VIDEO, PIZZA CO-STAR AT RAY'S FOOD PLACE

DAN ALAIMO

BROOKINGS, Ore. -- The combination of video and pizza is spicing up sales for Ray's Food Place. The 30-unit chain is putting in pizza stands next to video departments as it remodels existing stores and builds new ones, said Larry Hage, division supervisor. The pizza business is franchised from Moose Bros. Food Systems, Sioux Falls, S.D. By the end of the year, the retailer will have added six video rental departments and five pizza stands, he said. Ray's, which changed its name from Ray's Sentry Markets during the summer, has so far opened one new store and three remodels this year. Another new store is scheduled to open Oct. 26 and one more remodel is in progress, Hage said. "Video has been good to us," he said. "It is a very viable part of our stores and we add it to every new and remodeled store that we do." The retailer had tried the pizza program near the deli department, but it was not successful. "Then we moved it over by the video department and it took off," he said. "The combination of pizza and video seems to be the key. We are very happy with how it is working," he said. For grand openings, Ray's cross-promotes the pizza with video by offering a free rental with a pizza purchase. "We get big-time results. Our goal is not to prostitute the price of the pizza. The philosophy we work under is that we want to add value rather than reduce price," said Hage. "The free video rental gets the customer to try our pizza product and then gets them back in the store the next day when they come to return the video," he said. The quality of the pizza has made a big difference in the success of the program, he added. Ray's had tried other pizzas, but they weren't that good, he said.

"These are very good pizzas," he said. The free video promotion "is an incentive for customers to try a pizza that we are proud of. It's one of those things where, if you can get people to try it, they will be hooked, but first you've got to get them to try it," said Hage. While Ray's uses video rentals to promote its pizza, the main appeal of video to the retailer is its profitability, said Hage. For example, in a new store, "video is probably one of the first departments to come around to the parameters of profitability that we are looking for," he said. "We are finding it to be a real profit center and it ties in well with our format. We are running a conventional supermarket with a real emphasis on customer service," he said. Overnight rental rates are between $2 and $3 in most stores, depending upon the competition. Currently, 23 of the chain's 30 stores have video rental departments. The video departments are part of the stores' customer service centers, said Hage. Among the centers' other offerings are Western Union, fax, money orders, UPS and key making. The video departments use a controlled inventory system where empty boxes are on display and the actual tapes are kept behind the counter. Ray's video departments range in size from 3,200 to 3,500 units, which is an ideal size for the retailer, said Hage. "We can make money at that size and it fits in with the size of our stores," he said. The new stores are 45,000 to 46,000 square feet. "With the store sizes that we are dealing with, making another major change would involve having to reallocate square footage that we just don't have. Everything is working now. The shelf space we need to adequately merchandise our primary grocery business is covered," he said. "We've hit a level of inventories with video that we are very happy with. At that size, we don't get many customer complaints about not having what they want," he said. "The catalog titles are displayed on slanted racks, which have better capacity, while the new releases are displayed full-face on flat racks for better exposure," said Hage.