Fred’s changes will spotlight home
May 29, 2014,
Memphis, Tenn. – After a long push on consumables and pharmacy to drive traffic, Fred’s will now overhaul the layout to boost higher-margin goods by creating six “convenience centers” largely focused on home categories.
- Home improvement (including window)
Bruce Efird, ceo, said during the company’s quarterly conference call this morning that research found while Fred’s customers consider the store a destination for consumables and pharmacy, they view the rest of the assortment as mere “stuff.” The new layout seeks to move shoppers into remerchandised, home-focused shop-in-shops.
The format will begin rolling out in June and will be substantially completed by the end of the fourth quarter.
Key components of the strategy:
- A new front end that emphasizes power displays, palettes and faster checkout;
- Competitive everyday pricing and much more aggressive promotions on fewer items;
- New signage and displays calling out the convenience centers;
- Reducing assortments in electrics, furniture and apparel;
- Boosting assortments in home improvement, seasonal, pet and consumables;
- An overhaul of circular content, starting this month, with 20% devoted to key items from the six convenience centers;
- In-store distribution of 1 million circulars each week. Store associates will personally hand circulars to shoppers and encourage them to visit the convenience centers, a strategy Efird referred to as “the secret sauce” in the plan.
For the first quarter, ended May 3, net income tumbled 46% to $6.1 million, or 17 cents per share. Sales slipped 0.6% to $498.3 million, with comps down 1.9% on top of a 1.3% decline in the year-ago quarter.