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Gourmet's subtle seduction.

Supermarket operators continue to embrace specialty foods with the passion of a gourmand. Not only are an increasing number of retailers weaving palate-pleasing items into the grocery mix, but many are extending the upscale theme into virtually every major department. At these traded-up stores, the dazzling decor...the arresting aroma of hot-out-of-the-oven baked goods...the decorative display of deli pasta salads and artfully arranged produce...the staggering selection of prime meats...the fresh fish on ice...the mouth-watering assortment of bulk cheeses...the imported chocolates...and the fine wines (where permitted) are tied together in a total package designed to assault the senses.

Synonymous with this seductive type of selling are chains such as New York's Shopwell, which runs 18 Food Emporium stores in the New York metropolitan area, and New Jersey-based Grand Union, which now operates a total of 74 Food Market stores in various states. The others, of course, include Safeway, which recently opened its third Bon Appetit unit in the San Francisco area and also runs the Safeway International store in McLean, Va., and Giant Food Inc., which has its Someplace Special-Giant Gourmet unit in McLean, Va., and the new Giant Food and Gourmet store in Rockville, Md.

However, long before these chains knew the difference between radishes and radicchio, or cheddar cheese and chevre, independents--like Minnesota-based Byerly's, Dierberg's in St. Louis, Gelson's in the Los Angeles area, and the West Point Market in Akron, Ohio--had been specializing in specialties. Now joining these gourmet gurus are operators from coast to coast such as New York's Red Apple, Boston-based Stop & Shop, Minyard's in Texas, and Ralphs on the West Coast, all of which are into specialty selling to some degree. Even the once barebones warehouse store format has given way to the dressed up super warehouse store--a la Super Valu's Cub--combining the best of both price- and service-oriented worlds.

Why all the moves to splashy selling? The brighter economic picture has something to do with it and the increase in two paycheck households also bodes well for the continued success of the gourmet effort. So does the increased sophistication of today's consumers and their fixation with foods that are "in fashion." This is particularly true of young, upwardly mobile, professional people (or YUPPIES), who want a taste of the good life--now!--and are willing to pay for it.

However, a retailer's decision to "go gourmet" is often deeper rooted than all of this. Not surprisingly, operators in tough competitive situations view the upgraded "niche" as a weapon in the battle for market share. And a powerful one it can be, if all the conditions are right.

"You don't fight fire with fire. You fight fire with water," says marketing consultant Len Schechter of Scottsdale, Ariz.-based Claridge Marketing Associates, and formerly of upscale King's Supermarkets in West Caldwell, N.J. "That is, you don't fight a super warehouse market with a 20,000-square-foot store with limited variety. You must find some other types of competitive weapons--like service and variety--and all the things we squeezed out when we started emphasizing price." That's exactly what many operators are attempting to do, but Schechter cautions that "concept integrity" is vital to success. "Know your niche, and stick with it," he says, acknowledging that it is possible to incorporate certain elements of the traded-up store into existing units, without going the total route.

Russ Vernon, president and owner of Akron, Ohio's West Point Market, a specialty super with all the trimmings, says he was particularly gladdened by a recent article in the Wall Street Journal that called super warehouse stores, superstores and upscale stores the three significant formats in supermarketing. The 18,000-square-foot West Point Market, which Vernon describes as "offering an alternative to the conventional supermarket," definitely fits into the "upscale" slot. As much as imported cheeses, caviar and croissants, the store sells service. To do this, it employs a staff of 67, 13 of whom are butchers. "Our percent of labor would shock conventional supermarket operators," says Vernon. "They operate on 9% to 10%; we are in the 14% range. Yet, for us, it all works."

Like West Point Market, most of the successful specialty supers are in affluent areas that can support them. Exceptions to the rule--like two Haggen food stores in the state of Washington--are few and far between. Located in the middle-income areas of Bellingham and Alderwood, Wash., the stores have been in operation for five and three years, respectively, says Larry Ziels, vice president and grocery merchandiser for the eight-store independent. "These are more on the order of the Byerly's type of store," he says, adding that the company also recently opened a 77,000-square-foot super warehouse store in Everett, Wash., complete with a service deli and fish counter, and a European-style scratch bakery. "We also have warehouse stores in our Top Foods Division," he says, describing the new unit as a cross between the company's upscale and warehouse formats.

