MONTEREY, Calif. -- Seven months after Ralphs Grocery Co. launched a private-label beef program last April, its same-store beef sales had grown an average 3.7%.
That is according to Charles Bergh, group vice president for the Compton, Calif.-based chain, who spoke on the development and the initial success of the product line, called Ralphs California Beef, at a meeting here of the Western States Meat Association late last month.
"What we found is that our sales of beef pounds per thousand customers increased from 116.5 pounds in 1992 to 120.8 pounds in 1993," said Bergh. The results were based on same-store sales from April through October 1993. The numbers were calculated by dividing the beef tonnage by customer count in thousands.
"That is a phenomenally big increase year to year in our industry, particularly when you consider that overall supermarket sales in the Los Angeles marketplace ran negative to flat for the same time period," commented Bergh.
And the importance of having a strong beef program can't be underestimated, he suggested.
"While beef consumption has decreased during the past 10 years, the category continues to play an important role in sales dollars and impact on total customer purchases," said Bergh.
Of total store sales, said Bergh, "beef is not only the largest total single dollar producer in perishables, but the largest dollar producing category in the store."
In terms of the retailer's own internal sales data, said Bergh, only soft drinks, with weekly sales of $2 million, come close to beef in total sales. The company reported annual sales of $2.7 billion last year. Bergh didn't disclose beef sales figures.
Bergh said supermarket shoppers
can be divided into two categories: the primary and the secondary shopper. "It is the primary shopper that we want to attract and hold," said Bergh. "Meat customers drive total store sales because they are clearly primary shoppers.
"If they are satisfied with your meat department, you have a pretty good shot at making them a customer and having them shop your entire store."
Ralphs claims the beef to be more palatable and tender than traditional supermarket beef, and backs it with a double money-back guarantee. Since its debut, it has been promoted with television, radio and print advertisements, as well as in-store signs and point-of-purchase brochures.
Bergh said that while brand identification has been used successfully in the turkey and chicken industries, and to a lesser degree for some pork products, the beef industry has been too segmented to "provide for such a concept on a widescale basis."
However, he said, "the California Beef concept is based on the belief that many southern Californians believe that a product produced in California is better and that they would prefer to purchase such products."
Ralphs conducted four years of research before going forward with the creation of California Beef, which uses only grain-fed Holstein cattle procured through five feeders, all based in California's Imperial Valley.
Bergh said research showed that while there has been an industry improvement in costs and yield due to cross-breeding, there has been a downgrading in product palatability.
In a study by the Department of Animal Science of Texas A&M University, College Station, Texas, samples of beef taken from around the country were found to vary widely in tenderness.
"All grades had tenderness variability with some choice being less tender than some select," said Bergh. "The bottom line is there is a lot of tough meat in the meat cases of American supermarkets."
And, continued Bergh, the importance of tenderness cannot be overstressed. "Marketing research says tenderness is a primary determinant of [consumer] satisfaction."
The Texas A&M study also showed that the keys to meat palatability are the genetics of the animal and the age at slaughter.
"Animals with a sound genetic background fed for a long period of time on high energy rations will produce consistently tender and flavorful meat regardless of marbling present," said Bergh.
"Overall our strategy was to develop a beef product that had demonstrable quality differentiation and then aggressively market that product to our customers."