SMITH'S OPENS 13TH POSTALANNEX CENTER

JOEL ELSON

LA JOLLA, Calif. -- Smith's Food & Drug Centers, Salt Lake City, opened its 13th PostalAnnex here last week.

Two more PostalAnnex centers are slated for stores in El Cajon and Vista, Calif., next year, and others in different markets could follow, according to industry sources. Smith's officials declined to comment on the franchised postal operations at its stores. Expansion of these franchised centers enhances Smith's one-stop shopping concept, the sources added. "One of the things Smith's tries to do is put as many services under one roof as possible," said David Wilkey, vice president of marketing for San Diego-based PostalAnnex. "They have a florist, one-hour photo, discount pharmacy, bake and video shop, nutrition centers and bank all under one roof. They believe the center is a natural complement to one-stop shopping." The chain leases retail space to PostalAnnex, and PostNet Express, Las Vegas, which operates two 300-square-foot centers in Utah and 10 in Las Vegas. At the 1,300-square-foot La Jolla store, PostalAnnex pays Smith's a flat fee per-square-foot for the leased space, according to observers. The lease agreement has a five-year renewable clause.

The specialty centers offer a wide selection of postal and business products and services including postage stamps, packaging, money orders, photocopying, mailing, shipping, fax service, post office box rentals, typing, word processing, laminating and binding, telephone answering services and dry cleaning.

PostNet even offers customers a computerized gift-giving service of gourmet chocolates and flowers, said Dale Harelik, chief financial officer of PostNet.

"The centers also solve staffing headaches for Smith's. It doesn't have to pay employee benefits and wages to those selling postage stamps, making money orders and photo copies or sending faxes at those stores," he said. At the La Jolla store the center is located inside the lobby and is open from 8 a.m to 8 p.m., Monday through Saturday, and on Sunday from 10 a.m. to 4 p.m.

Wilkey said these centers can be operated more efficiently and profitably as a leased section rather than as a retailer-operated department.

"Supermarkets have offered shipping services, key cutting or postal services, but they don't seem to have employees with the experience to do a first-class job.

"The employees assigned to that area usually aren't 100% focused on providing these added services. Often, they must split their time between other tasks such as in video rentals and other product areas not associated with postal and business services," Wilkey added. He said PostalAnnex franchisees go through a three-week training program that qualifies them as authorized United Parcel Service and Federal Express shipping centers.

An average 1,200-square-foot PostalAnnex center can do between $250,000 and $600,000 in sales, said Wilkey.

Founded by Jack Lentz in 1985 with a single store in University City, Calif., PostalAnnex now has 170 locations in shopping centers in Western states.