Success or failure in upscale selling is all a matter of demographics, believes Mike Margarites, director of supermarket sales for the Import Group of Carlstadt, N.J.-based Universal Foods, and a former specialty foods consultant. "Everyone's on an image-changing kick now, but some are just into it because the competition is in it." He suggests that supers should test the concept in one or two stores before going the total distance.

That's exactly what Coppell, Texas-based Minyard Food Stores have been doing in upscale areas, says Liz Minyard, corporate vice president of the 54-store chain. The company remodeled a 25,000-square-foot store in the affluent Preston Forest section of Dallas more than two years ago, and polished up its image with the help of special lighting, all-white refrigerated cases, and black-and-white photo murals. What's more, a selection of specialty foods is carried; a scratch bakery produces croissants, quiches and tarts; a service deli offers dishes such as fresh pasta salads; and the produce department features a self-serve salad bar--one of the first in the Dallas area.

The concept was so successful at this first store that the chain is now moving it into another, according to Minyard. She says that the company is beginning to see a payback on the original remodel already. For a different flavor in stores where the demographics dictate it, more of an ethnic approach is being taken.

Part of the appeal of a traded-up store like the Minyard's remodel is the wide variety it offers shoppers. In the dry, packaged grocery area, this typically includes an array of imported and domestic food items that are supplied by specialty food distributors, many of whom offer service. These items usually include a soup-to-nuts assortment of products such as crackers, cookies and snack items; chocolates; mustards; balsamic, wine and herb vinegars; oils, such as extra-virgin olive, walnut and sesame; canned pates and other meat products; fish items such as smoked oysters, clams, anchovy paste, escargots, and caviar; herbs and spices; cornichons, olives and capers; baking and cooking needs such as almond and tomato pastes; vegetable items such as asparagus spears and grape leaves in brine; chutneys; honeys; dry pasta products; wild rice; sauces; soups; teas; coffee beans; bottled waters; fruit juices and certain Oriental items, among other specialties. And as some of these items become more widely accepted and faster-moving, they often find their way into the grocery warehouse. Most, however, are still in the "slower-moving, higher-margin" (25% to 40%) category, and are primarily store-door delivered.

"If an item grows to where movement is substantial, we will request that our major wholesaler, J.M.Jones Co., a division of Super Valu, pick it up for us," says John Muckerman, director of marketing at Dierberg's in St. Louis. But the bulk of the company's specialty foods--some 2,500 items--are supplied by outside distributors, he says.

A study released by the British Trade Development Office at the 1983 International Fancy Food & Confection Show, said the American specialty food industry is growing 20% annually, and put the wholesale value of packaged imported food items at approximately $900 million. An earlier study by the market research firm of Frost & Sullivan projected that gourmet food retail sales would grow from $2 billion in 1980 to $6.2 billion by 1990. However, the firm cautioned that "these projections could prove to be considerably understated should domestic economic problems be brought under control relatively quickly."

Some specialty foods industry observers feel the economic recovery has played a vital role in the increased popularity of these items, while others do not. "The specialty department is beginning to expand now because of the economy," says Steve Abramson, CEO of the Caron Company, a full-service merchandiser based in Portland, Ore. "Consumers might have been hesitant to buy caviar and snails in the shell at one time, but now they're trying them."

Charly Lukas of Richter Bros., a leading specialty food importer and distributor based in Carlstadt, N.J., sees things differently. "We never suffered a recession in the gourmet specialty business. People couldn't afford to take trips, but they still were able to 'get away' by indulging in a jar of caviar."

Most operators in affluent areas say they weren't greatly affected by the recession. "Our specialty sales may have increased somewhat as a result of the economic recovery, but they had never dropped off much, due to the fact that this is a well-insulated area," says Bill Norkin, part owner of one-store Scotts Corner Market in Pound Ridge, N.Y.

The same is true at Akron's West Point Market. "I feel quality will win the day, given the right customer profile and disposable income," says Vernon. "That's always been the case here and it's getting more so as far as our market is concerned. We're even seeing an interest in $15-a-pound candy and in Italian triple creme cheeses."

