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Tough times lead to tougher posture.

Grand Union Chairman Floyd Hall calls fiscal 1983 "the most challenging year" in the company's history, with good reason. Not only did the Elmwood Park, N.J.-based chain close down 223 stores and vacate three unprofitable operating areas, it also repositioned itself with an aggressive price-matching policy that trimmed margins in an effort to boost volume.

The results were mixed. Despite the fact that the company closed a third of its stores last year, sales declined only 2.3%, to $3.44 billion from $3.52 billion in fiscal 1982. But as a result of the trimmed margins from its pricing program, Grand Union suffered a net loss of $115.2 million, compared with a profit of $226,000 the year before. The deficit included a $45 million pretax reserve established to cover store closings, which occurred predominantly in Florida, suburban Washington, D.C., and Texas (where only one Weingarten unit remains). Grand Union also closed a number of stores in its remaining operating areas, leaving itself with only 394 units today, compared with 610 stores at the end of fiscal 1982 and 856 at the close of 1980. Among the stores in operation are 74 upscale Food Markets located in Vermont, New York, New Jersey, Connecticut, North Carolina, South Carolina and Georgia, as well as two BASICS warehouse stores still operating in New Jersey.

Sales decreases resulting from the disposition of the three operating regions were somewhat offset by increases in sales volume from Grand Union's new chainwide pricing program. Established in July 1983, the policy of matching the low price supermarket chain leader in each of its operating areas is reinforced by Consumer Price Finder booklets that list over 9,000 regular retail prices of authorized items. They were joined by the new Red Dot Price Finder for Specials, which list hundreds of sale items available chainwide. A company spokesman says the pricing strategy is working, with some areas reporting sales increases of more than 25%. "We said we'd take a loss for the short term," he says, "but that period is over."

Indeed, despite the serious setbacks during the last fiscal year, the outlook at Grand Union today is hardly one of gloom and doom. On the contrary, the company was heartened by first quarter results, and recently reported that net income for the 16-week period ending July 21, 1984 was $464,000, compared with a net loss of $9.8 million during the same period last year. First quarter sales amounted to $780 million, as opposed to $1 billion in 1983, when the company operated some 200 more stores than it does today--a strong indication that the tide may indeed be turning.

Now a more centralized operation, Grand Union has a total of 12 operating areas functioning under an umbrella of four regions. In efforts to improve efficiency, the chain's accounting and advertising operating staffs were reduced.

Some key management changes were also made, the most import of which was the naming of Hall as chairman of the board and chief executive officer last March, following the resignation of Patrick Deo. Hall, a newcomer to the industry, was formerly a chief executive officer at the Dayton-Hduson Corporation.

The thrust of the company's developmental plans continues to be the 28,000-square-foot, service-oriented--and laborintensive--Food Market concept, but the construction of larger Food Center stores is also on the agenda. Two 45,000-square-foot Food Centers will be opened in Atlanta, under the company's Big Star banner, with the first scheduled for a late fall opening.
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Title Annotation:Grand Union
Publication:Progressive Grocer
Date:Oct 1, 1984
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