Vons has decided to go after a bite of the $40-billion-a-year convenience store business by opening an experimental store-within-a-store geared to customers on the go.
Last week, the grocery chain opened a 1,000-square-foot prototype called Vons Express Store inside its Redondo Beach supermarket. In it, shoppers may pick up a quick hamburger or hot dog to go, a cup of coffee, a lottery ticket, a pack of cigarettes or some self-serve frozen yogurt or videotapes without having to wait in the main part of the store behind a line of customers buying a week's supply of goods.
Offers Better Price
"We acknowledge that the convenience shopper has different needs," said Stuart A. Rosenthal, executive vice president-marketing for the El Monte-based company. "We think that's a customer that we ought to be catering to in a special way."
Like Vons' recent move to 24-hour-a-day operations, the new concept is designed to compete with stores such as Southland Corp.'s 7-Eleven chain, Circle K and Arco's AM/PM operation, where millions of customers nationwide have shown their willingness to pay a premium for milk, eggs and butter in exchange for convenience and speed. All told, such convenience stores accounted last year for $39.1 billion in sales, according to the National Assn. of Convenience Stores in Alexandria, Va.
But Vons said it has gone those operations one better when it comes to price.
"The food items will be better priced than at the convenience stores," said Phil Hawkins, director of operations for Vons' central region. He said the competitive pricing is possible because the added costs of running a store-within-a-store are minimal and because Vons is able to buy goods in volume at lower prices and pass along the savings.
To bolster the point, mailers describing the new Vons concept offer a comparison table showing prices at the Express Store to be lower than those at AM/PM or 7-Eleven on items such as a six-pack of Budweiser, a one-pound can of Folgers coffee, a Colgate toothbrush and a 16-ounce cup of coffee.
To make room for the small store inside the 18,000-square-foot Redondo Beach location, Vons reduced the amount of space for pet food and canned fruits and vegetables, which have experienced declining sales of late, Hawkins said. "People are more into frozen and fresh foods," he added.
Hawkins stressed that the program, in development for a year, is only an experiment. Although the company tentatively plans another Express Store in its San Pedro location in about six weeks, rapid expansion is not necessarily in the cards.
"This is a test," Rosenthal said. "You won't see 20 of them on the street anytime soon."
The Vons convenience stores are not expected to spell the end of round-the-clock shopping in the company's Vons and Pavilions supermarkets, the company said.
"A customer in the middle of the night could come into the big store and get a steak for tomorrow and salad and vegetables, then stop over at the Express Store and get a burger for tonight," Hawkins said.
Noting that Vons has had serious problems with long lines, retail analyst Ron Rotter, with the Los Angeles brokerage of Morgan, Olmstead, Kennedy & Gardner, said the new concept "sounds interesting. The key is the ability to get the customer in and out of the store quickly. If they're able to execute that, it could be real interesting."