REINVENT SUPERMARKETS, PRESIDENT OF H-E-B URGES

ELLIOT ZWIEBACH

PALM DESERT, Calif. -- Supermarket operators must take bold steps to reinvent and redesign the purpose of the supermarket, James F. "Fully" Clingman, president and chief operating officer of H.E. Butt Grocery Co., San Antonio, told the Western Association of Food Chains convention here last week. "Our past and present are done," Clingman declared in his keynote address. "The challenge now is to create a future for the supermarket industry that goes beyond improving our past -- to launch the next era of our industry by beginning new traditions."

Clingman, promoted from executive vice president and chief operating officer earlier this month, is the first executive outside the Butt family to hold the title of president. He succeeded Charles Butt, who remains chairman and chief executive officer.

H-E-B has already taken several steps "to get out of the [traditional supermarket] rut," Clingman said. They include the following:

Building concept stores "that are not for profit but for ideas and breakthroughs, to discover what we don't know." The chain's two concept stores are H-E-B Marketplace in San Antonio, an expanded format with a lot of animation, and Central Market by H-E-B in Austin, Texas, which emphasizes fresh departments and specialty groceries but does not offer nonfood or branded grocery items, Clingman told SN after his speech. Both formats are "research and development" stores that provide ideas for use in more traditional H-E-B outlets, he said.

Establishing unreasonable sales increases of 10% per store per year "to create management involvement, because you can't achieve that goal without doing something differently than in the past."

Elevating salaries of hourly employees "from a minimum wage to a living wage" to retain more skilled employees in its service departments and to boost the ratio of full-time employees to 60%.

Investing $15,000 per person in about 100 corporate officers, marketing and operations directors and district managers "to enable them to reinvent their jobs so they can address the challenges of today in bold new ways."

The industry must rethink the way it does business to meet the changing needs of consumers, according to Clingman. The area that will require the greatest redesign, he said, is "bringing different and more creative choices to our customers -- not by meeting customer needs but by changing the way people live, a concept where customers and supermarkets come together to create the excitement that breathes new life into our stores, our companies and our industry."

Consumers have expressed a desire to develop stronger relationships and values in the home, "and they are dependent on us to provide meal choices that eliminate the work and time commitment to prepare meals," Clingman said.

\He suggested a variety of store formats that retailers can explore:

A four-in-one format that would encompass a conventional assortment for primary shopping, convenience needs for fill-ins, grab-and-go fast foods and a ready-to-eat or ready-to-go section similar to Eatzi's or Emily's, two retail chains geared toward home meal replacement.

A three-in-one format featuring items grouped together by meals, including breakfast suggestions, lunch suggestions (including snacks and grab-and-go) and dinner suggestions.

A value-added store with ready-to-eat foods that provides 100% value-added items; ready-to-cook-and-eat items, with 70% value-added; ready-to-prepare meal components, with 50% value-added, and basic ingredients with no value-added.