GELSON'S SEES NEW GROWTH OPPORTUNITY

ELLIOT ZWIEBACH

LOS ANGELES -- For Gelson's Markets, an eight-store operator in this market, the pending merger of two of southern California's largest chains may open up some growth opportunities.

Allan Scharn, president of the upscale Gelson's operation, recently told a Food Industries Sales Managers Club luncheon here that he believes the new company that results from the merger of Ralphs Grocery Co., Compton, Calif., with Food 4 Less Supermarkets, La Habra, Calif., may sell some stores. This could be a positive development for Gelson's, he said, because the retailer wants to expand.

The downside, Scharn said, is the merger will further concentrate the food-retailing sector.

"As an independent, we are obviously concerned about a process that puts more resources in the hands of fewer players," he said. "And we have great apprehensions and anxieties about the possible consequences of any industry consolidation."

Still, Gelson's needs to grow to keep pace with the southern California marketplace, which is maturing, Scharn said.

"But the challenge has always been finding the right kind of locations that fit our demographic requirements and where the economics will work," he said.

Gelson's, an Encino, Calif.-based division of Arden Group here, opened its last new store in February 1990. It operates service-oriented stores that tend to be in upscale neighborhoods.

One new venture for Gelson's is the purchase of a shopping center in Calabasas, Calif., which the company intends to redevelop, Scharn said.

Bob Stiles, Gelson's vice president of marketing, told the sales managers' club that Gelson's hopes to expand an old Alpha Beta store on the property into a 40,000-square-foot Gelson's with extensive inside and outside dining areas. The reopening is scheduled for the fourth quarter of 1995.

In a question-and-answer session, Scharn said:

· Although Gelson's oversees the operations of four Mayfair Markets here, it has no plans to merge the two chains under the Gelson's name.

"We decided years ago to retain the two separate identities because of different physical characteristics of the stores and the neighborhood demographics," he said.

· Gelson's has no plans to invest in Efficient Consumer Response systems, though it is monitoring industry developments.

"We like to think of ourselves as a forward-thinking, leading-edge company," he said. "But in the case of ECR, we've taken the approach of watching developments to see if the rhetoric is an accurate presentation of what's happening."