Family Mart combos: 'less is more' for non-foods.
That's the way John J. Miles sees it. And Mile's opinions carry a lot of weight, as he is chairman of the board, chief executive officer and president of Family Center Inc., the operator of 24 Family Mart combination stores, headquartered in Clearwater, Fla.
The company, a subsidiary of A&P, was established in 1976 under the aegis of Jonathan Scott, then chairman of the board for the tea company. Scott was the former president of Albertson's and was fresh from the highly successful combination store marriage between Albertson's and Skaggs Drugs. He and his new combination store team at A&P naturally gravitated toward the size and format made famous at Skaggs-Albertson's. Family Mart's 50-50 division of floor space between foods and non-foods and its product arrangement was virtually a carbon copy.
An average Family Mart comprises about 50,000 square feet, excluding an adjacent 3,000-square-foot liquor store and mezzanine equipment areas. The sales floor averages 38,000 to 40,000 square feet and weekly sales per store range to $400,000.
Miles, a 24-year veteran of Grand Union, joined A&P in 1975 and became a senior executive vice president (a post he still holds) before being shifted to the top Family Mart post two years ago by A&P's current CEO James Wood. The combo stores group he took over had grown to 22 outlets and extended from its Florida base into several Southern states. But its profit performance left a lot to be desired.
Chief Tours the Scene
Miles, who prepped for his new job by visiting outstanding stores around the country, felt Family Mart's combos needed more "consumer appeal" and that the first thing was "to become more of a top-flight supermarket."
To accomplish this, the decor of the stores was upgraded and both non-foods and dry grocery space was cut back to make room for an array of new sections including floral shops, service fish and cheese islands. Cold beer and service deli and bakery sections were expanded and sit-down eating areas were added. Several stores were given bulk foods sections and service meats. Produce was upgraded.
The 22-store remodeling program, a vast 18-month undertaking to create a second generation of Family Marts, was completed this past November.
At the same time, Miles "remodeled" the headquarters staff. Virtually a whole new organization was created, including the directors of operations and merchandising and all members of the four-man non-foods executive staff.
Family Mart is now making a satisfatory contribution to A&P's bottom line, according to Wood. The A&P chief says the combo concept is sound, providing both a fuller one-stop shopping and a range of products, including non-foods, that enables a store to offer strongly competitive prices and make a good margin overall. The support of the concept is borne out by Family Mart's plan to add five new stores in 1985.
Although non-foods lost some floor space in the course of the remodelings, Miles says it was "squeezed" less than dry grocery. It now represents about 25% of the sales area in newer stores, compared to 38% before the remodelings. But despite the space cut, non-foods' 21% to 28% sales distribution (including tobacco and candy) has held up surprisingly well. This shows, says Miles, that many non-foods lines had been overestended in the past. "In the long run," he says, "non-foods will probably increase its distribution through better merchandising and more efficient use of space while improving its margins, ROII and net profit contribution."
The new stores' configurations provide extra support for non-foods. In these stores, the dairy cases are located on the back and side walls behind non-foods to draw traffic. Says Miles, "Non-foods is a source of sales in itself, but it always does better with a little help from its friends."
The remodelings have brought other changes. Non-foods is condensed, but the newest layouts features three boutique-like shops: a cosmetics and fragrances bar followed by island greeting cards and an extended books and magazines center called the Book Mart. All three are positioned on the wall side of the non-foods area, which is separated from the grocery gondolas by well-type frozen food cases.
The "shops" approach was devised to provide an open area, somewhat like the floral and cheese centers on the grocery side. "It's a part of making shopping more interesting and attractive," says Miles. In the original layouts, the non-foods setup was simply a series of standard height gondolas.
The cosmetics and fragrances bar is a U-shaped formation of glass cases and shelving. The section is located near the store's office to reduce pilferage and has one locked case for high priced items.
Greeting cards and related products, once housed in 148 linear feet of space, has 96 feet in its new location.
Publications, with the Book Mart set-up, is the only non-foods category to gain space in the new design. Custom-made shelving sparked by rear lighted plastic canopies houses 80 linear floor feet of display (compared to 32 feet in the older stores). Two endcaps and two promotional tables provide additional space.
Non-foods' lobby shop in newer stores is situated in the center of the lobby rather than in a corner. Sharply reduced in square footage, the new lobby installation has a 36-foot front of showcases, shelving and tables. Its positioning makes it more visible to customers and allows it to serve as an extra express register.
From Candy to Cameras
Products sold in the lobby include confections, single pack and carton cigarettes, tobacco sundries, batteries, film, sunglasses and a smattering of cameras, radios, cassette players, clocks and watches. Service lines offered include film finishing and rentals of movie video-cassettes and carpet cleaners. The pharmacy, an innate part of the combination store, has an upfront position in newer stores, been spruced up with a carpet, modern chairs, a large potted plant and a free-use blood pressure testing machine.
All told, non-foods (called "drugs" at Family Mart) comprises 1,070 linear floor feet of display in the newest store. This includes the lobby shop, endcaps, permanent floor displays, candy and 100 feet in the grocery aisles.
