SALES GROWTH STRATEGY SET BY CERTIFIED OF CALIFORNIA

ELLIOT ZWIEBACH

LOS ANGELES -- Certified Grocers of California here expects to increase sales by more than $1 billion over the next four years through a series of marketing and technology initiatives.

Al Plamann, president and chief executive officer, said at the annual meeting that the moves will create a "virtual chain" among the wholesale cooperative's independent members.

"Integrated retail chains have a built-in advantage over our organization because they can manage product flow through the distribution system and achieve significant cost advantages," he said.

"For Certified and its members to be competitive, it's necessary for us to create a virtual chain, with an efficient, state-of-the-art distribution system that keeps us on an even footing with competition and provides us with efficiencies to create a seamless flow of information." The company aims to reach sales of $3 billion by the year 2000. In fiscal 1995, Certified's sales were $1.82 billion, the company reported. For the first six months of this year, sales were $960 million, 13.2% ahead of last year's first half. To make it easier for retailers to do business with it, Certified is:

Implementing an impact pricing program.

Launching a new interactive ordering system.

Adding a new customer service center.

Continuing efforts to upgrade technology and streamline the organization.

The goal of impact pricing is "to stimulate customers to purchase more products from us, to incentivize them with a simplified fee schedule and to tie together purchases from our grocery and specialty foods divisions," said Chuck Pilliter, senior vice president and president of Certified's northern California division.

The program is being tested at 16 Certified member stores. It includes a co-op program available to all members, which reduces the number of pricing brackets, and a partnership program, which has qualifying requirements and reduces costs by assessing fees at the category level rather than the invoice level.

The company's current fee schedule has 34 price brackets for orders of $5,000 to $18,000 per average delivery per week, while the new schedule has eight brackets for weekly orders of $8,000 to $22,000, Pilliter told SN after the meeting. The simplified fee schedule, he said, "is easier to understand and makes it easier for the customer to plan his purchases around fewer brackets."

Under the new schedule, there's just one four-week pricing period per quarter instead of 13 periods a year, "which means the fees will change less often," he noted.

The partnership program, he said, is tied to minimum annual purchases. Southern California participants must buy from eight of the 10 product categories they're offered, and northern California participants must buy from all five product categories they're offered. Certified's new interactive ordering will be "a system that allows a member to have real knowledge of his order size, the allowances in effect and the cubic dimensions of the load, all in advance of order transmission," Pilliter said. The company expects to install a pilot ordering system by late spring and to have it available to all members by late August. The wholesaler is adding a customer service center, Pilliter said, "to provide a single point of contact for members to get immediate answers daily" to questions they have about Certified's operations, such as details about the new pricing, where an order is in the distribution chain or how to read invoice charges. At the meeting, Plamann stressed the need to keep pace with advances in technology. "The challenge is to convince all successful independents to implement systems as basic as scanning -- to bring their operations up to date." About 60% to 70% of volume out of Certified goes through stores that scan, but only 40% of the company's members have scanners, Plamann told SN.

"We are working with those companies to develop an easy-to-afford front-end system that will allow neighborhood stores to move into the electronic age."