CONSUMER-FRIENDLY APPROACHES

FRED MEYER REACHES OUT

At Fred Meyer Inc., the center store concept of marketing groceries and nonfood passed away back in 1991, when produce was repositioned to the middle of the food side of Fred Meyer units.

Produce is now sold in kiosks, and people shop around circular wet racks, all of it merchandised under a farmers' market for a fresh concept of quality.While Fred Meyer helped to redefine the concept of one-stop shopping in the late 1980s, the retailer has not emulated warehouse clubs as do some retailers, said Curt Lerew 3rd, senior vice president and director of the food division.

"We are not putting in 'club-pack' sections," he said. "We only merchandise a few items that way, the ones that make sense, like 150-sheet fabric softeners.

"We are clearly not intent on selling super jumbo packs of everything we offer," Lerew added.

Nevertheless, Fred Meyer hangs its hat on living large in retailing, carrying nearly 225,000 stockkeeping units per store. The stores are so big that "center store" doesn't really exist as a concept, Lerew said.

One way Fred Meyer reaches out to consumers in the grocery end of the business is through direct couponing done right at the store, through Actmedia.

In each unit, about 15 to 20 instant coupon dispensers hang on shelves. This has been going on for about two and a half years, Lerew pointed out.

Another way Fred Meyer reaches out to consumers is by matching the needs and wants of its customers. "Take coffee, for example," Lerew said. "The Pacific Northwest has become widely known for its appetite for coffee."

Accordingly, he said, Fred Meyer carries not one but three complete lines of whole coffee beans so that people can take it home and grind it themselves.

Another outreach campaign has been the successful Nutrition Center, a special section of healthful foods.

CUB'S ADAPTIVE NEW STANCE

ATLANTA -- Cub Foods Stores' Atlanta division has boldly adopted a zero-based strategy, throwing out all the old rules by coming up with a revolutionary format.

Shoppers in its new stores -- the first is set to open this month -- will find perishables on the right side of the store while nonperishable groceries will be housed on the other side, rather than in the center with perishables wrapped about them.The idea is to make it easier for consumers to buy what they want when they want it, according to Jack Coppinger, division president.

"Our market research undertaken to see how Cub stacked up against the competition suggested that we had to change our approach to respond to the changing needs of the consumer of the 1990s," Coppinger said. "We had to make the shopping experience as convenient as possible.

"The new format allows the frequent shopper intent on making a purchase of a few items, mainly perishables, to move quickly in and out of the store so he or she can get home," Coppinger added. "For full-blown trips by those who typically do all their shopping at one time, the format is no obstacle, but simply requires a different traffic pattern."

As Coppinger explained, Cub will continue to ensure the sales of high-volume and high-margin grocery items by positioning them in places where consumers can easily reach them.

For example, paper products such as bathroom tissues and paper towels, items that Coppinger said are used on a daily basis 98% of the time in most U.S. households, will be in the left rear of the store for easy access.

Soft drinks, another key category that can generate as much as 10% to 12% of store volume, will be situated along the left wall of each new Cub store.

But "format alone will not guarantee success," Coppinger warned.

"To be judged by consumers as a supermarket of quality and value, retailers need to keep in mind three things," he said. To differentiate themselves from rivals, stores in the 1990s must:

· Stock heavily on national brands, since manufacturers do the bulk of marketing for retailers, helping to spur demand and to lure shoppers into supermarkets.

· Be price-competitive, since in groceries there is no difference between a can of tomato soup sold by one supermarket and that sold by another. Price dominance will thus be the key to sustaining customer loyalty.

· Maintain wide variety. The Cub tradition is to bury the competition by carrying twice as many stockkeeping units for each product category, such as 25 to 30 assorted kinds of peas, compared with the dozen or so that a typical 30,000-square-foot supermarket might carry.

"In perishables you can differ through quality and service," Coppinger said. "In the grocery category, variety and price will differentiate you from the pack and help you reach out to the consumer."

Despite the increasing competition from warehouse clubs, Coppinger emphasized that there will always be a place for nonperishable goods sold in supermarkets.

