Auchan to clothe Chicago hypermarket by year-end - hypermarket to add apparel

Discount Store News, May 22, 1989 by Arthur Markowitz

Auchan to Clothe Chicago Hypermarket by Year-End

BRIDGEVIEW, Ill. -- Auchan will transform its new food and hard goods combination store here into a typical hypermarket when it adds a 30,000-square-foot apparel department by the end of this year.

That Auchan would open a 130,000-sqaure-foot store in this Chicago suburb this month without an apparel department (see DSN, May 8, page 7) demonstrates the $7.5 billion French retailer's willingness to experiment, to tailor stores to specific markets while making the long-term investment to learn more about American retailing.

Auchan debuted in the United States last fall with a 230,000-square-foot full-line hypermarket in Houston (see DSN, Oct. 24, 1988, page 1) that included apparel and such other categories as tires and major appliances which aren't being added to the Bridgeview store when it is expanded to 160,000 square feet.

Auchan's goal is to become an American, rather than a foreign, retailer in its U.S. operations, Jacques Marcelin, president and ceo of the Auchan Group and chairman of its American subsidiary, O'Field, told DSN.

"We came to the U.S. to become an American company and we certainly need time for this," he said, adding that "six years is the time in which to make a decision on further expanding within the U.S."

David Skinner, general manager of the Bridgeview store, said Auchan would basically draw shoppers within a three to five mile radius, with some customers coming from as far as 10 miles. The store's core trading area of about 88 square miles is home to about 210,000 people.

Its immediate competition includes a Venture, co-anchor in the Bridgeview Court Shopping Center, a K mart across the street, and nearby Zayre and Warehouse Club stores. The broad range of other retailers within the trading market is exemplified by Sears Ltd., Montgomery Ward, Service Merchandise, Fretters, Office World and Phar-Mor Pharmacy. Supermarkets include two major Chicago area chains, Jewel Food and Dominick's, and independent operators.

Auchan researched the Chicago market for over a year, using a market research firm to survey what consumers wanted and shopped competitors to ascertain what was actually being sold. This information was used to determine the store's mix and the price points of its 40,000 sku's.

The assortment breaks down to approximately 70 percent food and 30 percent nonfood (and is expected to swing to about a 60-40 ratio when apparel is added). Food takes up about two-thirds of the approximate 80,000 square feet of selling space.

Skinner explained that Auchan has gained experience in the food business through its parent's operation of a franchised Cub Foods unit in Joliet, Ill., for almost four years.

"We took a pragmatic approach as we knew the grocery business but we hadn't learned the non-food business," Skinner said. "We decided to focus on hard lines to develop professionalism in that area before moving on to apparel."

The proposed apparel section will be added to the front right side of the store which now houses the sporting goods department. The physical extension will result in a slight reconfiguration of that area of the store, including extending the checkout section which now contains 36 lanes.

Auchan executives declined to comment on expected sales, gross margins or profits beyond noting the parent company, through its Houston and Chicago ventures, had made a long-term commitment to the American market.

Skinner said trade projections of $1 million a week in sales at Bridgeview "aren't unreasonable." He expected food to account for about 80 percent of the store's volume and non-foods 20 percent, with general merchandise capturing a larger share when apparel is added.

Auchan expects to be profitable by adjusting its mix to focus sales on higher-margin categories. "There is a margin in non-food different from grocery and there is a margin in perishables different than dry groceries," Skinner said.

PHOTO : Target president and ceo Robert Ulrich to vendors: `You're going to hear the word `together' a lot.

PHOTO : Inside Chicago's first hypermarket are Christian Clerc-Batut, president of Auchan parent, Midfield/Foodfield, and Jacques Marcelin, president and ceo, Auchan Group.