Fred's Keen on Softlines, Ups Advertising

By Cecile B. Corral -- Home Textiles Today, 3/27/2006 12:00:00 AM

Memphis, Tenn. — —

Memphis, Tenn. — Under its new “refresher” program aimed at restoring sales per square foot, Fred's Inc. expects to improve on the recent sagging performance of its soft lines and home furnishings categories. By late June a new store prototype will begin making its appearance, and over the four-year program period it will roll out chainwide.

“Most of the progress is going toward soft lines and the home areas,” explained James Fennema, evp, gmm, during the 648-unit discount general merchandise store's fourth quarter and year-end earning conference last week.

“Getting our buying team in place is helping significantly because in both of those areas, 50% of each of those staffs changed over during the course of year last year,” he continued.

Noting that direct competitors Dollar General, Family Dollar and Wal-Mart have all accelerated their circular activity, Fennema added, “We have increased our corporate commitment in advertising and marketing by 16 basis points.”

New store openings for fiscal 2006 are expected to range from 60 to 70 units, mainly in North Carolina, South Carolina and Florida, as well as in Alabama and Georgia. Store closings are expect to consist of five to 10 Fred's stores and five to 10 of its pharmacies.

In its four-year refresher campaign, Fred's — a $26 million net income company — will refresh about 25% of its store merchandising with new products and product categories.

Other keys to this effort include: remaining focused on Fred's core customer; applying performance metrics to all classes of merchandise; and creating excitement and interest for customers at the store level through new-product introductions.

Over the past year, Fennema said he has “solidified” his buying staff, replacing more than one-third with new blood. “Now that the turnover has become stabilized we have become more comfortable working together and are focused on our merchandising programs,” he continued.

Regarding marketing, he said Fred's will continue with its normal circular program and also increase activity to support new store openings with mid-month circulars.

“We used to do that and we had gotten away from it, but we saw a difference in our new store performance because of that.” Fennema said. Advertising will focus on print media, and less on TV and radio.