PALM SPRINGS, Calif. -- Gary Michael, chairman and chief executive officer of Albertson's, said in-store cafes don't fit into the company's goal of providing its customers with one-stop shopping.
Hot bakeries, however, have a place in the store, but there is room for improvement, said Michael, a speaker at the annual National Deli Seminar of the Deli Council of Southern California held here earlier this month.
"I think bakeries are an important part of one-stop shopping," he told the audience of deli and bakery buyers and suppliers during a question and answer period following a speech he gave on training issues. "Everybody has a version of one-stop shopping, but ours is more conservative. We think bakeries are part of one-stop shopping. I don't think cafes are. I don't think chocolate factories are." Michael said Albertson's, which operates about 690 stores in the Western and Southern United States and has plans to open 55 units this year, sees perishables overall as the "entrance fee" to the supermarket business, with "no ifs, ands or buts about it. If it doesn't start there you can stop, you needn't go any further."
While some supermarket companies are rethinking whether they should continue with hot bakeries in their perishables mix because of the labor costs involved, Albertson's plans to keep them, Michael said.
The company's strategy is to operate high-volume bakeries with 40% of the product baked on site and 60% obtained from outside sources.
"You just can't bake and produce the items at store level that you once could," he said. "We're making a [return on investment] on our bakeries, finally, with our philosophy of outsourcing."
Products and packaging must be improved, he said. "We've got to take that outsourced [product] and make it look like it was baked in the store," he said. "The fact that it doesn't look that way today is as much our fault as anybody else's."
Michael called packaging in in-store bakeries "awful." "We make decisions on a lot of things based on what's the cheapest thing to do and not how it's going to look for the customer," he said.
"Quality perishables" tops a list at Albertson's Michael presented called "What we have to do every day to sell one more item." And that selling is particularly important for an everyday-low-price operator like Albertson's which doesn't have two-tier pricing to bring in shoppers, Michael said.
Next on the list: "The store has to be full. Things in the grocery store are consumable, and they should sell and sell fast," Michael said.
Third is sampling. "Remember, 60% of the people coming into the supermarket want help. Any time you can give them help with dinner or give them an idea, that's why we do this," he said.
Cross-merchandising is next. "It is extremely important in this business today, especially in non foods," Michael said.
Then comes point-of-sale advertising. "This doesn't mean price comparing necessarily," Michael said. "Once you have a person in the store you have to assure them they are in the right place and are getting the right price," he said. "I like things that say, 'Buy me.' "
Finally, there is "front-end convenience."
"We have probably 620 million customers going through our checkstands, and our goal is to make every one of those transactions right," he said.
All aspects of running a successful company, Michael said, take second place to having good employees.
Albertson's has been working to cut back on the industry's perpetually high turnover, especially in the deli and courtesy clerk positions, with careful hiring and employee recognition programs.
"You have to have an attitude of recruiting people, and you're going to have to train them and in some cases finish their education," said Michael, who advocates hiring people from within the community of a store to reflect the neighborhood.
Customer service is key and rewarded. "Outstanding customer service brings customers into the store. As a result that increases sales," Michael said.
Albertson's has a program called "Service First," which recognizes employees for service above and beyond expectations.