It's difficult to get a good handle on the so-called "gourmet market," simply because the very term, "gourmet foods," is considered to be "undefinable" by specialty food trade experts, most of whom frown on offering the products in separate sections at the supermarket. Side-by-Side With Staples

"Some people are trying to glamorize the items, but they are limiting them," says Dierberg's Muckerman. "Labeling them 'gourmet' can turn customers off."

Lukas of Richter Bros. agrees. "Gourmet special signage is a mistake. There's a pricing stigma attached to it. When stores ask me, 'How can we highlight your items?' I tell them I don't want them to be highlighted."

For the most part, the items that Richter Bros. distributes to supermarkets such as New York's Food Emporiums, and Mott's ShopRite and Gran Central stores in Connecticut are integrated within the regular dry grocery mix. This is also the case at the upscale Minyard remodel in Dallas, although Liz Minyard says some specialty items are grouped together on Metro shelving in the store's deli department as well. These are often brand new items that will eventually be integrated with the rest, or products bearing the respected labels of "Dean & DeLuca" or "The Silver Palate." The deli racks also hold specialty breads and bagel items, she says, but, by and large, Minyard professes to be a staunch believer in offering shoppers a wide choice in the regular grocery aisle.

Safeway's Bon Appetit stores have also integrated gourmet products from the start. A Safeway spokesman calls the specialty supers, "complete grocery stores that appeal to the gourmet," and says "the concept is doing well," despite publicity to the contrary in recent years. The new 28,000-square-foot Danville, Calif. store, like the other Bon Appetit units in San Francisco and Tiburon, Calif., carries a complete assortment of regular grocery store items such as pet foods, laundry supplies, paper products, and a wide selection of national brand food items integrated with the specialties. At Safeway's upscale superstores, such as the new 55,000-square-foot, Doody-designed unit in San Ramon, and the Brentwood Markets superstores in the San Francisco area, some gourmet lines are also mingled with the regular groceries.

The space allocated to gourmet-type foods at New York's eight upscale Red Apple units in Manhattan has been increased and there's been a switchover to integration. "Although we had a separate section about two years ago when we first got into specialty selling, we've found that integration works better for us," says John Riley, vice president of purchasing, adding that the upgraded units carry approximately 200 packaged specialty items. The stores also include bakeoff operations and service meat and fish departments.

For Jerry's, with 10 stores in Minnesota and one on Sanibel Island, Fla., gourmet food sales increased when the company switched from a freestanding gourmet island to integration, says general manager George St. Germain. "If you don't have a gourmet reputation, 'freestanding' builds an image," he says. "But we've been doing it long enough and are known for our variety."

Still, some operators, like Byerly's, Grand Union and King Kullen prefer segregated sections. At Grand Union Food Markets, the gourmet items are found in the International Aisle. "The movement in separate departments is much better," says spokesman Don Vaillancourt. The stores also boast service butcher shops, delis and bakeries and even offer some degree of service in the produce departments, Vaillancourt says.

At King Kullen's Kullenary store in affluent Bayshore, N.Y., and Super Place in Lindenhurst, N.Y., specialty items are offered in separate aisles that include international foods, gourmet lines and health items, most of which are supplied by full-service merchandisers. The stores also display some related specialty items in various appropriate departments, such as sauces in the seafood section. The 48,000-square-foot Super Place offers more variety than the Kullenary, and features service in the meat, fish, bakery and deli departments as well as an eat-in snack bar and an in-store sausage maker. A King Kullen spokesman says that the Super Place is designed to appeal to a broader range of people, while, at the Kullenary, the emphasis is clearly on attracting the areas' upscale clientele.

Although more and more specialty items are finding their way to the regular grocery shelves at Byerly's three-year-ol Minnetonka store, Manager Leo Friesen says this is only because of a space problem. The store still maintains a separate gourmet section with 60 running feet of items on low-profile gondolas. Although Friesen is a believer in integration, he says the setup of the store--with its builtin lower shelving--prevents this.

At Giant Food's newest, more traditional, Food and Gourmet unit in Rockville, Md., packaged specialty items are located in the "Very Special Foods" section which consists of products on regular grocery gondolas and special midaisle island-type displays. Super Sellers

Not every specialty item is expected to catch on in every area. One that caused more than a little concern recently--later proved unfounded--was the high-ticket (in the $25 range) Sushi Chef kit for preparing the Japanese rolled raw fish delicacy. The item is distributed by Richter Bros., and Lukas says the big question was, "Would the kit do better in the city or in the suburbs?" To find out, New York's Shopwell agreed to test the item in Food Emporium stores in each type of location--one on the Upper East Side of Manhattan and one in suburban Rye, N.Y.

