ALBERTSON'S NEW COMBO STORES BOOST GM, HBC

MARK HAMSTRA

BOISE, Idaho -- Albertson's here has expanded its general merchandise and health and beauty care offerings by 25% in two markets by combining its traditional supermarkets with its drug store brands.

The company earlier this month completed the conversion of seven Albertson's stores in Tucson, Ariz., to Albertson's/Osco combination stores and eight Albertson's in Reno, Nev., to the Albertson's/Sav-on combination format. Both markets already have freestanding drug stores bearing those respective brands.

"What we've done is that we've added more drug stores into the market," said Karen Ramos, spokeswoman, Albertson's.

The 15 combo units offer a distinct separation in the store between the supermarket grocery business and the nonfood area, which includes the pharmacy. The general merchandise and health and beauty care categories that had been located within the traditional supermarkets have been transferred to the drug store side of the store and expanded.

Ramos said the stores now contain a selection of about 50,000 general merchandise items, vs. 40,000 before the resets. The typical store sets of 750 linear feet of nonfoods have been expanded to an average of 1,250 feet, with an emphasis on core health and beauty care categories like cosmetics, vitamins, analgesics and skin care.

To accompany the expanded cosmetics offerings, Albertson's added beauticians in the combo stores.

The stores also added one-hour photo labs and expanded their selections of photo merchandise to mirror what the company typically provides in its drug stores. The greeting cards and gifts departments also were expanded to drug store size, and more seasonal goods were added.

Private-label merchandise in the nonfood areas bears Albertson's new store brand: "Sav-on Osco by Albertson's."

The changes mirror what Albertson's Jewel/Osco division has been doing for 40 years in the Midwest, where the company has 198 Jewel/Osco combo stores.

"It is a successful format for us," Ramos said.

To accommodate the added merchandise, some of the shelves were narrowed. The original supermarket product selections have been retained.

Ramos said the company might consider adding the format to other markets.

Jon Hauptman, vice president, Willard Bishop Consulting, Barrington, Ill., said focusing on high-margin GM and HBC items in a one-stop shopping environment makes sense for supermarkets.

In addition, he applauded Albertson's effort to serve aging baby boomers.

"Developing an offering that provides health and wellness solutions and at the same time highlighting private-label health and wellness products is just a very, very strong solution," he said.