FIRST AND FOREMOST

NEW YORK -- There's no topping the efforts supermarkets will pursue to grow the top line. That is the apparent message as companies retool their formats and juggle numerous merchandising programs in attempts to maximize volume and existing facilities. cticing neighborhood marketing, expanding customer-loyalty card programs, expanding corporate brands and taking other approaches to gain a competitive

NEW YORK -- There's no topping the efforts supermarkets will pursue to grow the top line. That is the apparent message as companies retool their formats and juggle numerous merchandising programs in attempts to maximize volume and existing facilities.

cticing neighborhood marketing, expanding customer-loyalty card programs, expanding corporate brands and taking other approaches to gain a competitive edge.

Many executives pointed to the benefits they were drawing from experimental stores and retooling of formats.

Among the companies appearing at the event were Kroger Co., Cincinnati; Safeway, Pleasanton, Calif.; American Stores Co., Salt Lake City; and Albertson's, Boise, Idaho. "We're focusing on food and drug and new formats, including Kap's Kitchen & Pantry for prepared meals and Health 'n' Home for home health care [category killer home health care superstores]," said Victor Lund, chairman and chief executive officer of American Stores. "We learned things from Health 'n' Home and Kap's that have already been rolled out into our existing stores."

Tom Smith, president and CEO of Food Lion, Salisbury, N.C., pointed to the benefits drawn from the company's larger experimental stores, which are 45,000 square feet, as opposed to the standard 34,000- to 38,000-square-foot stores.

"We're using those five stores as experimental units -- to allow us to try some new things and experiment with things we don't have room for at other stores, to see what works and what doesn't.

"The 34,000- and 38,000-square-foot stores are a direct reflection of what we've learned at the experimental stores."

According to Smith, the larger stores give Food Lion "an opportunity to expand on such categories as health and beauty aids, pet foods, delicatessen and drinks and to alter the mix of items to see what kind of potential they have. We are also stressing convenience and changing layouts to make stores more convenient to move in and out of."

Smith noted that one of the latest goals is to build on the home-meal replacement momentum by extending sales to other parts of the store. "The deli is the meal-replacement area for [meals to be used] that night, but we're trying to convince consumers there are other meals to take home and put in the refrigerator."

George Golleher, CEO of Ralphs Grocery Co., Compton, Calif., said his company's prototype store of about 50,000 square feet enables the chain to "hone in on our strengths. We have high ambience, quality, variety and service. There are new signature programs, full-service floral and an in-store prepared-foods program we call 'Chefs on the Run.' "

At Fred Meyer Inc., Portland, Ore., Robert Miller, chairman and CEO, said the company has added service delicatessens, bakeries and fish counters to all food stores "and removed walls to open the stores up for more cross shopping."

Executives stressed the role of local marketing in their operations. American's Lund said in southern California the company is running three separate ad versions every week.

Lund and other executives lauded the performance of customer-loyalty cards. At American, a seafood coupon program linked to the loyalty card has improved sales by about 35% at the Jewel Food Stores operation, Lund said.

Also driving sales for operators are private-label programs, which are still on the growth path. American's program is at 19% of sales in grocery, and the company is looking to take it to 25%, Lund said. Currently there are more than 2,000 store-label items.

Food Lion recently advanced private label to 16% from 12%, and expects it to reach 18% this year, Smith said.

Is there a natural ceiling to private-label growth? If there is, the nation's biggest operator hasn't found it. "Even the traditional private-label categories like cereal are continuing to do well," said Joseph Pichler, chairman and CEO of Kroger. "HBC private label is double digit. We're seeing good returns from newly introduced products on the grocery side. We're now about 25% to 26% private label on the grocery side, not including produce and meat."

Steve Burd, president and CEO of Safeway, noted the company's improved same-store sales picture was the result of a number of factors, including more-competitive pricing, enhanced customer service, expanded private-label lines and improved store standards.

Other topics raised at the conference included the following:

Many operators continue to retool their stores to take on category killers in pet and other areas.

While many companies are attempting to better coordinate some portions of their procurement, executives said they recognize the need to keep much of the decision-making local.

Supermarkets continue to hold their head high in the battle with supercenters. A few operators indicated that supercenters are now thought of as just one of a range of important competitors to supermarkets. One tip from Albertson's King: "Stay competitive against supercenters as long as it takes, not just during the opening."