN.

The one-day sales held twice a month on alternating Saturdays, feature sales on frozen foods, breakfast foods or meat - "the category that attracts the most people, with business doubling at some locations," Friedlander said.

Rice runs the sales on Saturdays "because we want to attract people when they are in- terested in shopping, although they may not have been planning to come to one of our stores," he explained.

He said Rice limits the sale to the eight Epicurean units (out of 24 Rice Markets) "because we need to add labor from our other stores to accommodate the crowds, and we couldn't handle that kind of increase at all stores."

Rice has also gotten deeper into home-meal replacement with the recent expansion of its "Hot to Go" program, Friedlander said.

He said the lack of inflation is nothing new in Houston, "where we haven't had much inflation for many years."

Hy-Vee Food Stores, West Des Moines, Iowa, does not believe low inflation is affecting sales, Rose Mitchell, director of communications, told SN. "Our sales are increasing pretty well, ahead of the national average, and we think a lot of that has to do with consumer confidence in the strength of the economy and in their own personal situations, with people feeling they're doing pretty well and will continue to do well or better in the new future," she explained.

Helping the chain maintian its strong sales base, Mitchell said, is its meal-solutions program - available at nearly 60% of Hy-Vee stores -- "which we think is increasing sales and contributing to sales in other parts of the store as more people stop in for takeout foods and buy additional items while they're at the store." Hy-Vee's meal-solutions programs features an expanding array of departments in its in-store food courts, including traditional items like roasts and chickens, a Chinese food counter, Italian foods like pizza and pasta, expanded salad and soup bars, and sandwiches.

"And we're doing more with variety in our merchandising offering more fresh meals in prepackaged, ready-to-go forms," Mitchell said. "Our efforts are aimed at finding the right kind of packaging and putting together the right kinds of combinations, such as prime rib with twice-baked potatoes. "Mitchell also said a growing number of in-store service are contributing to sales increases -- such offering as dry cleaning, video rental, pharmacies and banks -- "because they bring more people to the store as the store becomes more of a one-stop shopping center," she noted.

To keep sales strong, Hy-Vee is also testing a frequent-shopper program at a limited number of stores, Mitchell said, "and, so far, the results are promising."

Mark McLin, president of Hometown Foods IGA, Clermont, Fla., said he hopes to pinpoint customers around each of his three central Florida stores who aren't shopping with him and then direct advertising efforts specifically at them.

"The lack of inflation is part of our motivation, since sales has been a little flat in Florida lately," McLin said. "But we're also looking for ways to build our customer base.

The first phase of McLin's effort will involve spotting -- asking customers who enter the store where they live, to enable him to determine areas of geographic weakness in attracting customers, he explained. "We're trying for a rifle effect rather than a shotgun effect, to help us avoid spending hundreds of dollars a week to distribute circulars and run ROP ads." In late September, he said, he plans to begin a series of marketing efforts using a continuity program that rewards customers with gift certificates if they spend $50 a week or more in his stores in eight out of 10 consecutive weeks; he will also simultaneously distribute weekly sheets of in-store coupons at the checkstands good for the following week on everyday commodities like milk and bread, McLin explained.

He said he also hopes to reduce wasted advertising efforts.

"Several years ago a friend said I could probably save money on advertising by going door-to-door in a two-block area around each store and telling people that if they will shop with me for the next year, I will give them $100. And I ran the numbers and, you know, he was right.

"So we hope to wean ourselves away from the vicious cycle of circulars and inserts by going to more strategically designed direct mailings," he said. "Instead of sending out 15,000 circulars a week in our area, our thinking is, why not offer a half-page or full page of ROP advertising at half the cost and spend the other half for direct mailing."

Not everyone is enjoying complete success with sales efforts -- for example, Eagle Food Centers, Milan, Ill. According to Herb Dotterer, senior vice president and chief financial officer, Eagle has gone to more aggressive price points in meat, produce and some grocery categories, "but we haven't seen any noticeable results," he told SN.

Eagle is also trying more continuities to keep customers coming back, he added.