Super K's new phase will be to develop a more complete store with a broader mix - Super K mart; includes related articles - Food Merchandising for Non-Food Retailers

Discount Store News, Feb 12, 1990

Super K's Next Phase Will Be To Develop A More Complete Store With a Broader Mix

K mart, the industry's largest discount chain, has been operating experimental warehouse-style food departments in two Illinois and Ohio stores for more than a year.

Their report card from Larry Parkin, executive vp-warehouse and grocery operations: The concept for the Super Ks is on the "right track," but the original test stores were "too small" and the product line "too limited."

Parkin says K mart will eventually open another Super K in a bigger store, either a new or a converted unit, and the mix in this "second phase" test store will be "more complete," more like a traditional food store.

The giant discounter decided to develop Super K to appeal to a broader base of shoppers and encourage K mart shoppers to spend more money. "We want to get a full shop of the store," said Parkin.

Traditional K marts have always carried a limited assortment of dry groceries, warm beverages and snacks; Parkin said as limited as this assortment has been, the department's strong sales have taught K mart that it can definitely build traffic with food.

When the two experimental stores opened in Kankakee, Ill., and Clinton, Ohio, they stocked 3,000 to 4,000 grocery items and carried about 25,000 items overall. Each store had one central checkout and a mix that relied heavily on the assortment used by K mart's Makro wholesale club division. In fact, originally the combination stores were managed by Makro.

But Makro stopped being involved with Super K last July when K mart changed the product mix. "We made changes in the assortment and we're not buying what Makro buys anymore, so it's better not to try to adopt Makro's merchandising," Parkin said.

In keeping with its position as a warehouse store, the original mix was very basic--primarily dry groceries, limited produce, frozen foods, dairy, packaged cheese, and packaged meats. The meat department, however, didn't stock fresh cuts and the store only carried large sizes and institutional sizes--the traditional package sizes that wholesale clubs stock.

The dry grocery assortment featured high consumption items primarily, a cherrypicking of Makro's best-selling items.

The pricing strategy was similar to that of membership warehouse clubs, but shoppers didn't have to be members to use the store. K mart was shooting for 10 percent average margins overall.

Much of the merchandise in the store was bought on deal, but K mart also used Fleming Foods as a secondary supplier. Some products were also delivered to the stores directly.

When these stores opened, Parkin called them "stock-up stores." Now with a year's sales history under his belt, he recognizes the mix needs to be "more complete," like a traditional food store.

"The original test stores are too small to do it. We need more space for these combination stores, for a full meat department, a bakery, and a deli. The next phase for us will be to open a more complete store with a broader mix."

Refining the mix

Last July, the two test stores were remerchandised. Slow-turning categories and sizes were dropped. The sku assortment was almost doubled, and more space was given to produce, deli, packaged cheese and packaged meats.

The racking was also modified. It is still warehouse-style racking, but now it is four feet wide rather than eight. That change lets K mart carry a broader assortment of sizes and brands without dramatic increases in inventories.

K mart has also changed the store's layout and configuration to improve customer convenience. There are now two entrances and exits instead of one.

K mart currently advertises its food department once a week, on the same day food stores advertise their specials. It has tried doing one insert for food and non-food together, but Parkin says the chain gets better results if it does a separate insert for each. Their message is pretty typical. The ads stress items, price and service.

Parkin says K mart has learned enough from the experiment to know that the food section brings people back more often to shop.

"There's no decision yet as to where or when we'll open the next one," he said. "But we will definitely continue to test this concept. We know we're not totally right now, so our next phase will be to test the department in a bigger store where we can carry a more complete mix."

PHOTO : Super K was developed to broaden K mart's shopper base and to encourage regular shoppers

PHOTO : to spend more money.