VIDEO FADES TO BLACK IN KROGER'S ATLANTA AREA

MATTHEW W. EVANS

ATLANTA -- Video rental is out and whole health is in at the Kroger division here.

"We'll have all of our video departments closed and converted to another use, one of which is the whole-health department [Nature's Market], by the first of next year," Ron Hoffman, the division's manager of store development, told SN.

The move, however, does not signify a complete departure from video for the retailer, company spokesman Gary Rhodes stressed; Kroger is staying in the business. It's just an example of how in some market areas and selected retail units, video is being phased out, he said. "It's not companywide," Rhodes explained. "There are other divisions [in addition to Atlanta] and stores removing the video rental department and replacing it with something else, in many cases Nature's Market."

The strategy exemplifies two simultaneous trends in food retailing -- a decline in video and an upsurge in whole-health marketing. The conversions will only affect for-rental videos, Rhodes said. Other uses for the former video departments, ranging in size up to 600 square feet, could reportedly include expanded meal solutions areas. Kroger operated an estimated 700 rental departments earlier this year, which included 50 Blockbuster leased-space arrangements.

Nature's Market will use the same video department footprint in the stores where it is rolled out in Atlanta, according to Hoffman. He wouldn't specify how many of the division's 164 units would see the video-to-vitamins switch, saying only that, "we are resetting quite a few stores" in this manner. At least 10 Atlanta units where this conversion is taking place will be completely remodeled stores, according to Hoffman, which are slated to be finished by Thanksgiving.

The Nature's Market sections will offer more than the typical number of vitamin/supplement stockkeeping units sold in the division. "This would be a larger set," Hoffman said, without providing details about vitamin/supplement expansion volume. Merchandised in the whole-health departments will be "everything except bath and body -- mainly natural foods and the expanded vitamins and herbals," Hoffman noted. Nature's Market offers nearly 4,500 SKUs of health, nutritional and organic foods, according to another company spokesman.

The Atlanta initiative started earlier this year and demonstrates the company's whole health commitment. Kroger Chairman and Chief Executive Officer Joseph A. Pichler, in remarks made at the end of the company's fiscal year in January, announced then the introduction of 34 Nature's Market sections.

In May 1999, within an 80,000-square-foot test store about 10 miles north of the company's headquarters in Cincinnati, a 2,800-square-foot Nature's Market was opened, the local press reported. Located in Winton Place, Ohio, the test unit's video department was shuttered and photo department moved to make way for the whole-health department.

By the end of fiscal 2000, "we expect to have more than 400 natural food departments in our stores," Rhodes said. "In the pre-merger Kroger divisions, those departments are called Nature's Market. And in the Fred Meyer division, those departments are called Natural Choices."