DLJ CONFERENCE

NEW YORK -- Add Ralphs Grocery Co. to the growing list of supermarkets that have recognized pharmacies as a necessary part of their store layouts.Ralphs, based in Compton, Calif., will be rolling out pharmacies to a number of new and existing stores throughout 1999, said Robert Miller, chief executive officer of parent company Fred Meyer Inc., Portland, Ore. Miller spoke before an audience of analysts

NEW YORK -- Add Ralphs Grocery Co. to the growing list of supermarkets that have recognized pharmacies as a necessary part of their store layouts.

Ralphs, based in Compton, Calif., will be rolling out pharmacies to a number of new and existing stores throughout 1999, said Robert Miller, chief executive officer of parent company Fred Meyer Inc., Portland, Ore. Miller spoke before an audience of analysts and investors Feb. 10 at Donaldson, Lufkin & Jenrette's Annual Food & Drug Retailing Conference here.

Miller was part of a panel that included Joseph Pichler, chairman and chief executive officer of Kroger Co., Cincinnati, and W. Rodney McMullen, chief financial officer of Kroger, which is in the process of acquiring Fred Meyer.

Of the Ralphs pharmacy rollout, Pichler said, "That's a growth area that's very exciting to us and potentially very profitable."

Terry O'Neil, manager of corporate communications at Ralphs, said the retailer plans to open "several" pharmacies this year. He declined to give a specific number.

Ralphs, as of its fiscal-1998 third quarter, operates 308 stores in southern California with an average size of 37,000 square feet.

O'Neil said Ralphs already has opened two pharmacies, one in a Whittier, Calif., Ralphs Marketplace store in December, the other in a Temecula, Calif., store Feb. 10. Those pharmacies, each 800 square feet, "are the model for future pharmacies in Ralphs," he said.

O'Neil described the departments as "full-service, store-within-a-store pharmacies" designed to bring added convenience to shoppers. They include over-the-counter medications, vitamins, herbal supplements and other health care products, O'Neil said. The pharmacies also have meeting areas where pharmacists will counsel customers on the proper application of medicines, nutrition and disease management.

To promote its first two pharmacy openings, O'Neil said, Ralphs staged "health fairs" at the Whittier and Temecula stores, offering free nutrition counseling and blood-sugar, cholesterol and blood-pressure testing to customers.

He said Ralphs, unlike many supermarkets ramping up their pharmacy operations, currently has no plans to offer drive-through service.

Although Alpha-Beta, a chain Ralphs acquired several years ago, operated pharmacies, O'Neil said, "Basically, this is a brand-new venture for our company. It's just one more reason to shop at Ralphs."

O'Neil said the pharmacy program was developed in response to customer requests and had been in the works well before the Kroger-Fred Meyer merger was announced. He added, however, that the merger will only help Ralphs' pharmacy operation.

"It will allow us to be better, to offer better services and prices to our customers."

At the DLJ conference, Miller and Pichler raised the subject of Ralphs' pharmacy program within the context of synergies and cost savings the executives hope to realize for Kroger, Fred Meyer and their subsidiaries as a result of the merger.

Pichler said Kroger's enhanced buying power and longstanding expertise in pharmacy will be factors as Ralphs opens new pharmacies.

Post-merger, Kroger, with more than 1,300 pharmacies, will be the country's eighth-largest pharmacy chain, according to the National Association of Chain Drug Stores, Alexandria, Va.

In November Ralphs hired Alice Haines, a former Rite Aid executive, as its director of pharmacy operations, O'Neil said.