Within a week's time, Lukas says the store managers of both units were reporting favorable results and asking for more. Besides the initial kit, the line also includes replacement items such as nori sheets, pickled ginger, dark soy sauce and wasabi, all carrying prices in the $2 range. The China Bowl Oriental specialty line, also distributed by Richter Bros., is another good mover, says Lukas, who claims that a total of 4,000 cases were sold at Food Emporiums last year.

Steve Abramson of the Caron Company, which distributes specialty items to stores in Maine, New Hampshire, Vermont and Massachusetts, says hors d'oeuvres items including anchovies, canned pate, marinated mushrooms and artichoke hearts are among his best sellers in supers, as are black, red and white fish caviar and other seafood items like smoked mussels, herring and oysters. "We also can't carry enough mustards," he says. "The stores leave the selection up to us, and we rotate items according to what sells best at each unit." He says the typical store he services with a 12-foot separate gourmet section carries between 15 and 20 mustard items, but that this number is reduced to four or five items in stores with 4- to 8-foot sections.

Dry pastas, mustards, and sauces are popular items at the eight upgraded Red Apple stores in New York. At Dierberg's, hearts of artichoke and palm move well, as do specially nuts.

"We're doing more promotional work with specialty items now and feature two items a week in our circular and give them end-display space removed from the gourmet section," says Norkin of Scotts Corner Market. "We started with crackers--which we still find to be one of the best-selling items--but now we do it with jams, jellies, teas, bean coffee, oils and salad dressings as well. The Total Package

Besides packaged goodies galore, Giant's Someplace Special Store features an impressive array of service departments. Among them are: a meat counter displaying prime cuts, squab, pheasant and goose; a seafood department complete with live lobsters and trout; a deli housing a full line of domestic and imported cheeses; a bakery producing pasta, pastries, breads, cakes and mousse pies; and a wine department offering 500 imported and domestic varieties. In addition, the store boasts an international assortment of fresh fruits and vegetables including cocktail avocados from California, red bananas from Colombia, blood oranges from Spain, mache (lamb's lettuce) from France and radicchio (red lettuce) from Italty.

Giant's latest 61,000-square-foot Food and Gourmet store in Maryland, combines the most popular features of the chain's 131 stores, including the splashy Someplace Special. It features similar service departments such as a gourmet service counter offering unusual cuts of meat; a deli with a European-style bubble case; a fresh fish department; a scratch bakery; a bulk candy counter, and a produce department complete with a salad bar and a selection of exotics.

The equally impressive 72,000-square-foot Byerly's Minnetonka unit has a 36-foot service meat counter, a service fish department of the same size, and a scratch bakery. The store's produce department offers a wide variety of items like jicama (a Mexican potato), French endive and horseradish root. "We do a big business on this type of produce," says Manager Friesen. "A case a week isn't bad for an item like jicama."

Surprisingly, the 30,000-square-foot, service-oriented Scotts Corner Market offers its produce prepacked. "We've never been a bulk operation," says Norkin. "We feel we're truly offering a better product by packaging it for shoppers. We have tight quality control and the products are being handled less this way. He admits that customers do inquire about bulk. "We explain why we don't offer it, and they seem to understand," says Norkin, pointing out that the produce department accounts for a substantial 13% to 14% of total store sales. Among the independent's top produce movers are specialty items like hydroponic lettuce and Oriental varieties of mushrooms.

"We were one of the first in the area to go back to bulk produce four or five years ago," says St. Germain of Jerry's. The company's two most upscale stores, in Edina, Minn., and on Sanibel Island, Fla., offer a selection of exotics including star fruit, many types of squash including gold nugget and patty pan, fresh figs, horseradish root, sweet Vidalia onions, blood oranges from Israel during January and February, Oriental enoki mushrooms, canary melons during the summer months, and berries year-round.

The company's produce supervisor, Tom Fozo, says sales of items such as kiwi fruit and avocados--once considered to be "exotic"--have increased dramatically in the last three years. "When kiwi was first introduced, we couldn't give it away," he says.

