A Jewel of a Toy Display

Jewel-Osco, the Chicago area-based grocery and drugstore subsidiary of Albertson's Inc. (Boise, Idaho), has been testing toy-only aisles in its supermarkets in conjunction with Toys 'R' Us (Paramus, N.J.).

According to a report in Crain's Chicago Business, sources say toy sales are up at least 50 percent since November in the five test stores, compared with a year ago. The stores are in Elmhurst, Lombard and West Chicago, Ill., and two on the Northwest Side of Chicago.

Co-branding is a new but growing strategy for the Melrose Park, Ill.-based company, which recently put Starbucks coffee kiosks in a dozen stores and now features Krispy Kreme doughnuts in special displays in more than 100 stores. “Co-branding works,” says Jewel president Peter Van Helden. “Our toy category is substantially ahead of a year ago in our test stores.”

Crain's says some feel that the typical 62,000-square-foot Jewel might not be big enough to accommodate the branded departments of the future and that Jewel and other grocers will have to get bigger to compete with 200,000-square-foot Super Targets and Wal-Mart Supercenters that also sell groceries. “I think you'll see supermarkets pushing the envelope in bringing in more non-food merchandise, inching toward the superstore concept,” a Chicago retail consultant told Crain's. “Chains like Jewel are under some extraordinary pressure, and they'll be rethinking what their grocery model should be.”

The model may well be the new 85,000-square-foot Stop & Shop grocery store that recently in Walpole, Mass, and has a Toys 'R' Us aisle and an Office Depot aisle alongside Dunkin' Donut and Boston Market counters (plus an expanded housewares section and a music and book department). Jewel, on the other hand, has been experimenting with smaller stores, such as a 40,000-square-foot branch it opened in November at State Street and Grand Avenue in Chicago's River North area.

“We're talking to Toys 'R' Us right now about putting their products into more of our stores,” said Van Helden.