ALBERTSONS TOYS WITH NEW IDEA.

Byline: Nicholas Grudin Staff Writer

VALENCIA - A new Valencia Albertsons, which includes an aisle full of Toys ``R'' Us products, illustrates how conventional supermarkets might try to compete with the industry's new players like Wal-Mart and Costco.

The Santa Clarita Valley's newest grocery store, on Valencia Boulevard and The Old Road, is larger than conventional stores and contains a wider variety of products, according to Albertsons officials. Not only is there a Savon drug store encompassed in the vast market, there is an aisle dedicated to stuffed animals and toys from struggling toy store Toys ``R'' Us.

``Toy categories are not a significant focus for most grocery stores, but it's something that's convenient for kids and for moms,'' said Albertsons spokeswoman Lilia Rodriguez. ``Each store is different because they fit the needs of their neighborhood.''

According to experts, this is more proof of Wal-Mart's impact on nearly every retail industry. Albertsons and Toys ``R'' Us reached the partnership agreement in June 2003 and at the time it was considered a response to Wal-Mart's devastating impact on toy stores, including pushing KB Toys and FAO Schwartz into bankruptcy, according to experts.

``The goal is to give you someplace to buy toys other than Wal-Mart,'' wrote Phil Lempert, editor of SupermarketGuru.com.

And the historic 4 1/2-month grocery strike that ended in February provides more insight into the rationale for the partnership.

Executives for Albertsons, Vons and Ralphs said repeatedly that new competition from stores like Wal-Mart was forcing them to cut labor costs, which was the impetus for the strike.

Competition from big-box stores is forcing them to become more like Wal-Mart in what they offer, according to Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

``It's this move toward one-stop shopping. You can go in and take care of all your needs,'' Kyser said.

The Valencia Albertsons is one of about 10 new or renovated stores throughout Southern California that will feature partnerships with other retailers in conventionally unrelated merchandise.

Toys ``R'' Us and Office Depot are the two most notable such deals, both of which were agreed to last summer.

Other grocery stores have done this as well - including everything from banking to drugstores to coffee shops under the same roof - but in light of the grocery strike, the motivating factor becomes far more apparent, Kyser said. Stores like Wal-Mart, Costco, and Target, which sell everything from big-screen TVs to kiwis, must be accounted for in supermarkets' strategic planning.

``The idea is, this is what grocery stores are doing to counter what is going on with Wal-Mart. The Ralphs I go to even has some shirts hanging up,'' Kyser said.

Wal-Mart intends to open 40 Superstores throughout Southern California in the next five years.

Stacia Levenfeld, Albertsons head of corporate communications, said the partnerships with Toys ``R'' Us and Office Depot are proof that the grocery industry is changing.

``It's not specific to one competitor. It's just Albertsons competing in the marketplace. The grocery industry in Southern California has become increasingly competitive,'' Levenfeld said.

Nicholas Grudin, [phone]

nicholas.grudin(at)dailynews.com

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2 photos

Photo:

(1) A stuffed Geoffrey the Giraffe doll, the Toys ``R'' Us mascot, greets shoppers at the new Albertsons on Valencia Boulevard at The Old Road in Valencia. The store includes a Savon and aisle featuring toys from the retail chain.

(2) You can get a Barbie and a dozen eggs at the new Albertsons in Valencia, which features a Toys ``R'' Us aisle.

David R. Crane/Staff Photographer