Each store's drug section has its own receiving door and about 800 square feet of backroom space. Non-foods' inventory at cost comes to about $500,000, half of the store's total opening inventory investment. Non-foods' total SKUs is 15,000 to 20,000 items.
Non-foods has its own managers in the stores. They report as co-managers with grocery managers to the store director. The typical non-foods staff includes two additional full-timers and two part-timers. Non-foods labor, excluding the pharmacy employees, averages around 320 hours a week.
While the non-foods staff order and stocks health and beauty aids, cand, housewares and some other GM lines, many categories stocked by the staff are ordered by outside merchandisers under staff supervision. (Family Mart maintains no warehouse facilities of its own.) Supermarket Service, an A&P subsidiary, provides most of Family Mart's fast-moving health and beauty aids as well as some GM product lines from its warehouse in Fort Wayne, Ind. Supermarket Service also has a full-time field person to assist in HBA setups and troubleshooting.
The stores also receive the attention of district managers and visits by the headquarters staff--from Miles himself down to the non-foods buyers. In-store coordination between grocery and non-foods is aided by a policy in which the drug and grocery co-managers share overall management duties in the store director's absence. Another factor is that about half of the store directors have emerged from the drug side, according to David Edwards, director of human relations.
The coordination may even improve. Tom Brewer, Family Mart's new director of general merchandise, says he plants to hold at least one drug managers' meeting a year where ideas can be exchanged and new lines and operating/merchandising methods discussed. Brewer also says he will be spending two to three days a week in the field. The purpose of all this is not just to review the departments, he says. "We want to build a team feeling, which is particularly important, considering how spread out our stores are."
Brewer also sees improvement in internal promotions. Some current Family Mart drug managers have come up through the ranks from clerks, but because of the fast expansion in the early days, many others came from outside the company. Now that the company has a broader, more established base, Brewer feels that internal promotion will become more common.
"Our drug managers must be fully qualified," he says. "They must be able to handle a wide range of goods under pressure. If we don't have our own people ready to move up, we certainly don't hesitate to reach out into other combo store operations or mass merchandisers."
Non-foods also receives considerable advertising support. Merchandising Vice President Neele Neelen, who coordinates the buying staff's selections with the advertising department, says non-foods gets two to three pages of an eight-page monthly roto, and up to six pages in a 12-page roto for seasonal events or promos like Dollar Days. Non-foods is also given 20% to 25% of the space in the one-page Sunday ad and in the Thursday Best Foods Day double-truck. In addition, drugs may receive separate ads for such events as Valentine's Day.
Less Space No Problem
The reduction in floor space hits non-foods hardest in seasonal and promotional displays. In Family Mart's early days, the merchandise was allocated two sides of four facing gondolas plus another side, for a total of 260 linear floor feet. Over the past two years, this has been whittled down from three sides to two sides and now it occupies a single 52-foot gondola side in the chain's newest store in West Palm Beach, Fla.
This probably will work no hardship, according to Brewer. Although he agrees that strong seasonal and promotional efforts are "absolutely essential in successful combo operations," he says the former space allocation was too big to merchandise efficiently.
"It's better to be a little tight than just filling to suit the space. You can end up with surplus merchandise, which is deadly for gross profit through markdowns and creates inventory problems if held over." Labor costs in display-building were also cited as a factor.
Brewer points out tht in addition to the in-gondola space, the department has "plenty of promotional display space in the 'power aisle,'" which is how he refers to non-foods' spacious 16-foot-wide cross-aisle which provides room for at least six large displays. In addition there are about 15 endcaps available plus aisle space for the floorstands.
The product categories that have been reduced sharply in floor space include appliances, now 16 feet; school/stationery, now 32 feets; glassware; do-it-yourself hardware; toys, now 52 feet; and audio tape and phonograph records. Framed pictures have been eliminated entirely, while clocks were eliminated except in the lobby shop, and sporting goods were cut to 12 feet of fishing supplies.
In both the early and current layouts, the non-foods area includes grocery products to draw traffic and to tie in with related general merchandise. Pet foods and baby foods, diapers and formula continue to hold their positions in GM. Paper has been switched to the grocery side, while household and laundry supplies, dish detergents and bar soaps have been brought in because they are considered more suitably related.
With the expansion and addition of food service sections, other grocery sections have been moved into the non-foods side. Commercial bread and cakes and jams, jelly, peanut butter and toppings occupy most of the two gondola sides facing frozen foods.
Non-foods has been compensated somewhat with shelf space in the grocery aisles. New Family Marts have more non-foods integration with grocery than in the past. Although they are not extensive, GM outposts in the chain's newest store include glassware, foilware, coffee mugs and filters, pool supplies, gardening supplies, and 8 feet of wicker goods. A new development is an 8-foot bath accessories section located in the paper aisle for tissue holders, bath mats, soap dishes, etc. Pantyhose and batteries/film each has an endcap in the grocery area. The battery rack, custom-made by a service merchandiser, stands 7 feet high.
