SUPERMARKETS BUCK TREND, REPORT CHEERY HOLIDAY SALES

LISA A. TIBBITTS ELLIOT ZWIEBACH

NEW YORK -- It was a merry holiday season for many supermarket operators.

Unlike retailers in other channels of trade, food retailers ended the fourth quarter with strong sales gains, supermarket executives told SN during a nationwide survey conducted last week. Even the snowstorm that hit the Northeast and Midwest the week before Christmas did not have a major impact on sales, according to supermarket retailers in those regions.

Many retailers apparently prospered during the season by merchandising a broader array of offerings and promoting high-quality items, such as high-ticket hams and chocolates. Value-added foods such

as gift baskets and general merchandise items like gift wrap were also top performers.

Meanwhile, mass merchandisers and department stores generally found consumer spending sluggish during the holiday season.

At Harvest Foods, Little Rock, Ark., Mike Marcussen, director of human resources, consumer affairs and corporate communications, said same-store sales were up 3.5% for the holidays and overall sales, including revenues from five new stores, were up 15%.

He attributed the increases to strong ad features, including Bryan boneless hams for $1.37 a pound; Coca-Cola, 2 liters for 89 cents, and Cool Whip topping, 8 ounces for 68 cents.

"We had a really strong assortment of Christmas items across all departments with good pricing," Marcussen said. "In general merchandise we did well with a lot of accessories, including lighting, cards and decorations."

At Ukrop's Super Markets, Richmond, Va., sales were strong despite the entrance of a new competitor, Hannaford Bros. of Scarborough, Maine, into the market.

James Ukrop, vice chairman and chief executive officer of Ukrop's, said sales for the week preceding Christmas were "extremely good -- up 10% over last year.

"At the holidays, people want to be sure that what they buy is good, and we are seeing more people depending on us for prepared meals -- 35,000 sold at Thanksgiving and probably a like number at Christmas," Ukrop said. "And we sold more party platters this year."

In short, Ukrop said, his company has been using a number of different tactics to ward off competition: "Hannaford has entered our market, and we've been preparing for them for the past year, and what we've done is paying off for us." Mike Selenka, general manager of Roundy's Pick 'N Save stores, said the company recorded its strongest sales increases of the year during the fourth quarter. Roundy's, based in Pewaukee, Wis., operates 66 Pick 'N Save units.

"We had a very successful season. We had some bad weather, but it wasn't crippling," he said.

Roundy's has been emphasizing all of its perishables departments, he said, particularly value-added meats. The chain also promoted fruit baskets, as well as a variety of general merchandise items, including gift wrap and plush toys.

"We've made a move to try and upscale the items that we promote and advertise. We're doing more value-added, more perishables," Selenka said.

Daniel Lescoe, vice president of sales and marketing at Big Y Foods, Springfield Mass., said the preholiday snowstorm did not have a major impact on sales.

"Although sales were down for the days following the storm, we picked up a lot of business the couple of days prior, so it sort of balanced it out. People usually wait until the last minute anyway because they want their foods fresh," he said.

Big Y's marketing activities focused on two primary factors: convenience and quality, Lescoe said.

"The thing we concentrated on this year was trying to assist the customer with types of things that made it easy for their entertaining -- such things as spiral hams. At $3.99 a pound in the deli, that's a big-ticket item. We did a big job with vegetable platters, bakery platters, seafood platters -- things that were easy and

quick," he said. Jack Brown, chairman, president and CEO of Stater Bros. Markets, Colton, Calif., said holiday sales were up 10% over last year, "despite the fact there are four Kmarts in our area going out of business, which was taking money out of the market."

He said Stater featured a broader selection of products this year, such as fresh flowers at all stores, instead of at just one-third of the stores a year ago. In addition, Stater put Russell Stover boxed candy into all its stores just for the holiday for the first time ever. Brown said the candy "had good sell-through."

Russ Kates, president and owner of Steele's Markets, Fort Collins, Colo., said sales were up 5.8%, compared with a 3% increase last year.

Both the bakery and meat departments strongly contributed to the increases. Hot sellers were 10-inch apple pies at $3.99 each, smoked bone-in hams at $2.09 per pound and smoked turkeys at $1.69 per pound. Kates said the stores ran out of the hams and turkeys, which are prepared in the company's own smokehouse.

Steele's also "aggressively" pushed seasonal items ranging from chocolate to greeting cards. Operators in other retail channels did not have similar experiences because, according to one analyst, consumers are spending selectively.

Gary Giblen, managing director of Smith Barney, New York said, "Food is a small-ticket item, and in this kind of economy, people will spend more on small-ticket indulgences."