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Fred’s changes will spotlight home

Key items, sharper promotions part of strategy

 

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.

The in-store centers will focus on need-it-now merchandise items in six broad categories:

  • Seasonal
  • Bedding
  • Bath
  • Kitchen
  • Pet
  • 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.

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