ROUNDY'S REACHES FOR HIGHER PERFORMANCE

WEST PALM BEACH, Fla. -- Roundy's corporate stores have the No. 1 or No. 2 market-share position in most areas in which they operate, "but that's both the good and bad news," Robert A. Mariano, chairman and chief executive officer, told investors at the Consumer and Industrial Growth Conference 2004, sponsored here last month by Wachovia Securities.With average weekly sales of $516,000 per store,

WEST PALM BEACH, Fla. -- Roundy's corporate stores have the No. 1 or No. 2 market-share position in most areas in which they operate, "but that's both the good and bad news," Robert A. Mariano, chairman and chief executive officer, told investors at the Consumer and Industrial Growth Conference 2004, sponsored here last month by Wachovia Securities.

With average weekly sales of $516,000 per store, "we come from a strong base," Mariano said, "but we're not satisfied with that kind of performance, and we still have a ways to go."

One way Roundy's hopes to improve its performance is by centralizing merchandising and procurement functions for its stores, he pointed out. "We're centralizing those functions on a very deliberate, orderly basis and staying very focused so that we lose nothing in the process," Mariano said.

"We're always looking for opportunities to do things more efficiently, but once we extract those costs, we try to put those savings back into customer-based activities to enhance sales," he explained.

At the Rainbow stores in the Minneapolis-St. Paul area that it acquired in mid-2003 from Fleming, Roundy's is seeking to boost performance by establishing labor productivity standards, Mariano said.

"We started integrating those stores around Labor Day, and our progress has been consistent with our expectations. After years of neglect, we've accomplished a great deal, and now that our full merchandising staff is in place, we expect to be able to give customers in the Twin Cities more of what they're looking for.

"We're spending a fair amount of money on consumer research this year to understand what they like, but we can't turn four years of neglect around in the next four minutes."

Roundy's also is putting more emphasis on perishables, "and we think we can do a great deal in our stores in Milwaukee and the Twin Cities with natural and organic items because we believe those markets are ripe for those products," Mariano said.

In private label, "we're just beginning to scratch the surface in terms of product and distribution," he added.

On the wholesale side of its business, Roundy's is working with consumer packaged goods companies to find ways to leverage its purchasing power, "and with the management people we have in place now, we will be able to get that done," Mariano said.

The company also is hoping to cut costs on the wholesale side by eliminating the number of touches, he said. "We look at total inventory turns, not just turns in the warehouses or the stores, so later this year we will start a data synchronization program with vendors so we can look at ways to take costs out of the system from the point of origin through the retail shelves," he explained.

Roundy's also is making sure it gets the full benefits of the software programs it installs. "Often managements don't do enough of that, but if we don't change the work process, then people fall back into their old ways and we don't get the maximum advantage from the software packages," he said.