DELCHAMPS MODELS GROWTH ON ITS FLAGSHIP PROTOTYPE

MOBILE, Ala. -- Delchamps plans to use the "flagship" store it opened here last April as the prototype for four new stores and nine remodels in 1995, the company said in its annual report.

e current standard for a full-service supermarket, each store may have a different set of available services tailored to local customers' shopping needs," the report said.

The flagship store, which the company characterizes as "a shopping center inside a supermarket," is a 58,357-square-foot unit with several unusual features for Delchamps, including a pharmacy, full-service laundry and dry cleaner, cafeteria, pizza parlor and walk-in beer and ale cooler. It has expanded sections for floral, video, deli-bakery, seafood, produce and the food court and butcher shop. Delchamps plans to take the one-stop shopping approach "to new heights in the years to come," the report noted. "With a greater variety of products and services than ever before and a unique environment in which to shop, we are poised to compete effectively with not only major grocery retailers, but also the mass merchants, deep-discount stores and warehouse clubs that are expanding their percentages of sales in food items."

The chain plans to expand its selections of bulk and special discount items and its private label .

In a message to shareholders in the annual report, Randy Delchamps, chairman, president and chief executive officer, said, "While net earnings were lower than the previous year, we're in an excellent position to improve them with new emphasis on margins and more cost-effective management."

He noted that sales at stores remodeled in the past two years have increased an average of 21%, "(which) is confirmation that our chainwide expansion and remodeling program is beginning to pay off.

"The enlargement and upgrading of stores enables us to have higher-margin specialty departments and an overall larger offering of merchandise, including more of our own higher-margin brands," he said.

Delchamps operates 120 stores in Alabama, Louisiana, Mississippi and Florida. Its sales were $1.07 billion in fiscal 1994, the second consecutive year of record volume.

According to the annual report, "In last year's annual report, we stated that 1993 was the year for laying the groundwork for even higher levels of success in the years ahead. Fiscal 1994 has been the year for building the foundation of that success."