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GRAND UNION HIKING HBC SPACE, SELECTION

WAYNE, N.J. -- Grand Union Co. here is reaching for new heights in health and beauty care.The 250-store chain is completing plans to add an additional six inches of shelf height throughout every one of its HBC departments."We are right now in the process of adding an additional shelf to our gondola height [in HBC]. We're going from 72 inches, at least in our Grand Union stores, to 78 inches, and that's

WAYNE, N.J. -- Grand Union Co. here is reaching for new heights in health and beauty care.

The 250-store chain is completing plans to add an additional six inches of shelf height throughout every one of its HBC departments.

"We are right now in the process of adding an additional shelf to our gondola height [in HBC]. We're going from 72 inches, at least in our Grand Union stores, to 78 inches, and that's given us, in many categories, additional space," said Mark Gillette, merchandising manager of HBC for Grand Union.

Gillette said the move will paint a public image of Grand Union as a retailer committed to improving HBC selection. The chain will emphasize more variety with the increased space, as opposed to just adding facings, he explained.

"I think it's enough [of a change] to be considered significant," Gillette stated.

But while the additional shelf space will allow Grand Union to stretch its range of HBC products, some industry observers said Grand Union's latest move is simply part of a natural evolutionthat will help the chain to survive in an increasingly competitive retail world.

"Many of Grand Union's new stores in upstate New York have been in new formats with pharmacies and extended variety in health and beauty aids, vs. a store [format] without a pharmacy," said one industry observer familiar with the Northeastern supermarket business.

"It's not really unique to Grand Union. I think most of the food operators you look at in the

Northeast segment [are increasing their HBC departments]," the observer said.

"As long as Wal-Mart or deep discounters or anyone comes in, the only way to maintain that drug store segment is to get as close to 8,000 stockkeeping units in HBC as you possibly can," added the observer.

"If you're a customer and you walk in somewhere where they've got the typical, conventional grocery store assortment of 3,500 to 4,000 SKUs and you find about eight out of the 10 items you're looking for, your thought is going to be 'Well, I guess I've got to go to a real drug store,' " said the observer.

But Grand Union's additional HBC shelving may prevent that scenario from happening by allowing it to offer consumers a broader mix of HBC products.

"In most cases, the items that were available in our large-sized planograms we're incorporating into our smaller planograms, because of the increase in space," said Gillette. He said that these items, which aren't necessarily new, will be added to increase variety by expanding HBC lines with new sizes and labels.

No new categories, however, will be added to Grand Union's HBC departments. And the company will not change the way it currently displays its products.

"I don't see it as changing the philosophy behind the way we set," said Gillette.

One philosophy that may be changing, however, in the eyes of consumers, is the market for HBC items in the Northeast region, particularly in upstate New York. Some observers say the dominance of chain drug stores in HBC categories is beginning to weaken after a long period of dominance.

"Fay's and CVS had a virtual vacuum in the region for something like the last 20 years. Now all of a sudden they're looking up and saying, 'My God, everybody is coming after us,' " said an observer.

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