PORTLAND, Ore. -- Fred Meyer Inc. here this year plans to intensify efforts to use food as a vehicle to lift soft nonfood sales, according to company executives.
Those efforts include increasing national-brand selection, continuing private-label expansion, stepping up cross-merchandising between food and nonfood items, improving in-store space allocation, and boosting customer service and staff training under a program called P.A.C.E. (Please All Customers Everyday).
Comparable-store sales in food continued to far outpace those in nonfood in the third quarter ended Nov. 4, the company reported.
Curt Lerew III, senior vice president of the sales and operations group, and Kenneth Thrasher, senior vice president and chief financial officer, discussed the superstore chain's 1996 strategy in a presentation at Donaldson, Lufkin & Jenrette's Food Retailing Conference, held last month in New York.
"Our strong food sales are bringing increased traffic to our stores," Thrasher said, noting that the frequency of food shopping draws attention to nonfood departments.
Key factors in food's strong performance, Lerew said, include a focus on everyday low pricing, private label's growth to more than 20% of sales, the addition of delis and bakeries to most food locations, a monthly coupon book and a greater array of ready-to-cook and "heat-and-eat" foods. The chain's new distribution center in Puyallup, Wash., which opened last year, also has reduced store-level inventories, increased forward-buy capacity and honed logistics, he added.
For the third quarter, ended Nov. 4, comparable food sales rose 23.7%, and comparable nonfood sales increased 7.4%. Excluding stores affected by the region's crippling strikes, comparable food sales climbed 9%, while comparable nonfood sales dropped 2.2%. In the 40 weeks ended Nov. 4, comparable food sales rose 5.9%, and comparable nonfood sales dipped 1.7%. For non-strike stores, comparable food sales were up 1.6% in that time, and comparable nonfood sales fell 4.5%.
Six new stores and remodels to four existing stores are planned this year, with four new units and four remodels expected in 1997 and 1998, Lerew said, adding that the company is looking to expand into new markets.