ALBERTSON'S CONSIDERS NEW HISPANIC, COMBO FORMATS

ELLIOT ZWIEBACH

BOISE, Idaho -- Albertson's here said last week it is "looking at opportunities" for two new store formats -- one catering to Hispanics and a drug store with greatly expanded food offerings.

An Albertson's spokeswoman told SN the company is exploring both formats but is uncertain if or when either one will be tested.

"These are two concepts that are being studied within our marketing department as we look at opportunities to expand our offerings," Ertharin Cousin, group vice president, public affairs and government relations, said.

Industry analysts contacted by SN were uncertain about the prospects for success of a Hispanic format, noting that an attempt by Vons Cos. in Southern California in the late 1980s was unsuccessful. However, the analysts seemed more intrigued by the prospects for a drug store format with expanded food.

According to Cousin, Albertson's views the possible development of a Hispanic format "as an opportunity to grow our business. Our ongoing goal is to be the neighborhood food-and-drug chain of choice, and the Hispanic population is a growing sector we serve through our traditional food stores.

"But as we look at the competition in Hispanic neighborhoods, we see bodegas that target that customer. Our goal is to develop a format that can compete head-to-head with those bodegas and any other stores that target the Hispanic community.

"That's a community we know how to serve, and what we don't know we're learning by continuing to meet with people inside and outside our company to develop the best solutions."

What a Hispanic-format store might look like has not yet been determined, Cousin said. "That's something we're still working on.

"Meanwhile, we're working inside our existing boxes to be sure we have the right products on our shelves in those communities, and for the future, we're looking at a box dedicated to meeting the needs of Hispanic customers."

Cousin was reluctant to identify where Albertson's might open its first Hispanic-format store. "We're looking at communities across the areas we serve."

Asked if the chain might recycle existing real estate rather than build new locations, Cousin replied, "There might be different solutions in different markets that could include recycling or building from the ground up."

Whereas the chain's existing combination stores operate under the Jewel-Osco or Albertson's-Sav-on names, the reverse combos would operate with the drug store name first -- Osco-Jewel or Sav-on-Albertson's -- Cousin said.

"The goal would be to grow sales within an existing box," she explained. "We're looking at how we can expand food offerings so there is enough of a food presence to put the food name on the building alongside the drug store name."

Meredith Adler, an analyst with Lehman Brothers, New York, said there is clearly a demand for a Hispanic format that's well-executed. "But it hasn't always been easy to execute that business," she told SN. "Vons tried it with Tianguis, and it didn't work.

"But it's still a good idea because Hispanics are great customers, with big families that eat together. In addition, they cook from scratch and buy a lot of perishables, which makes them an attractive demographic."

Gary Giblen, senior vice president and director of research for C L King Associates, New York, said a Hispanic format "certainly makes sense, though whether or not Albertson's could execute it well is another matter."

He said Tianguis failed "because Hispanics wanted to become part of the mainstream."

Mark Husson, an analyst with Merrill Lynch, agreed, noting that retailers who try a Hispanic format "have to avoid talking down to Hispanic customers and treating them like something other than Americans, because the reason they're here is they want to be Americans."

Regarding the reverse combo drug store, Husson noted that Walgreens already operates drug stores with significant grocery sections. "But," he said, "I don't think drug stores are a big-enough draw to pull shoppers in two or three times a week."