Thrifty to Lease Space : Ralphs Renaming, Revamping Giant Warehouse Stores

Ralphs Grocery is calling it quits on the Giant food warehouse concept.

The Compton-based company said Tuesday that it will shrink the 15 Giant stores and rename them Ralphs. Much of the space in the outlets, which range from 70,000 to 100,000 square feet, will be leased to other retailers, Chairman Byron Allumbaugh said.

Thrifty Drug Stores, which several months ago closed some small Thrifty jr. outlets in Ralphs stores, has agreed to put full-scale drugstores of 20,000 to 25,000 square feet into four Giant stores, starting in about three months. In addition, McCrory, a discount-variety store operator that owns the Giant buildings, is “looking at several locations,” Allumbaugh said.

Allumbaugh acknowledged that “the stores are too large. We knew they were too big to start with, (but) we took them to see how much business could be done in them.” He said the Giant stores have been less profitable than other Ralphs stores “but have been in the black.”

Giant stores feature aspects of warehouse stores, such as high ceilings and boxes of merchandise stacked high on shelves, and departments typically found in upscale operations, such as bakeries, European-style fish counters featuring items displayed on beds of ice and delicatessens offering hot and cold carry-out dishes.

The Giant stores in Canoga Park and Redondo Beach will adopt the Ralphs logo next month, Allumbaugh said, and the rest of the units will be revamped and renamed gradually by year-end.

Forced to Hurry

Ralphs rolled out the Giant super-warehouse concept in the summer of 1986, after several months of experimentation in a Bakersfield store. During the testing phase, several prime locations became available when McCrory’s Zodys discount chain was closing.

Ralphs took a dozen of those sites and was “forced into the (Giant) format before it was ready,” said Ken Stevens, a consultant at the Los Angeles office of McKinsey & Co. “They weren’t able to fully develop the concept before they had to execute.”

The decision to scrap the Giant concept was made a year after Ralphs decided to forgo an effort to establish a separate marketing identity for the Giants. For several months, Ralphs has been advertising its two formats with the slogan “Change for the better to Ralphs and the Giant.”

The company recently opened six new Ralphs stores of 45,000 to 50,000 square feet, up from a typical size of 35,000 to 40,000 square feet, Allumbaugh said. It plans to open 11 more of the larger stores this year. In addition, it remodeled six stores in the final quarter last year and will do 37 more this year. The new, larger stores will feature some of the service departments and expanded merchandise assortments of the Giant outlets, Allumbaugh noted.

Ralphs recently completed its first, shortened fiscal year of operation under Campeau Corp. of Toronto, which bought the supermarket company last May as part of its $6.6-billion purchase of Federated Department Stores. For the 1988-90 fiscal periods, Ralphs has budgeted $280 million for new stores and remodelings.

The revamped Giants are expected to lease space to dry cleaning and laundry establishments, video stores, shoe repair shops and other service businesses typically found in strip centers, Allumbaugh said. Under an arrangement with Citicorp, Ralphs also has opened two Citicorp Savings branches in recent weeks in two locations in the San Fernando Valley and plans to open several more.

Unlike Ralphs, which is reverting to what Allumbaugh described as “one basic format in different sizes,” archrival Vons Cos. in El Monte is busily rolling out several different formats into the approximately 150 Safeway locations that it acquired last fall.

Shoppers are noticing signs such as Vons Food and Drug, featuring large sections with health and beauty aids; Pavilions, upscale stores with service departments; Pavilions Place, smaller versions of Pavilions, and Tianguis, the company’s Latino food market concept.

Vons also has been experimenting with Vons Express, a convenience-store-within-a-store concept, in two locations in Redondo Beach and San Pedro. In addition, it recently installed a Panda Express fast-food Chinese takeout outlet in its Arcadia Pavilions. A spokeswoman said the restaurant has “exceeded our expectations.”