Looking over the department with the fresh eye of a company newcomer. Brewer observes that expanded non-foods in the combination store is in a constant state of change. New lines and new manufacturer programs appear, while some existing ones may falter. Drawing on his years of experience in discount department stores, he says there may be opportunities for expanded kitchen-related products, moderately priced apparel and specialty lines related to the stores' expanded wine and cheese sections.
Overall, he says, "We want to avoidexcessive 'creaming' of the categories. We don't want to match the extensive assortments of massmerchadnisers, but most categories need sufficient brand and item variety to provide a choice and an incentive to make multiple purchases." loation and upgraded decor and facilities in newer stores to stimulate sales, which have already been increasing due to customer familiarity.
"We believe we'll get more traffic from the new position. The walk-in aspect with the glass partition and carpeting imparts a professional atmosphere and takes the customer out of the busy aisle for her comfort and privacy. There are chairs to sit on and magazins to read," he says. "A prescription often involves an anxiety situation. Our new setup is designed to calm the nerves as well as ehance feelings of confidence in our service."
As for magazines and books, Hirshon says the Book Mart concept has proven that it is salesworthy. Improved merchandising and promotional efforts such as "Books Make Great Gifts for Christmas" have shown the sales potential is better than first believed. The typical Book Mart occupies 700 square feet and includes 18 linear feet for magazines, extensive paperbacks and an endcap for serial romances.
Ken Alburtus, who came to Family Mart from Eckerd Drugs, says the slimmer lobby shop is increasing its selection of 35 mm cameras, but has cut back on many other lines, including calculators, clocks and telephones. Alburtus is planning a direct program to stores for radios and cassette players to obtain lower costs.
Film finishing is big business in the lobby, Alburtus says. Sales have been improved thanks to heavy advertising and promotion for a new double-print program that was launched with separate advertising last year.
On the other hand, movie videocassette rentals are described as a "mixed bag." Volume ranges from $1,500 per week down to $150, depending on the store. Lobby shop installations diaply over 100 titles in an attractive setup, but they may be dropped in stores that show no signs of sales advancement.
Alburtus leaves no doubt about his feelings on small appliances. Small applicances "belongc in a combination store, he says. "Going through appliance distributors keeps our margins tight, but due to customer demand we believe this is an improtant area for us. Also we have good response when we run an ad." Items displayed in the 16- or 20-foot set range from coffee makers to showerheads with the most expensive carrying a retail of under $30.
Records and tapes, usually located in an 8-foot shop-around island fixture near the store office, are stocked and merchandised by a spcialty wagon jobber. Sales and profits are good for the space involved, says Alburtus. "It's plus business for us." Teen-agers shopping with their parents are the primary buyers.
Batteries are sold in three places in the store: the lobby shop, an endcap and in-line near the hardware and light bulbs, Alburtus says. Permanent ends are generally frowned upon at Family Mart, but batteries, like pantyhose and lightbulbs, is an exception because of its velocity and profit, he adds.
Jean McPhee joined Family Mart last August after 17 years wth Jewel/Osco. One of her specialties is toys, so she pushed to have that section expanded to a full 52-foot island side from the 42 feet she found when she first came. Toys had been overexpanded in the early stores (getting up to 104 linear floor feet), but the cutback to 42 feet had been excessive, in her opinion.
Since she arrived, more box toys and games have been added to the primary placements of extended peg toys, children's coloring and learning books and crayons. Space for seasonal toys is primarily available in the promotional areas, but peg toys can be reduced for a period, she says. The buyer says her first Christams at Family Mart saw "good sales" in seasonal toys, thanks in part to the guaranteed sale policy of the service merchandiser.
Soft Goods Get Hard Looks
Soft goods, another of her lines, has had several new developments. In pantyhose one brand is being dropped and its 4 feet of space is being given to a rival brand's color and queen-size lines. Colored pantyhose, she says, "has been terrific" and needs in-line space.
The "ready to wear" section consists of T-shirts and terry cloth items, both of which do well in warmer climates. Men's and boys' socks and underwear, which are "regulars," have a new neighbor on the shelf--panties and bras. McPhee says "it's too early to tell" if this merchandise, set up last spring, will make the grade. She notes that these goods have fared poorly in supermarkets in the past, but feels they have a chance today because of better packaging and marketing. A Mother's Day special brought a good response, she adds.
Bath towels, a weak line at Family Marts, is being re-examined. McPhee feels it may sell better with another supplier and when combined with shower curtains in less space. Meanwhile, she's considering giving some of bath towels space to expanded kitchen domestics as provided by a new supplier.
A new sewing and notions program with a different supplier's program and fixture has made "a tremendous difference" in sales, McPhee says and she hasn't given up on sewing's sister--craft yarn. McPhee says she is switching brands and is going to promote it more. "There are a lot of retired people here in Florida with time on their hands to knit and crewel, and many younger people are going back to crafts," she says. "I think we can bring this category back to life."
Canvas footwear, another lagging line, will be remerchandised by a different supplier testing an endcap display.
"Before you call a category dead," she says, "you have to be sure you've given it a fair chance and have tried the best suppliers. Sometimes after you've given up, a new program can spring up that changes things for the better."
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|Title Annotation:||combination stores|
|Date:||Feb 1, 1985|
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