"Dry grocery items may represent a smaller percentage total of store sales than before -- although I don't think any real hard data taking into consideration domestic gross deflators has ever been done -- but the category is not shrinking in dollar sales," he said.

"The dollar sales are the same, but the percentage is probably smaller because people are eating more perishables, which has helped lift total store sales, and thus shrink the percentage for dry groceries," Coppinger said.

SCHNUCK TAILORS ITS EFFORTS

ST. LOUIS -- Successful outreach for Schnuck Markets here lies simply in matching product mix to consumer demographics.

The chain is diligently keying in on the personality and ethnic flavor of neighborhoods it serves to meet the needs of its customers, according to Sue Kunstmann, communications specialist."Of course, we sell most of the same products through general sets in all of our stores, but demographics shape the variety of what we offer," Kunstmann said.

This strategy is encouraged by the growing diversity of the population in terms of age, ethnicity and affluence, Kunstmann added.

"Micromerchandising is certainly the wave of the 1990s," she said. "We foresee a greater trend of changing general sets to further satisfy the individual needs of neighborhoods."

Schnuck relies on electronic scanning information to help ensure that certain items are available in sufficient supply and move through distribution channels in response to consumer profiles.

This means that a store regularly visited by Jewish people will carry more kosher foods.

Another example of tailoring the mix to match shoppers' needs is indicated by the way Schnuck does business in Columbia, Mo., a college town with a large student population. Kunstmann said students have a wide choice of single-serving items as well as hot and cold carryout foods, such as ravioli or sub sandwiches.

AMERICAN'S TWO=PRONGED STRATEGY

SALT LAKE CITY -- Private labels and club packs are two center store product trends that American Stores is capitalizing on to meet the changing needs of its consumers.

American Stores operates supermarkets under its Lucky Stores, Jewel Food Stores, Acme Markets and Star Market Co. divisions."The quality of private-label products has certainly improved over the last few years, and will become pivotal in cementing consumer loyalty," said Meredith Anderson, vice president of public and government relations for the company.

"The increasing importance and broader selection of private-label products will be a critical factor to success in the grocery department in the 1990s," she said.

Success also will be determined by the ability of its divisions to keep warehouse clubs from wresting away more sales in key grocery categories. To that end, American Stores is embracing a concept Anderson said 10 years ago would have been unthinkable -- Max Packs, or club-sized packs of grocery items.

"We've introduced this concept to further enhance the image of one-stop shopping in our units," Anderson said. "Consumers can purchase single-serve items or, if they're accustomed to extra-large sizes, they have that choice now."

In groceries, club packs that sell well are typically multiple packs of paper products such as towels and tissues, as well as institutional-size laundry detergents.

Canned goods move well, too, Anderson noted. Consumers can now select from a wide range of multiple pack items such as a mini-pallet of green beans -- 12 cans shrink-wrapped together.

Beyond the progression of these trends, Anderson pointed out that the center store grocery set is unlikely to radically change in any of the American stores chains.

"Lucky is an everyday-low-price retailer, so products will be marketed and priced accordingly. Jewel will remain more promotional in its marketing efforts, as will Acme. Star will continue to be an upscale supermarket and market its groceries in that manner."

A Multifaceted Response at Vons

ARCADIA, Calif. -- Vons Cos. has implemented a number of strategies, including multiple formats, technology and restructuring to ensure customer retention and to win over new shoppers.

The West Coast retailer is known for its distinct store formats, each tailored to the specific needs of its customers.

"We respond to the needs of a wide spectrum of customer segments with a dense and growing state-of-the-art store network employing several names and store types," said Julie Reynolds, a Vons spokeswoman.

To increase market share and to compete more directly with warehouse clubs, Vons developed Expo, a new concept targeting price-conscious consumers.

Under the Expo banner, the retailer offers the same kinds of jumbo value-pack items found in warehouse clubs that have lured customers away from supermarket grocery aisles. Vons offers its ValuePacks in many areas of the store, ranging from grocery to service deli to health and beauty aids to produce. On another front, to win the loyalty of grocery shoppers, Vons recently underwent a restructuring that allows for reinvesting cost savings to generate lower prices and increased promotions, Reynolds said.