In this paper, we study how array contraction can enhance locality and improve performance. In our previous work, we have developed a memory minimization scheme, SFC, which is a combination of loop shifting, loop fusion and array contraction. SFC focuses on reducing the memory requirement, and as a by-product, it may enhance cache locality. In this paper, we study how array contraction can contribute to cache locality and performance enhancement. We develop a memory cost model for SFC. We also present a fusion algorithm so that the predicted locality enhancement can be realized. Experimental results on both a real machine and a simulator demonstrate the effectiveness of array contraction on cache locality enhancement and performance improvement.