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Customer service commitments drive remodeling, merchandising

BY Jim Frederick

Supervalu chief executive officer Jeff Noddle wants to make customer service more than a corporate feel-good buzzword. He wants to make it an obsession among the company’s 200,000 employees.

Among the four performance milestones that Noddle has established as the pillars that will secure Supervalu’s future is “serving our customers through superior standards of excellence throughout our organization.” To that end, the company is combining an array of existing store-service initiatives, such as “3s a Crowd,” developed by Albertsons to keep waiting in line at the registers at a minimum, with new strategies in store design and product presentation to make shopping any of the 2,500 stores within Supervalu’s network easier and more pleasant.

“A vital underpinning to serving our customers is to always work to better understand their needs,” Noddle said in a company report earlier this year. “Our local management and our marketing and merchandising teams are harnessing trend data and consumer insight to ensure our regional brands are responding to customers’ expectations.”

Noddle called that ongoing process “an important step to becoming more customer-centric, whether it’s a focus on natural and organic foods, the convenience of home meal replacement or expanded pharmacy services.”

Central to the new focus on exceeding customers’ expectations, he added, is “raising the bar on our store offerings, shopping experience and in-store service levels [including] remodeling programs that will enable us to implement innovative merchandising and marketing programs [and] locally driven programs to keep us relevant to our communities.”

To that end, Supervalu now is in the early stages of a years-long campaign to cycle through its nationwide network of more than 2,500 supermarkets and food/drug combo stores with a massive, long-term rejuvenation and store-remodeling program that will take years to complete and hundreds of millions of dollars in capital outlays. But those efforts already are paying off in stores that have been upgraded with such elements as the Power Drug format, the repositioned and redesigned patient-friendly pharmacy and the package of “way-finder” elements to help customers easily find and identify such core departments as pharmacy, beauty care, produce, general merchandise and photo.

“We’ve said publicly that our top priority going forward is to aggressively invest in our retail stores,” noted Kevin Tripp, Supervalu executive vice president and president of Midwestern retail operations. “In particular, many of the acquired properties had not been touched in awhile, and our strategy is to get in and touch our store base and remodel every seven years or so.

“Given the kind of traffic we have in those stores and the reality of this business, I think that’s about right and very doable,” he added. “We’re playing catch-up right now with the acquired banners, but it’s certainly not out of the realm of possibility that over the next three to five years we can get caught up with those.”

Indeed, he said, Supervalu always had maintained its metric of having 80 percent of the company’s original store base prior to the acquisition of Albertsons new or newly remodeled within the past seven years.

Customer input is helping drive those store renovation efforts. “Our focus is to get the pharmacy closer to the front, and much more convenient for a quick in-and-out…to try to serve both that convenience aspect, as well as the entire store experience,” Tripp explained.

On the drug store side of the business, the effort to boost customer satisfaction levels is playing out with a growing menu of both older and more recent wellness and preventive services at the pharmacy counter.

At Albertsons, for instance, “We’ve had programs like ‘Eating Healthy with Diabetes’ in place for quite a few years,” noted Supervalu pharmacy president Chris Dimos. Through that service, he said, “the pharmacist and a dietician will take a group of patients, walk them through our food stores and explain…how to read labels and make the right food choices.”

Dimos said the program, which was originally developed for the Jewel-Osco stores in Chicago, was extended to more than 400 in-store tours last year. “We’re rolling it out to more banners as we see the opportunity,” he added.

For patients with such conditions as diabetes, who are “usually compromised around cardiac and several other disease states,” the tours have become a core customer service, including advice about heart-healthy foods and lowering cholesterol levels. “It encompasses the entire patient’s wellness on a walk through the food store,” Dimos added.

Another, newer service that presents “a huge opportunity we’re working on,” said Dimos, is helping patients combat obesity and maintain a healthy weight. “We’re working on initiatives to capitalize on that…making sure we use dieticians and pharmacists, all the healthcare resources in the company. We have dieticians and a lot of education around food and the healthy components of eating, and we’re marrying them up with the patient who is compromised from a medical standpoint, trying to help them live a healthier life.”

