Regionals dish out larger food departments - regional discount chains - Regionals

Discount Store News, August 15, 1994

Regional discounters are just as hungry for food profits as are the national chains. Many are following the lead set by national discounters. They are expanding their food, candy and snacks area as a way to build traffic, increase customer transaction dollars and add distinction to their stores.

While none of the regionals are immersing themselves in the burgeoning supercenter business, several have taken major steps to develop food programs that answer consumer demands for convenience and quality at their local discount store.

The most developed of the food programs has been forwarded by Rose's, Henderson, N.C. Unveiled a year ago, Rose's is now looking to scale back its initial aggressive stance in grocery retailing. Company president George Jones said that while the program, called Grocery Basket, has been a success, the program had gone "too far."

"We found we don't need three salsas," noted Rob Gruen, executive vice president, merchandising. "One salsa brand will suffice."

Food accounts for 8% of Rose's business and the chain doesn't expect the mix to grow past 10% of total sales.

Last year, Rose's reconfigured its interior to accommodate 60 linear feet of new grocery products, excluding candy, snacks and beverages. Although Grocery Basket has been pared, it still features refrigerated and frozen products--still growing--and shelf-staple goods like canned meat and dry cereal, also big sellers, in a slightly smaller presentation better geared to maximize space and profitability. The goal of the department still remains the same: convenience and value.

Shortly after Grocery Basket debuted, Gruen noted that the food program aims to offer "a grocery store's greatest hits. Milk, bread, pizza, cereal, coffee, beer, soda, chips and so on are the products people shop for most often. By hitting hot price points, and not going after a business if we can't, we're seeing a phenomenal turn rate."

A number of otehr regionals are also looking to reap the benefits offered by the traffic-building food category.

Venture, for example, introduced a private label line of snacks in April that attempts to penetrate the popular premium snack business of grocery stores as well as that of rivals Wal-Mart, Kmart and Target. Called TasteWorks, Venture premiered 19 skus of cookies, nuts and juices carrying price points ranging from 99 cents to $3.29.

This fall, company spokeswoman Kim Phillips said Venture will add 10 skus of trail mix to the TasteWorks line. There are no immediate plans to extend the cookies and fruit juice offerings, she said. Unlike the cookies, juices and nuts, the trail mix program will be available in pegable bags.

TasteWorks offers a color-coded packaging system for its products in easily identifiable wrappers: orange logo for cookies, red for juices and purple for nuts. Trail mix is an extension of the nuts category.

Ames, still sorting out its direction for the future, recently jumped on the PL food wagon, introducing Exclaim, a soda label sold exclusively at the store. The program debuted in the discounter's July 17 to July 23 ad circular. Introduced at five 2-liter bottles (67.7 oz.) for $3, the regular price is 79 cents each.

Until recently, the regional chains have kept private label and category expansion outside of the food, candy and snacks category, opting for more profitable lines of merchandise. Private label foodstuffs has been out of the question, as development costs are too high. However, expansion of branded foods has gone well beyond the salty and sweet snacks offerings and the obscure vendor of canned fish.

Discounters, including the regionals, offer a wide variety of shelf staple products as well as a smattering of refrigerated items, especially sodas, teas and juices and increasingly, milk. Even route service for breads and cakes, some from local bakers, crop into the mix.

At Rose's, like at Wal-Mart and now Kmart, route service for bread, milk and bakery goods is evident. Recently at Rose's Henderson, N.C., unit, Hostess products were prominently displayed on a cart. In the immediate area was a table of bread loaves and rolls. Refrigerated units stocked with Pepsi, milk, assorted juices, Coke and beer were available as were such grocery items such as Stove Top stuffing mix, Hormel food cups, Uncle Ben's rice, Chase & Sanborn coffee, Lipton tea and an endcap of Froot Loops.

Pamida has experienced huge growth in its food program. While not the size of Rose's department, food occupies 48 running feet of non-perishable packaged food plus another 24-plus feet for candy. The program is heavily branded and no PL lines are planned.

Standard grocery store fare like canned fruit and vegetables appear on Pamida shelves when special buys are available, said Steve Fishman, chairman.

Hills Stores, similarly, doesn't offer private label food, and keeps its food offerings largely at the convenience level. However, the chain does look for local sources of foodstuffs to add distinction to its mix. The company's Pennsylvania stores often showcase Synder's products, and offer them at a discount.