Kmart to Super K: conversion begins in Fresno

Discount Store News, Oct 17, 1994 by Richard Halverson

FRESNO, CALIF. -- Ben Morales, manager of the new Super Kmart Center that opened here last month, is the first to acknowledge that much is riding on this Super K:

* It's the first Super K that Kmart has opened in the crucial California market, where it operates 212 units;

* More important, it's the first Super K expansion of a traditional Kmart discount store and a key test of how successful such conversions could be.

In addition to closing at least 110 under-performing discount stores, Kmart has pretty much put its store remodeling program on hold with the expectation that many stores could be likely candidates for Super K conversions.

The Fresno Super K is one of four Kmarts operating in Fresno. Competition in the area comes from three Target stores and a pair of year-old Wal-Mart stores, including one next door. Only an access road off West Shaw Road separates Wal-Mart's and Super K's parking lots.

The Kmart was less than two years old when conversion began. Conversion took seven months, Morales said, because of weather delays. "Going forward, I would think conversions would take no longer than six months," he said.

Supermarket competition in Fresno comes from: Von's, Albertson's, Pak 'N Save, Save Mart and Food Max, a food warehouse operation. The Super K gets a jump on the supermarket competition by operating 24 hours a day.

The next-door Wal-Mart also remains open 24 hours a day and offers automotive services.

The Super K conversion was less than ideal from two standpoints, manager Morales said. Kmart wanted to add an auto service center, but was unable to buy the abutting property. Kmart also could not add its prototype heated and air conditioned gardening center because moving a load-bearing exterior wall proved too expensive.

However, the existing, unheated L&G department, a narrow strip running from front to back, can be used year around because of the mild weather in California's Central Valley. In fact, the Fresno Super K handles green goods through the winter and just brought in its selection of fall color.

Morales previously served for four years as district manager within the western region. "Wherever possible, Kmart tries to get district managers to operate Super Ks," Morales said.

First year projections for the Fresno Super K call for $80 million in sales, he said.

With the Fresno opening, Kmart operates 50 Super Ks and expects to end '94 with 67. In 1995, it plans to open about 40 more.

With the exception of tires, the Fresno SuperK offers the same mix of food and general merchandise as any other Super K, Morales said.

But in a merchandising wrinkle, the Fresno SuperK provides metal shopping carts for kids, commonly found in conventional supermarkets. "They are adding to incremental sales increases," Morales said. Other Super Ks provide plastic shopping carts for kids, a spokeswoman said.

In another distinction, the Fresno Super K provides a lottery ticket machine in its camera and one-hour photo department. The Super K in Yuma, Ariz., also operates a state lottery machine. In states that operate lotteries, all Super Ks will have lottery machines, he said.

The Fresno Super K covers a footprint of 198,500 sq. ft., including the stock room and the enclosed garden center, with a selling floor space of 137,500 sq. ft. That puts Fresno on the small end of the range for Super Ks, which range in selling space up to 185,000 sq. ft. Including the food court, the Fresno Super K devotes 95,000 sq. ft. of total space to food.

About 6% of its shopper base is Hispanic, Morales said, but micro-marketing consists basically of an endcap in health and beauty care. The most visible sign of Spanish language at the supercenter was a translation of a flier that pickets from the United Food & Commercial Workers union were handing out.

In both English and Spanish, the UFCW fliers urged food shoppers to boycott the Super K and instead shop at unionized supermarkets. The flier claimed that prices there are "competitive."

Morales said his goal is to be the community food leader in price, selection and quality.

Fleming Foods supplies the fresh food, Morales said.

The Super K has two leased shops, a Bo-Ric beauty salon, and a Video Center. Construction of the video rental shop will begin shortly.

The Fresno Super K also is making more of a point of promoting Kmart's charitable works. Above the customer service counter, the store displayed a three-foot-long mock-up of the $1,000 check that Morales presented to the local high school in a typical donation for a store opening.

Above the supercenter's 30 checkout counters, the Super K displayed a large sign that read: "Kmart and its 290,000 associates give more than $25 million a year back to the communities which we serve."

Overhead signage and a flier for shoppers also promote Kmart's new Extras in customer service program that it recently rolled out. The Extras include longstanding customer service policies such as: taking a customer's word if a competitor offers a lower price and then offering that price; reducing the price of laid-away merchandise if it goes on sale; cutting the price of unavailable advertised specials by 10% if the customer opts for a raincheck instead of selecting comparable merchandise; and offering to replace children's apparel if the clothing wears out before the youngsters outgrow it.