TWO SCENARIOS

MINNEAPOLIS -- Nash Finch Co. here is expanding two pilot formats in its retail arsenal.e Food Outlet, a Hispanic-oriented price-impact store at three locations.The company said it plans to open its fourth Buy n Save early next month in Cloquet, Minn., with at least four more through the summer and fall; it opened its third WFO earlier this month in Muscatine, Iowa.All Buy n Save units are in Minnesota.

MINNEAPOLIS -- Nash Finch Co. here is expanding two pilot formats in its retail arsenal.

e Food Outlet, a Hispanic-oriented price-impact store at three locations.

The company said it plans to open its fourth Buy n Save early next month in Cloquet, Minn., with at least four more through the summer and fall; it opened its third WFO earlier this month in Muscatine, Iowa.

All Buy n Save units are in Minnesota. They are supplied by the company's St. Cloud, Minn., distribution center, which warehouses Buy n Save merchandise in two aisles "that are the reverse of the layout in the stores, so we can fill orders efficiently," William A. Merrigan, senior vice president for distribution and transportation, told SN.

According to Deborah A. Carlson, vice president for store development, Nash Finch has limited the Buy n Save group to Minnesota "because we wanted to build a market identity and to be sure we knew how to operate in rural and metropolitan areas."

Of the first four units built or planned, two are in metropolitan areas -- Brooklyn Park and Maplewood -- and two in rural areas -- Albert Lea and Cloquet.

Carlson said Nash Finch plans to expand the format out of state, on a contiguous basis, sometime in 2001.

The merchandise mix at the stores has been an evolving process, Brian A. Numainville, director of research, added. "We've tried different combinations of products -- national brands, private label, seasonal goods, in-and-out merchandise -- and we've tried different programs and learned how to market to different ethnic groups, particularly African-American shoppers."

"One thing we've found," Ron Marshall, NFC president and chief executive officer, said, "is that it's important to have a national-brand presence. These stores are 20% to 25% national brands because we believe national brands add a value halo to the store."

The stores feature sale items, identified with signs that read, STOP -- Special Temporary Outstanding Price. The company uses monthly fliers distributed at the stores as an advertising vehicle.

Merchandise is priced up to 40% below chain prices, Merrigan said, "and we're very concerned with quality. There are items we've rejected because they don't meet our quality standards."

One unique aspect of the limited-assortment stores, he added, is that all three turned profitable within two quarters of their openings.

All were opened in empty boxes, Marshall noted. "There's a tendency for companies to open limited-assortment stores in empty locations simply to absorb dead real estate. We don't believe that's appropriate. We are particular where we open these stores, and all are in the right locations."

He said Nash Finch will go into existing spaces at all future Buy n Save locations.

The company's other pilot format -- Wholesale Food Outlet -- started with two locations two years ago in Garden City, Kan., and Greeley, Col.

The company closed one store, retained the name on the 38,000-square-foot Greeley unit and converted it to a price-impact Latin-oriented format, featuring a wall of Hispanic values, Hispanic-oriented perishables and bilingual signs and associates.

Art Keeney, senior vice president for corporate retail stores, said the store has had positive comps for two years in a row.

According to Marshall, the Latin theme is important "because of the growth in the Upper Midwest of a Latin community -- a group that is profoundly under-served."

Nash Finch opened the second WFO in early May in downtown Omaha at a 28,000-square-foot former Hinky Dinky, "and in the first week we doubled the store's sales," Marshall said.

Nash Finch added some black ethnic merchandise at that store, since the store serves an equal mix of Hispanics, African-Americans and non-ethnic customers, "each of whom seems to shop at different times of the day," Marshall said

At the center of the store is a two-sided gondola with exclusively Hispanic items, mostly imports, including religious candles, large bags of masa (tortilla flour) and extensive selections of juices, soft drinks and other canned foods.

The store competes with a Wal-Mart Supercenter and a Super Kmart, as well as with King Soopers, Albertson's and Safeway, "and while we are competitively priced, we beat them all on key items," said Keeney.

According to Marshall, "We'll spend the rest of this year learning more from Omaha and Muscatine; then we'll look for new opportunities. We see potential for Wholesale Food Outlets in cities with Hispanic populations of about 15% to 25%, many of which are tremendously under-served."