SUMMER SALES ARE WARMING FOOD RETAILERS' HEARTS

SN SURVEYFood retailers around the country are posting good results this summer, with a range of promotions helping to drive improved sales, supermarket operators and industry observers told SN last week.Mark Husson, equity analyst at Merrill Lynch, New York, told SN this summer is "an improvement over the spring" although he said the gains did not appear to be evenly distributed.He noted that the

SN SURVEY

Food retailers around the country are posting good results this summer, with a range of promotions helping to drive improved sales, supermarket operators and industry observers told SN last week.

Mark Husson, equity analyst at Merrill Lynch, New York, told SN this summer is "an improvement over the spring" although he said the gains did not appear to be evenly distributed.

He noted that the large supermarket companies are expanding their sales space by an average of 4% and still achieving 2% to 2.5% comparable-store sales hikes "despite opening new stores and cannibalizing their existing markets."

Husson said the strongest region in the country appears to be California, spurred in large part by comp-store gains of 4% by Safeway, Pleasanton, Calif.

Other major operators that are performing well, according to Husson, are Kroger Co., Cincinnati ("They are no longer suffering"), and Wal-Mart Stores, Bentonville, Ark. ("They continue to open lots of supercenters").

The weakest region, he said, is the Southeast. Still, he noted that at three Southeastern retailers whose volume had been slipping -- Ruddick, Charlotte, N.C.; Food Lion, Salisbury, N.C.; and Winn-Dixie Stores, Jacksonville, Fla. -- "the most recent sales figures have been a bit better, but they have had to spend money to drive volume back into the stores."

Overall, Husson said, he doesn't expect supermarket sales to continue to climb. "I think the economy's going to slow down a bit more," he observed. While supermarket sales do not tend to fluctuate with economic downturns, he noted, "The consumer may decide to forgo the marginal purchase of a smoked salmon" or other luxuries.

At the store level, SN found retailers with lots of good news to report.

At Genuardi's Family Markets, Norristown, Pa., sales are also ahead of last summer's pace, Bill Wolfe, Genuardi's director of grocery, general merchandise and HBC, told SN. Wolfe credited a favorable climate in Pennsylvania, New Jersey and Delaware, where Genuardi's does business.

"It's been hot, but not extremely hot, and there has been no drought this year like we were having at this time last year," Wolfe said. "I think that has meant people are having more picnics and cookouts at home."

Items selling well at Genuardi's include fresh fish -- "I think people are cooking more fish on the grill this year," Wolfe said -- as well as canned soft drinks and salty snacks.

"We're doing outstanding numbers on salty snacks," Wolfe said. "We're in a good salty-snack market, but I can't really explain the upsurge."

Wolfe is expecting the summer to remain strong as the company expects to open a new store in Lionville, Pa., in August.

Bob Piccinnini, chairman, president and chief executive officer of Save Mart Supermarkets, Modesto, Calif., said, "Generally speaking, our volume is at an all-time high, and business is very strong.

"We had two back-to-back big weeks at the end of June and the first week of July. The economy is strong, but it's not clear why sales are going so well.

"In the Bay Area, where we operate six of our 97 stores, all the former Luckys that were converted to Albertson's are struggling, and we're seeing huge increases there. But here in the Central Valley there were no Luckys, so that deal has had no impact on the vast majority of our stores.

"During May and June, we sponsored the Winston Cup NASCAR event at Sears Point, and we promoted it extensively for eight weeks. As with any advertising, it's hard to know for sure what gives sales a lift, but we think the NASCAR promotion was very successful for us.

"With the NASCAR event over, we have no major themes planned for the rest of the summer. The thrust of our programs will be running hot ads with high/low pricing, which is our regular format."

Philip J. Quillin, president of Quillin's, La Crosse, Wis., said, "Our sales are running 5% better than last year."

He attributed the increase in part to the weather. "Last summer was really, really hot," he said. "This summer has been warm, but livable. People can go outside and be active."

Also driving sales, he noted, is a car-giveaway promotion. Quillin said it's the car itself -- a mint-condition 1955 Chevy Bel-Air -- that has captured shoppers' imaginations. Each week this summer, all nine Quillin's stores have been choosing a random customer who will be eligible for the grand prize. On Aug. 2, the 90 finalists will each be given a car key, and the winner will be the one whose key starts the classic Chevy.

Norman Mayne, president and chief executive officer of Dorothy Lane Market, Dayton, Ohio, said outdoor promotions at his company's two stores have helped put this summer's sales pace ahead of last year's.

"We're having fun while creating fun promotions for our customers," he said. Among these are a recently completed ice-cream social and salmon barbecue held in store parking lots; an Italian-sausage cookout and a "Baby Derby" are on the schedule for later this summer, Mayne said.

Among the hot-selling items at Dorothy Lane are prepared foods, he added.