JACKSON, Miss. -- Jitney-Jungle Stores of America here is planning a major shift in its mix of store formats that will emphasize its upscale Premier combination stores as it works toward a full integration of Delchamps, Mobile, Ala., and girds for increased competition in its markets.
Jitney will increase fourfold the number of its combination stores, trading under the Jitney Premier and Delchamps Premier banners, from 11 to 44 by the end of 1999, company executives said.
In the meantime, the company will cut its conventional Jitney-Jungle and Delchamps supermarkets to 138 from the current total of 184.
The number of Jitney's Sack and Save and Megamarkets discount stores will drop from 21 to 19.
"The discount stores are what I like to call one-trick ponies," said Michael Julian, chief executive officer. "If somebody comes in who's lower-priced than you, what do you do then? It's our smallest group and diminishing all the time. [Sack and Save] is probably not a long-term venture.
"Conventional stores work in small-town USA," he continued. "We'll always have a hundred conventional stores."
Julian said the Premier stores are strong gross-profit performers and will provide the best defense against competitors, especially superstores. He noted also that most conventional Delchamps supermarkets are big enough to accommodate the Premier format, which means Jitney, as it converts them, will save millions of dollars on store enlargements.
"You will see a very significant increase in sales," said David Black, senior vice president of finance and chief financial officer. "Our future is in these combo stores."
Jitney, Julian said, is giving special attention to the Mobile market in 1998, closing five or six Delchamps stores and converting the rest to the Delchamps Premier format in an attempt to hold on to Delchamps' No. 1 market position. Jacksonville, Fla.-based Winn-Dixie Stores, the other major player in Mobile, is converting all its stores there to supercenters, Julian said.
Jitney executives spoke about the chain at the Donaldson, Lufkin & Jenrette Food and Drug Retailing Conference in New York.
Ronald Johnson, Jitney's president and chief operating officer, said the company expects 23 new store openings in 1998 by competitors in its six-state operating area, which comprises Mississippi, Arkansas, Alabama, Florida, Louisiana and Tennessee: nine Winn-Dixie units, eight Wal-Mart Supercenters, three Albertson's and three Krogers.
Johnson said this lineup is limited, "based on what's happened in past years. It's almost like we got a breather. But our attitude is we're not going to give up our sales under any conditions to the new competitors that are moving into the market."
Two keys to Jitney's defense strategy, Johnson said, are aggressive weekly Gold Card, or frequent-shopper, promotions and an expansion of its new Jitney Gold private-label line. A Delchamps Gold Card launch is scheduled for March 1, according to Johnson.
Julian said he expected the growth of Jitney Gold to boost the private-label portion of Jitney's total sales to 23% from the current 21% penetration. About 16% of Delchamps' total sales come from private label.
Jitney will make capital expenditures of about $60 million in 1998, including $46 million on stores -- four new units, three remodels and 11 conversions -- and $14 million on "other assets," mainly technology, Black said.
Julian added that Jitney was considering making another acquisition in the next year to 18 months.
He said the company was interested in Seessel's Supermarkets -- the 10-store Memphis, Tenn., operation owned by Bruno's, Birmingham, Ala. -- but was outbid earlier this year by Albertson's, Boise, Idaho, which paid $88 million.