KING SOOPERS EXPANDS GM IN SIX STORES

LIZA CASABONA

DENVER, Colo. -- King Soopers, a Kroger-owned chain based here, expanded general merchandise sections in six stores, continuing a strategy the retailer has been exploring in other banners, according to industry and media sources.

Merchandise, including a wide range of small appliances, kitchen linens, housewares and office supplies, is now available in the stores.

Kroger has put an emphasis on general merchandise throughout its operating companies and banners, notably with its high-profile Kroger Marketplace and new large-format Kroger stores that also feature expanded nonfood categories.

"Essentially, America's largest grocery store company has decided that selling general merchandise will, in the long term, be more lucrative than selling fresh foods," said Perry Caicco, managing director, CIBC World Markets, Toronto.

The recently opened 105,000-square-foot Kroger unit in Anderson Township, Ohio, demonstrates this new emphasis, Caicco said. It carries kitchenware, jewelry and office furniture, among other categories.

Kroger, Cincinnati, did not respond to requests for comment.

Calls to King Soopers stores found that some locations are stocking two full aisles of general merchandise products. Items include microwaves, blenders, toasters, friers, crock pots, George Foreman grills, kitchen linens, pots, pans, dishes and other products merchandised together. In a few locations, the section is near the meat department, store associates said.

The expanded sections range from 192 to 356 square feet, according to a report in the Denver Post early this month. Stores involved in the launch are in Arvada, Aurora, Colorado Springs, Firestone, Lafayette and Littleton, Colo.

A greater offering of books and magazines have been made available, too, according to the Denver Post report.

Kroger's nonfood [sales] ratio, excluding jewelry stores and convenience stores, in 2004 was 11%, and its overall nonfood growth rate was 9%, according to research from Bloomberg and CIBC World Markets.

Kroger is not alone in pursuing a general merchandise-focused strategy. Caicco pointed out that Loblaw, in Canada, and Tesco, in the United Kingdom, have allocated more resources to nonfood.

"Kroger's drive toward general merchandise, which draws on the strengths of their Fred Meyer division, seems on the surface to be consistent with recent practices of better international grocers."

Both Loblaw and Tesco, however, operate under different circumstances than Kroger, he said. Trying to compete with Wal-Mart Stores and Target in nonfood categories is a bit of a "me-too" strategy, said Caicco, who added Kroger can't compete on price.