That effort “transcends the GM/HBC aisle,” he added. “We have to deliver on the GM/HBC and the pharmacy piece, but I think we have the ability to go outside those aisles with the patient. And being accessible and having that patient relationship is driving home the point of being a trusted professional for advice—whether the advice is for the right cold medicine or prescription…or when they’re choosing the right [foods] to put in the basket.”

That said, Supervalu’s pharmacy chief added, “We’re at the infancy with this. ‘Eating Healthy with Diabetes’ and some of the healthy-weight programs are the beginning. We’re just at the tip of figuring out how we can leverage pharmacy and GM/HBC into the total customer experience.”

Long term, Dimos said, “We still have to deliver on accurate and fast and on the fundamental customer-service level, but I think the differentiator will be the interaction the customer will get from our pharmacists, and the services they can get from our pharmacy they can’t get anywhere else.”

More and more, Supervalu is tying those services to a more integrated approach to food/drug retailing, emphasizing the natural relationship of good nutrition and preventive health with pharmaceutical therapy and pharmacy-driven clinical care and counseling. The company brands that integrated marketing approach under its Premium Fresh & Healthy strategy.

“As we roll out the different formats in all our different markets, we’ll continue to run different go-to-market strategies,” Tripp explained, like a traditional high-low promotional approach for such chains as Jewel-Osco in Chicago, versus more of an everyday-low-price strategy for operations like Cub Foods or Shop ‘n Save. Nevertheless, he said, “Premium Fresh & Healthy can apply to all of those. We see that as a clear advantage and exactly what our customers say they want.”

Tripp is quick to point out, however, that the basics of community pharmacy still apply. “Given all that, certainly you still have to pay attention to what the customer has been saying for the past decade about pharmacy. They want convenience, they want pharmacies open the hours they want, they want quick in-and-out trips, drive-throughs when available and they want to be able to do it all in one place.”

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Fred’s reports both monthly and quarterly record sales

BY Allison Cerra

MEMPHIS, Tenn. Fred’s Inc. reported record sales for the five-week and eight-month periods which ended Oct. 6, 2007.

The company said Friday that its total sales for the month increased 2 percent to $161.4 million compared to the same period last year. Total sales for the year-to-date period increased 5 percent to $1.157 billion.

Same store sales for the month rose 1 percent on top of a 5 percent increase in September last year. On a comparable store basis, sales increased 1.3 percent through the first eight months of fiscal 2007 compared with a 2.7 percent gain in the year-earlier period. Same-store sales are a key predictor of how well the company performs in stores that have been open for several years, and how well the newly open stores will do in the future.

“September sales came in at the low end of our forecasted range of a 1 percent to 3 percent increase, affected by unusually warm weather across our markets and the disruption caused by the updating of 98 stores under our refresher program,” said Fred’s Stores chief executive officer Michael J. Hayes. “We look forward to finishing our refresher program in October with the last 60 stores and to a better economic environment for our customers going forward, as the benefits of the minimum wage increase and the focus of Federal Reserve Board on the credit crunch take hold.”

Fred’s opened four stores at the end of September, bringing total store openings to 22 for the year-to-date period. These new store openings have been balanced by the company’s decision to close underperforming stores. In the remaining months, Fred’s Stores said that it plans to open 14 additional stores, with no further planned closings, which will result in a net increase in stores of 2 percent for the year.

Fred’s Inc. operates 702 discount general merchandise stores, including 24 franchised stores in the southeastern United States.

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Target to open another 61 stores nationwide

BY Allison Cerra

MINNEAPOLIS Target announced that it will be opening an additional 61 Target stores, the company said Friday.

The stores, which will all open Oct. 14, will open in 22 different states. The majority of the stores are making their debut in Arizona, California, Ohio and Texas.

In addition to offering the latest in trend-right merchandise, Target also brings a 44-year tradition of community involvement. The retail chain commits itself to local communities donating more than $3 million each week to area nonprofit organizations, becoming involved in local volunteerism efforts through Target Volunteers, and orchestrating other special projects that help meet area social service, arts and education needs.

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