LUCKY, FRY'S FUEL VOLUME WITH PROPANE TANK PROGRAM

JOEL ELSON

PHOENIX -- Fry's Food Stores of Arizona, headquartered here, and Lucky Stores' southern and northern California divisions, hope to ignite their nonfood sales with a gas grill propane tank-exchange program merchandised on the supermarket parking lot.

With outdoor barbecue cooking popular in the West, and sales of gas grills expanding 10% to 15% annually, supermarkets can capitalize on this growing market, noted Charlie Ory, operations director at AmeriGas Partners, a subsidiary of UGI Corp., Valley, Forge, Pa., the bulk fuel-refilling source.

"Supermarkets have always serviced the charcoal grill market, and now they're providing the same kind of service for the propane grill," Ory added.

The chains display filled propane tanks in metal cages large enough to hold 18 20-pound gas cylinders. They are positioned close to the store's front door.

The popularity of cooking outdoors has created the need for easy and convenient refilling of empty propane gas tanks, pointed out Frank Bussemeier, Fry's grocery director.

Besides customer convenience, Fry's decision to start a propane tank-exchange program was also based on Arizona's climate. "Cooking outside is pretty much year-round," said Bussemeier.

The amount of time consumers spend driving around in search of a refueling source to fill an empty grill cylinder also sparked Fry's interest in the program, Bussemeier added.

Fry's tested the propane tank-exchange program March 15 at seven stores, with plans for a chainwide rollout targeted for completion at all 56 stores this month.

The four-week pilot generated 15 turns per-store, which the chain is predicting should grow to 30 to 40 turns per-store per-week during the height of the summer months.

Store clerks accept all grill cylinders for trade despite their condition, rust level or parts needed. "Customers bringing us their empty tank in any condition can exchange it for a full one, even if it has a hole," added the retailer.

"In the Phoenix area filling a propane tank runs between $8 and $10, compared with stopping at a Fry's and picking up one already filled for $14.99," said Bussemeier.

Although refilling a grill tank at a grocery store is about $5 higher than at other propane-refilling stations, the convenience factor outweighs the higher expense for some customers.

A front-end head clerk or higher management staffer accompanies all propane-refueling customers to unlock the outside tank display. Payment is first made in the store.

Fry's sells new, empty grill tanks for about $26 in its stores. Customers without tanks to exchange can also buy a filled one from the outdoor display for about $32.

Lucky's Southern division, Buena Park, Calif., started testing the propane display units in May at 43 Los Angeles and 12 Las Vegas stores. Plans call for possibly expanding the program to other Southern area stores, according to the supplier.

While Lucky's has the program under consideration, plans haven't yet been completed, a company spokesman said.

The retailers plan to unleash a promotion campaign in June with television ads and $1 discount coupons, said Ory.

Store personnel are trained to test in-coming tanks for any leaking by squirting soapy water on the cylinder's exterior and watching for bubbles of escaping propane.

The two chains make 26.5% profit on an exchanged tank, and 27% on an outright sale of a used, filled tank, according to the supplier.

AmeriGas inspects traded cylinders and those that cannot be brought up to Department of Transportation standards are scrapped, added the supplier. The tanks are refilled at the AmeriGas facilities in Glendale, Ariz., Los Angeles or Gardena, Calif., and tested before they're sent back to the retailers in a direct-store-delivery program.

All refilled tanks are fitted with a new, quick spring-loaded coupler that doesn't release gas until the valve is fully connected. They are secured with a chain in the 30-inch-deep by 54-inch-tall by 41-inch-wide display cage.