VALU, CENTRAL GROCERS DEAL TO HIKE SALES

JOEL ELSON

FRANKLIN PARK, Ill. -- Central Grocers Cooperative here expects to boost nonfood sales several percentage points as a result of a distribution program begun this month with Valu Merchandisers, based in Kansas City, Mo., the nonfood subsidiary of Associated Wholesale Grocers, located in Kansas City, Kan.

The co-op's more than 200 retailers are counting on overall general merchandise and health and beauty care sales increases of 8% to 10% with replanogrammed sets and a wider mix.

Central Grocers used to purchase most of its nonfood through its own warehouse, but the programs often languished in stores mostly due to the lack of a marketing and merchandising staff or an enthusiastic cadre of food brokers and manufacturers reps to provide assistance to retailers, said Bob Shaefer, general merchandise buyer for the cooperative. Valu Merchandisers confirmed the agreement, but could not be reached for further comment.

"Nonfood has been a huge challenge for our members," Shaefer said. He explained that the brokers have not made the investment in time or staffing to provide the marketing and merchandising direction to members.

"This new supply arrangement," Shaefer stressed, "positions our members with a more complete nonfood offering, including pet accessories, stationery and home office supplies, housewares, film and batteries and other essential nonfood promotions such as seasonal campaigns," the buyer said.

"Under our new supply program, Valu Merchandisers will ship store-level orders to Central Grocers warehouse in a cross-docking arrangement," Shaefer added.

Cooperative retailers operate stores that range in size from 7,500 to more than 90,000 square feet. Valu Merchandisers is providing various size shelf schematics, which the store employees will use to remerchandise the nonfood sets. All stores are targeted to have their resets completed by April 1, the buyer said.

In some cases, he noted, "retailers might expand their nonfood sets as they remerchandise the categories. Stores are getting six to eight turns a year in nonfood, so it only makes sense to expand the faster turning sections," Shaefer added.

"With more complete departments and, in some cases, new sections, retailers can plan seasonal category promotions. They can better compete with the mass merchandisers, including Highland, Ind.,-based Strack and Van Til Supermarkets," Shaefer said.

Central Grocers will continue to purchase some items direct like coffee filters, motor oils and windshield washer fluid, and high volume, controlled-label HBC items under the Landers brand.

Shaefer said a kitchen boutique that Central Grocers had introduced to its members "never got off the ground last year. But a kitchen shop with upscale housewares, cookware and kitchen gadgets that Value Merchandisers has developed will be going into our stores," the buyer explained.

The program with Value Merchandisers also offers the opportunity for coordinated ads and promotions among the members, added Shaefer. He noted that Central Grocers retailers work on 33% to 38% profit margins in general merchandise and about 25% in HBC.