News

Inflation feeds Winn-Dixie ident-store growth

BY CSA STAFF

JACKSONVILLE, Fla. — Inflationary increases, sales growth at remodeled stores and a boost from fuelperks! helped drive up Winn-Dixie’s second quarter identical-store sales, while net sales dipped.

According to Winn-Dixie’s chief Peter Lynch, Winn-Dixie is riding a strong headwind into fiscal 2012 powered by a number of influencers — a marketing program that better sustains margins, its loyalty program Fuelperks!, an improved stocking system and a significant focus on improving the customer experience.

And even as Florida, home to the majority of Winn-Dixie locations, remains one of the hardest-hit states in terms of a down economy, Lynch is optimistic on the coming year. However you couch the economic climate — sustained recession or slow recovery — Americans have learned how to manage their food budgets, Lynch, Winn-Dixie chairman, president and CEO, told analysts Tuesday morning. Lynch also told analysts that Winn-Dixie steadily has been improving its approach to promotions, passing along many inflationary increases to the consumer in place of heavy promotions that make sustaining margins difficult.

That should make an improved customer experience coupled with a strategic loyalty program significant points of differentiation for a grocer reclaiming its brand identity, all the while competing with the other Floridian supermarket heavyweight Publix. The company’s Fuelperks! program will expand across 80% of the chain’s store base by October, Lynch said, up from half of the company’s store base today. By the end of fiscal 2012, Winn Dixie plans to have the Fuelperks! program operative in all locations, the company has reported in the past.

Winn-Dixie pumped up its Fuelperks! program in April — giving consumers a 15-cent-per-gallon discount if a customer purchases three of any particular bonus Fuelperks! reward items. That has become a significant incentive to make Winn-Dixie a one-stop-shop as the average cost of gas remains above $3.50 per gallon.

“Many of our customers are telling us they are saving 50 to 75 cents per gallon or more by shopping at Winn-Dixie,” stated Mary Kellmanson, Winn-Dixie’s group VP marketing, at the time of the announcement.

Winn-Dixie is also well on its way to converting more locations into the "transformational format stores," that on average perform better to its older store base to the tune of 10% higher sales per week. Target sales-per-sq.-ft. range between $400 and $500, Lynch told analysts. That compares with a chain average of an approximate $300 in sales per sq. ft. The company plans to convert 17 locations to the transformational format in fiscal 2012, two of which already are completed. Eventually, Lynch wants to convert some 60% of Winn-Dixie’s store base into the better-performing format.

Winn-Dixie on Monday evening affirmed fiscal 2011 net sales of $6.9 billion, a 1.4% decline, compared with fiscal 2010. The decrease was due to the extra week in the prior0-year period and a slight decline in identical-store sales, which on a comparable 52-week basis decreased 0.1%, compared with the prior fiscal year.

Basket size for identical stores on a comparable 52-week basis increased 1.3% while transaction count decreased 1.5%, compared with the prior fiscal year.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Lowe’s builds up merchandising after poor quarter

BY CSA STAFF

Lowe’s second-quarter financial report was a disappointment to the company’s executives, who made no excuses for the retailer’s poor showing. Earnings were down slightly, revenues grew by only 1.3%, and comp-store sales were essentially flat. “Even after taking into account the challenges of the macro-environment, we are still not pleased with our performance this year,” said chairman and CEO Robert Niblock, speaking at an analysts’ conference call on Aug. 15.

Instead, Niblock and his executive team outlined a series of initiatives they intend to implement — or in some cases, accelerate — to address some “gaps” they’ve identified through a critical analysis undertaken earlier in 2011. “We will go to market differently beginning in the second half of this year,” Niblock said.

What exactly does this means for Lowe’s customers and vendors? The former can expect fewer promotional sales, more emphasis on “Every Day Low Pricing,” and a broader assortment on Lowes.com. If the customers are Spanish speakers, they can conduct their whole e-commerce transition in their native language on Lowe’s new Spanish website.

Customers can also get their lawn mowers, string trimmers and other outdoor power equipment repaired by Lowe’s. The North Carolina retailer just completed the rollout of this program after testing it in 100 stores and finding that customers would rather deal directly with Lowe’s than the manufacturers for repairs.

But many of the current and future changes revolve around merchandising strategies, making them harder to implement and more subtle to notice — except by suppliers, of course.

Lowe’s is calling its new strategy “integrating planning and execution” (IPE), or putting the right product in the right store at the right quantity. A cornerstone to this process is catering to the needs of local markets. This is not a new concept in retailing — you don’t send snow blowers to Phoenix — but Lowe’s wants to peel back layers of previous merchandising habits to create an “institutional memory to maintain local assortment decisions when merchants change.” More than 80% of the merchandising teams have product line reviews in process using IPE techniques, according to the company.

Bob Gfeller, EVP merchandising, said the line reviews “are uncovering significant consumer insights that are driving different product decisions.” For example, the IP&E process was recently used in a fashion category, with “talented people” from across Lowe’s organization acting as consumer advocates during all aspects of the product line review, from design to store experience. As a result, selection varied from store to store, as did price points, in keeping with what people expect to see in their local markets. The remerchandised category should be ready for the fall of 2011.

This “solutions-based merchandising” approach was developed in the first half of the year, in a test store where Lowe’s removed a lot of standard racking and experimented with more open vignettes, expanded endcaps and “drop zones.” Gfeller referred to the Holy Grail of retailing — getting customers to shop across departments and buy everything they need for a remodel at once — as one motivation for the merchandise retrenching.

“We were not satisfied with second-quarter performance, but my team has been reshaping the merchandising direction, implementing changes now that should advance us further in our multiyear implementation of our broader strategic vision,” Gfeller said. And although he stressed the “test and learn” approach to some of the new ideas, Gfeller also said resets from the current line reviews are now beginning and will continue throughout 2012.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Rooting for a category expansion in sporting goods

BY CSA STAFF

Target may want to rethink its space allocation for the sporting goods department in light of the success the company is having with its Fan Central initiative. Granted, Fan Central is a licensed apparel program within the sporting goods department, but EVP merchandising Kathee Tesija described the success the program is having as “remarkable” during a recap of key merchandising initiatives earlier this month in a meeting with financial analysts.

According to Tesija, Fan Central’s high-quality, team-related apparel offered at great prices is now in every store and each store features a customized product assortment across every major league and team.

“It has quickly become the most productive space in the sporting goods floor pad,” Tesija said.

That’s saying something because licensed sports apparel is inherently difficult to manage as fan loyalty can surge and wane with a team’s fortunes, while affinities for teams and players also can vary widely within the same markets. That introduces a degree of operational complexity to assortment decisions and promotional efforts in a category segment that faces the same sizing issues as other apparel categories.

The fact that Target is managing this complexity and achieving remarkable results with Fan Central suggests the company might have an even larger opportunity with sporting goods. It is evident shoppers are willing to visit and make purchases in the sporting goods department, but Target’s limited breadth of assortment means active lifestyle shoppers inclined to makes sporting goods purchases are forced to go elsewhere to satisfy their needs.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...