Consultant Len Schechter, a big proponent of offering variety in the produce department, dislikes the term, "exotic," saying, shoppers often translate it to mean, "I probably won't like the taste." One way to dispel this attitude is to have shoppers sample the items, which is what Jerry's did recently with sweet chokes. According to Fozo, these are similar to Jerusalem artichokes, and are ideal for use in salads or with dips.

At Minyard's, a Specialty Foods Coordinator is employed and one of her chief duties is to coordinate store demonstrations. She also buys and displays many of the specialty items, and writes a special gourmet foods newsletter.

The demonstrators at Dierberg's do their thing every weekend. "We have an on-going demo and sampling program and we feature a different item in each of our stores every Friday and Saturday, with the exception of two weekends out of the year," says Muckerman. One recently sampled item was spaghetti squash in the produce department. Among other items offered are jicama, Japanese eggplant, taro root, ugli fruit, kumquat and chayote.

West Point Market utilizes a built-in demonstration center complete with running water and heating facilities. (See story on the Festival of Taste.) Another promotional device employed by the store is the holding of afterhours black tie dinner parties on the premises. Owner Vernon says he has a restaurant license, allowing him to serve wine. The promotional events, held to support groups such as the Akron Symphony, are grandly run with silver, linen, fresh flowers, and even musical accompaniment by the Cleveland Orchestra. Advertising Avenues

Although West Point Market is a "luxury" super in every sense of the word, Vernon does not shy away from advertising, but has removed the price signs from the windows of the beautifully landscaped store.

Byerly's, on the other hand, does no newspaper price advertising whatsoever, and has even cut back on its institutional ads. However, the company is now using billboard advertising and posts approximately six to eight different billboards on area freeways. These feature illustrations of appetizing food items, and the words, "Byerly's. . .


Shopwell's Food emporium has been going all out with radio and TV spots in the New York metropolitan area lately, and Safeway's Bon Appetit stores have a separate advertising program that includes both newspaper and radio ads.

Besides circular advertising, Scotts Corner Market also does non-price radio ads on a local station in the form of 60-second informative spots and customer testimonials. "We're trying to make ourselves more distinctive," Norkin says.

This is the case at all of the image-conscious stores, and many do just that by offering that extra, memorable feature. At a new Mott's ShopRite in Danbury, Conn., for example, a "Create-A-Pizza" counter, located near the deli features a cheese variety for $2.29 and a Super Deluxe type for $3.99, and various combinations in between. Another line geared to the busy working shopper is a selection of prepared "Foods From Emily's Kitchen," recently introduced at Foodarama Supermarkets' ShopRite of Freehold, N.J. The heat-and-serve line of soups and entrees will eventually be extended to other Foodarama ShopRite stores as well.

A unique feature at the Twin City Jerry's stores is the availability of 75 to 100 types of fresh sausage. Two Jerry's stores also have sit-down, full-menu restaurants. The Edina unit's restaurant has a 225-250 person seating capacity and the store on Sanibel Island, where wine and beer may be served, seats 75.

Call it, "the value-added shopping experience," the "traded-up store," or "upscale selling," it all boils down to service. At Dierberg's, there are seven home economists on staff (one for each store), who serve as customer advisors. In addition, five of the Dierberg's stores house complete cooking schools.

A staff of 136 people at Giant's Someplace Special store provides a variety of personal services including menu planning, flower arranging, gourmet preparation of specialty hors d'oeuvres, and advice on meal preparation. A host and hostess are also available to help shoppers plan elegant dinner parties for two to 200 guests.

Because of the high labor costs and wide selections of slower-moving merchandise--much of it perishable--that are inherent in this type of selling, many industry observers continue to view the specialty format with skepticism. However, consultant Schechter is among those who are convinced that it is a viable format for the future. "I don't know of any part of the country where the traded-up store doesn't work," he says. "You have to think of food marketing as a continuum, with the warehouse store at one end, and the 'emporium-type' store at the other."

For Russ Vernon, the secret to success (besides his location) has been a relatively simple one: "Pay attention to your customers," he advises, "and they will tell you how you're doing. Over the years, we have 'loved' many of ours away from our competitors."
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Title Annotation:supermarkets that sell gourmet foods
Author:Linsen, Mary Ann
Publication:Progressive Grocer
Date:Aug 1, 1984
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